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After opening marginally higher, benchmark equity indices entered into the red zone in early trade on Friday dragged by losses in RIL, SBI, ICICI Bank and Kotak Bank. At 10:32 am, Sensex was at 51,944.52, down 378.81 or 0.72%, while the broader Nifty 50 retreated 119.75  points 0.76%  to 15,571.65.

Bajaj Auto was the top gainer in the 30-share pack followed by Infosys, HUL, HDFC Bank and HCL Tech. ONGC, SBI, PowerGrid, Mahindra & Mahindra, NTPC and Kotak Bank were among the laggards.

Sectoral trends

All sectoral indices on the NSE were in the red, Nifty metal, falling over 3% was the top laggard, followed by Nifty PSU Bank and Nifty Media, down over 2% each.

Overall market breadth was negative. On BSE, 2,053 shares declined, 804 advanced, while 128 were unchanged.

“Macro signals continue to be mixed. While rising CPI inflation (6.3% in May) is a major concern, the performance of agriculture & advance tax numbers ( up 150% in Q1 FY22) are positives. In spite of restrictions imposed in Q1 the GDP growth in FY 22 is likely to touch 9.5% with above 25% growth in corporate earnings. Even though the market is exhibiting resilience, investors should be prepared for around 5% correction. From the global market perspective, it appears that markets have digested the mildly hawkish signal from the Fed. The US 10-year bond yield cooling-off from the high of 1.58 % touched after the Fed announcement to around 1.5% now is an indication that stock markets have shrugged off inflation fears for now,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Economy

Lockdowns imposed by the states in April and May to contain the second wave of the deadly COVID-19 pandemic has likely led to the economy contracting 12% in the June quarter as against 23.9% contraction in the same quarter in 2020, a UBS report said.

The economy had its worst contraction on record in FY21 at 7.3% as the two-and-half months of unplanned lockdown announced by the centre with just a four-hour notice had crippled the economy in the first quarter with a massive 23.9% contraction, which improved to -17.5% in the second quarter.

Earnings today

GMR Infrastructure, Dhani Services, Timken India, Fertilisers & Chemicals Travancore, Gujarat Fluorochemicals, Hinduja Global Solutions, RattanIndia Enterprises, Ashoka Buildcon, Shree Renuka Sugars, Eveready Industries (India), PSP Projects, RattanIndia Power, Insecticides (India), Oriental Carbon & Chemicals, India Motor Parts & Accessories, Welspun Specialty Solutions, Balaji Telefilms, Kokuyo Camlin, HT Media, Jubilant Industries and others will be reporting their quarterly earnings today.

Stocks in spotlight

Power Grid Corporation of India said the company’s board has recommended the issue of bonus shares in the ratio of 1:3 i.e. one bonus share for every three shares held.

Power Grid Corporation of India reported a 6.42% rise in consolidated net profit to Rs 3,526.23 crore on a 5.73% fall in total income to Rs 10,870.57 crore in Q4 FY21 over Q4 FY20.

SBI Cards and Payment Services will be in focus as CA Rover Holdings is reportedly offering up to 4.8 crore shares at a price range of Rs 1,002 to Rs 1,041.30 in an accelerated bookbuild.

Adani Transmission said that the company has incorporated a Wholly Owned Subsidiary company in the name of “ATL HVDC Limited” on 16th June 2021 for transmission, distribution and supply of power and other infrastructure services relating thereto.

Novartis India reported a 43.07% rise in standalone net profit to Rs 9.70 crore on a 9.76% rise in total income to Rs 111.56 crore in Q4 FY21 over Q4 FY20.

Natco Pharma reported a 43.68% fall in consolidated net profit to Rs 53.00 crore on 24.62% fall in total income to Rs 359.70 crore in Q4 FY21 over Q4 FY20.

Tube Investments of India reported a 141.91% rise in consolidated net profit to Rs 143.84 crore on 168.22% rise in total income to Rs 2,814.21 crore in Q4 FY21 over Q4 FY20.

Global markets

Overseas, Asian stocks are trading mixed on Friday following an overnight drop for the Dow Jones Industrial Average on Wall Street. Looking ahead, the Bank of Japan is expected to release its statement on monetary policy on Friday, including its interest rate decision.

In US, the Dow Jones Industrial Average fell for a second day as investors digested the Federal Reserve’s latest policy update, in which it moved up its timeline for interest rate hikes and forecast higher inflation. Afresh bout of rotation from cyclical stocks pushed the tech-heavy Nasdaq gauge to another record.

The number of Americans applying for unemployment benefits rose last week for the first time since April despite widespread evidence that the economy and the job market are rebounding steadily from the pandemic recession.

The Labor Department said on Thursday that jobless claims rose 37,000 from the week before to 412,000.