Markets wipe out opening gains to trade lower amid foreign fund outflows

Indian equity benchmarks made slightly positive start on Tuesday tracking overnight gains on Wall Street as well as broadly positive cues from Asian counterparts on renewed optimism over the outlook for interest rates, with traders growing increasingly confident about a rate cut in the coming months and largely eliminating short-lived concerns the US Fed might actually consider raising rates. Also, the services sector in Japan continued to expand in April, and at a faster pace, the latest survey from Jibun Bank revealed with a services PMI score of 54.3. Sensex and Nifty failed to hold their gains and slipped below neural lines and are trading tad lower in early deals amid foreign fund outflows. Foreign Institutional Investors (FIIs) sold shares worth Rs 2,168.75 crore on May 6. Also, geopolitical tensions weighted on markets as Israel commenced its planned military offensive in Rafah hours after it rejected Hamas's proposal for a ceasefire in Gaza. 

Downside remained capped as some support came in as India Ratings and Research revised upward the country's GDP growth estimate for FY25 to 7.1 per cent from 6.5 per cent earlier. The projection is marginally higher than the Reserve Bank's estimate of 7 per cent. The rating agency said strong support from the sustained government capex, deleveraged balance sheets of corporate and banking sector, and the incipient private corporate capex cycle make it revise its estimate. 

On the sectoral front, sugar industry stocks are in focus as sugar industry body Isma has urged the government to allow 20 lakh tonnes of sugar exports in the current marketing year ending September as shipments of surplus sweetener would boost liquidity of millers enabling them to make cane payments to farmers on time. In stock specific development, Godrej Consumer Products soared after posting strong Q4 results.

The BSE Sensex is currently trading at 73714.03, down by 181.51 points or 0.25% after trading in a range of 73713.21 and 74026.80. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.11%, while Small cap index was down by 0.08%.

The top gaining sectoral indices on the BSE were FMCG up by 2.26%, Consumer Durables up by 0.53%, Industrials up by 0.34%, Capital Goods up by 0.31% and Oil & Gas up by 0.20%, while Bankex down by 0.65%, Telecom down by 0.54%, Healthcare down by 0.54%, Basic Materials down by 0.41% and Auto down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 3.62%, ITC up by 2.19%, Nestle up by 1.81%, Asian Paints up by 0.89% and Sun Pharma Industries. up by 0.79%. On the flip side, HCL Technologies down by 1.89%, Power Grid down by 1.40%, ICICI Bank down by 0.97%, HDFC Bank down by 0.77% and Axis Bank down by 0.72% were the top losers.

Meanwhile, expressing optimism over India’s economic growth, India Ratings and Research has revised upward the country’s Gross Domestic Product (GDP) growth estimate for FY25 to 7.1 per cent from 6.5 per cent earlier. In a statement, the domestic rating agency said strong support from the sustained government capex, deleveraged balance sheets of corporate and banking sector, and the incipient private corporate capex cycle make it revise its estimate. It said that factors that may constrain growth include consumption demand not being broad based and the headwinds faced by exports due to sluggish growth globally.

The agency said it expects the growth in private final consumption expenditure to jump to 7 per cent in FY25, up from 3 per cent in FY24, and added that this will be a three-year high. It noted current consumption demand is highly skewed, as it is driven by the goods and services largely consumed by the households belonging to the upper income bracket, and added that rural consumption is weak. Above normal monsoon, jump in wheat procurement by Food Corporation of India at 37 million tonnes versus 26 million tonnes in FY24 will help the consumption story.

It said ‘Sustained real wage growth of the households belonging to the lower income bracket is an imperative for a sustainable and broad-based recovery in consumption demand’. On the capex front, it said private sector activity has remained down for several years but added that a new cycle is in the offing as seen from the increase in the project loans sanctioned by lenders. It further said the headline inflation will moderate in FY25, but the Reserve Bank will remain vigilant.

The CNX Nifty is currently trading at 22412.30, down by 30.40 points or 0.14% after trading in a range of 22411.50 and 22499.05. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 3.56%, Britannia Industries up by 2.20%, ITC up by 2.09%, Nestle up by 1.87% and Tata Consumer Products up by 1.40%. On the flip side, HCL Technologies down by 1.84%, Power Grid down by 1.40%, Bajaj Auto down by 1.39%, Apollo Hospital down by 1.16% and Divi's Lab down by 1.03% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 527.26 points or 1.36% to 38,763.33, Taiwan Weighted rose 60.26 points or 0.29% to 20,583.57, KOSPI increased 51.23 points or 1.88% to 2,727.86, Jakarta Composite gained 9.78 points or 0.14% to 7,145.67, Straits Times added 3.33 points or 0.1% to 3,306.52. On the other hand, Hang Seng declined 153.49 points or 0.83% to 18,424.81 and Shanghai Composite was down by 4.10 points or 0.13% to 3,136.62.