Markets open in red in wake of Hindenburg report; CPI, IIP data eyed

Indian equity benchmarks made negative start on Monday amid mixed cues from Asian counterparts as well as cautiousness over Hindenburg-SEBI row. Sensex and Nifty are trading down with cut of around half a percent each in early deals amid panic selling. Investors are reacting to Hindenburg Research's allegations that the Indian market regulator's chairperson had stake in some obscure offshore entities used in the alleged Adani money siphoning scandal. The market regulator SEBI has said in a statement that its Chairperson Madhabi Puri Buch has been making disclosures, and investors should remain calm and exercise due diligence before reacting to such reports. Investors also remained on sidelines ahead of the consumer price index (CPI) based inflation data for the month of July, and Index Industrial Production (IIP) data for the month of June, which are due after the trading hours today.

Traders overlooked the latest data from the Reserve Bank of India showing that India's foreign exchange reserves rose by $7.53 billion to a new record high of $674.91 billion for the week ended August 2. The total reserves increased on the back of a rise in foreign currency assets, which rose by $5.16 billion to $592.03 billion during the week. On the sectoral front, cement industry stocks are in focus with report that leading cement manufacturers reported single-digit volume growth in the June quarter, though their topline was muted on account of the continued downtrend in the price. 

On the global front, Asian markets are trading mixed, following the broadly positive cues from global markets on Friday, as markets continued to recover from recent sell-off sparked by concerns about the world's largest economy slipping into a recession. Traders may also be reluctant to make more significant ahead of key US inflation data later in the week. The Japanese stock market is closed for Mountain Day holiday.

The BSE Sensex is currently trading at 79289.78, down by 416.13 points or 0.52% after trading in a range of 79289.78 and 79597.07. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.43%, while Small cap index was down by 0.02%.

The only gaining sectoral indices on the BSE were Realty up by 0.33% and Consumer Durables up by 0.06%, while Utilities down by 1.89%, Power down by 1.27%, PSU down by 0.84%, Energy down by 0.57% and Telecom down by 0.55% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 0.82%, Tata Motors up by 0.62%, Maruti Suzuki up by 0.24%, Sun Pharma up by 0.15% and Infosys up by 0.07%. On the flip side, Adani Ports & SEZ down by 3.22%, NTPC down by 1.74%, Power Grid down by 1.34%, SBI down by 1.32% and Titan Company down by 1.07% were the top losers.

Meanwhile, Crisil in its report has said that the Reserve Bank of India (RBI) may begin lowering interest rates around October, provided that external factors like weather conditions and international commodity prices do not cause any disruptions. The credit rating agency further anticipated that it expects ‘two rate cuts this fiscal’. It said that the decision of the Monetary Policy Committee (MPC) decision to hold rates in its recent announcement was due to the elevated food inflation. The climate conditions such as weather events are frequently changing and they need to be monitored. 

Going ahead, the rating agency anticipated that the macroeconomic environment would be better, creating a background for a rate cut. It further said ‘The food challenge to a rate cut is expected to ease as agriculture prospects look better than last year. The monsoon has been above normal (7 per cent above the long period average as of August 7), and sowing has picked up across major foodgrains. As agriculture prospects become clearer by September, we expect it to pave the way for a rate cut’.

Noting a likely uptick in core inflation, the report added that factors such as international freight costs, geopolitical risks to crude oil prices, and hikes in domestic telecom tariffs could affect this indicator. Anticipating the growth, it added ‘The pace of growth of the economy is expected to ease this year, with lower fiscal support as the government pursues fiscal consolidation’. In a move reflecting its cautious approach amid ongoing economic uncertainties, the RBI had decided to keep the repo rate unchanged at 6.5 per cent.

The CNX Nifty is currently trading at 24253.85, down by 113.65 points or 0.47% after trading in a range of 24247.75 and 24323.70. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 1.79%, JSW Steel up by 0.87%, Cipla up by 0.82%, Tata Motors up by 0.66% and Maruti Suzuki up by 0.25%. On the flip side, Adani Enterprises down by 4.32%, Adani Ports & SEZ down by 2.95%, NTPC down by 1.79%, SBI Life Insurance down by 1.62% and Power Grid down by 1.23% were the top losers.

Asian markets are trading mixed; Taiwan Weighted jumped 333.13 points or 1.53% to 21,802.13, KOSPI surged 25.03 points or 0.96% to 2,613.46, Hang Seng advanced 6.16 points or 0.04% to 17,096.39. On the other hand, Straits Times fell 26.76 points or 0.83% to 3,235.07, Jakarta Composite declined 5.44 points or 0.08% to 7,251.56 and Shanghai Composite was down by 0.9 points or 0.03% to 2,861.29.