Shares drop after RBI hikes rates

4 May 2022 , 04:31 PM

The domestic equity barometers slumped on Wednesday. The Nifty closed below the 16,700 mark. Shares across sectors declined. The bourses witnessed sharp selloff today following the surprise rate hike decision announced by the Reserve Bank of India (RBI).

As per provisional closing data, the barometer index, S&P BSE Sensex was down 1306.96 points or 2.29% to 55,669.03. The Nifty 50 index lost 391.50 points or 2.29% to 16,677.60.

The NSEs India VIX, a gauge of the markets expectation of volatility over the near term, jumped 7.86% to 21.88.

In the broader market, the S&P BSE Mid-Cap index slipped 2.63% while the S&P BSE Small-Cap index fell 2.11%.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 864 shares rose while 2,508 shares fell. A total of 103 shares were unchanged.

The US Fed later today is expected to raise interest rates by 50 basis points and detail plans for the reduction of its balance sheet. Key for markets will be Fed Chair Jerome Powells commentary, which might contain hawkish surprises.

LIC IPO:

The initial public offering (IPO) of insurance behemoth Life Insurance Corporation (LIC) of India received bids for 7.78 crore shares as against 16.20 crore shares on offer, according to stock exchange data at 15:15 IST on Wednesday (4 May 2022). The issue was subscribed 0.48 times.

The issue opened today (4 May 2022) and it will remain open for bidding till 9 May 2022. The IPO price band is Rs 902 to Rs 949 per equity share. An investor can bid for a minimum of 15 equity shares and in multiples thereof.

RBI MPC Meet Outcome:

The Reserve Bank of India (RBI)s Monetary Policy Committee (MPC) held an off-cycle meeting between 2nd and 4th May 2022.

MPC unanimously voted to increase policy repo rate by 40 bps to 4.40%.

The central bank also increased the Cash Reserve Ratio (CRR) by 50 basis points to 4.50%. CRR hike can suck out liquidity to the tune of Rs 83,711.55 crore from the banking sector, The Governor reportedly said.

MPC judged that the inflation outlook warrants an appropriate stance. In MPCs view, monetary policy response at this juncture would help preserve macro-financial stability amidst increasing volatility in financial markets, RBI Governor Shaktikanta Das said.

Following the RBIs rate hike announcement, the yield on the 10-year benchmark federal paper jumped to 7.378% from its previous close of 7.119%.

Meanwhile, the Nifty Bank index was down 2.49% to 35,264.55.

Among the components of the Nifty Bank index, IndusInd Bank (down 3.91%), HDFC Bank (down 3.40%), Bandhan Bank (down 3.16%), AU Small Finance Bank (down 2.85%), Axis Bank (down 2.77%), State Bank of India (down 2.31%), ICICI Bank (down 2.26%) and Punjab National Bank (down 1.71%) and declined.

Stocks in Spotlight:

Kotak Mahindra Bank rose 0.07% to Rs 1,775.60 in a weak market after the private sector bank reported a 64.4% jump in standalone net profit to Rs 2767.40 crore in Q4 FY22 from Rs 1,682.37 crore in Q4 FY21. The banks total income in the last quarter rose by 11.8% year on year to Rs 8,892.26 crore in Q4 FY22.

Tata Steel fell 2.98% to Rs 1256.55. The steel major reported consolidated net profit of Rs 9,835 crore in Q4 FY22 from Rs 7,162 crore in Q4 FY21. Turnover for the quarter ended March 2022 stood at Rs 69,324 crore, rising from Rs 50,028 crore posted in Q4 FY21. The company recommended a dividend of Rs 51 per share for the financial year ended 31 March 2022. The companys board also recommended a 10:1 stock split.

Titan Company slumped 4.62% to Rs 2276.40. The Tata Group company reported 7.18% decline in standalone net profit to Rs 491 crore in Q4 FY22 from Rs 529 crore in Q4 FY21. Total income for the quarter ended March 2022 stood at Rs 7,352 crore, rising 3% from Rs 7,169 crore posted in Q4 FY21.

Britannia Industries advanced 3.13% to Rs 3375. The FMCG major reported 4.3% rise in consolidated net profit to Rs 379.87 crore on a 15.5% increase in net sales to Rs 3,508.35 crore in Q4 FY22 over Q4 FY21.

Mahindra & Mahindra Financial Services lost 1.13% to Rs 179.85. The companys net profit surged to Rs 601 crore in Q4 FY22 from Rs 150 crore in Q4 FY21. The company attributed the jump in the profitability to a reduction in GS-3, which led to significant credit cost reversal. Total income declined 6.5% to Rs 2,466.36 crore in Q4 FY22 from Rs 2,637.51 crore in Q4 FY21.

Hero MotoCorp slipped 3.03% to Rs 2411.15. The two-wheeler majors standalone net profit declined 27.51% to Rs 627.05 crore on 14.55% fall in net sales to Rs 7,421.73 crore in Q4 March 2022 over Q4 March 2021.

Adani Enterprises fell 3.73% to Rs 2260.35 after the company posted 15.7% decrease in consolidated net profit to Rs 304.32 crore in Q4 FY22 as against Rs 360.93 crore in Q4 FY21. Net sales in the fourth quarter stood at Rs 24,865.52 crore as against Rs 13,525.07 crore reported in the same period last year.

Ramkrishna Forgings tumbled 4.40% to Rs 181.60. The companys standalone net profit jumped 142.9% to Rs 86.65 crore on a 31.9% rise in revenue from operations to Rs 683.24 crore in Q4 FY22 over Q4 FY21.

SBI Cards and Payments Services fell 4.07% to Rs 786.80. The company said that Nalin Negi has tendered his resignation from the post of chief financial officer (CFO) of the company.

RailTel Corporation of India declined 1.44% to Rs 102.85. The company has received work order of Rs 107.44 crore from South Western Railway (SWR).

Cosmo Films jumped 6.69% to Rs 1978. The companys board will consider issuing bonus shares on 9 May 2022. At the same meeting, the board will also consider the audited financial results for the quarter and year ended 31 March 2022.

Global Markets:

European markets declined across the board while most Asian stocks ended lower on Wednesday as global investors await a crucial monetary policy decision from the U.S. Federal Reserve. Markets in Japan and mainland China are closed on Wednesday for holidays.

Meanwhile, the British factory activity edged up in April after slowing to its weakest in just over a year in March following Russias invasion of Ukraine, but manufacturers remained wary about the outlook as costs leapt and demand faltered, a survey reportedly showed on Tuesday.

Investors kept an eye on the war in Ukraine, with the EU lining proposing additional oil sanctions on Russia as Russian forces continue to bombard targets in eastern Ukraine. The European Commission on Wednesday put forward new sanctions against the Kremlin which will include a six-month phase out of Russian crude imports.

The S&P Global/CIPS manufacturing Purchasing Managers Index (PMI) rose to 55.8 in April from Marchs 13-month low of 55.2, a slightly bigger rise than the increase to 55.3 in an earlier flash estimate.

Wall Street stocks ended higher on Tuesday after a choppy session in which each of the major indexes fluctuated between gains and losses as a key meeting of the Federal Reserve got under way.

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