Middle East conflict grips Indian markets on Monday

Bears held a tight grip over the Dalal Street, with both Sensex and Nifty ending lower by over a percent,  as risk sentiment took a hit after Iran's retaliatory attack on Israel stoked fears of a wider regional conflict and kept traders on edge. After a negative start, markets remained weak for the whole day, as traders were concerned with a private report that exporters are in a wait-and-watch mode as they expect air freight volume to Europe to rise 10-15%, logistics and insurance costs to rise and engineering exports demand to Europe to get impacted following Iran's attack on Israel.

In last hours of the trade, indices extended losses, as sentiments remained downbeat after the provisional data released by the Ministry of Commerce & Industry showed that India’s wholesale price index (WPI)-based inflation accelerated to 0.53 per cent in March on an annual basis, as against 0.20 per cent in February. WPI inflation stood at 1.34 per cent in March 2023. Investors overlooked positive macro-economic data. India's retail inflation eased to 4.85 per cent on an annual basis in March as against 5.09 per cent in the previous month, while the Index of Industrial Production (IIP) in India rose 5.7 per cent in February as against 3.8 per cent in January.

On the global front, European markets were trading mostly in green, as Eurozone industrial production recovered in February driven by the rebound in capital and durable consumer goods output. Eurostat reported that industrial production grew 0.8 percent on a monthly basis in February. Asian markets ended mostly in red, even after the value of core machine orders in Japan jumped by a seasonally adjusted 7.7 percent on month in February, coming in at 886.6 billion yen. That blew away expectations for an increase of 0.8 percent following the 1.7 percent drop in January. 

Back home, auto industry stocks remained in watch, as the Society of Indian Automobile Manufacturers (SIAM) has said that passenger vehicle (PV) wholesales in India touched a record high of 42,18,746 units in the financial year 2023-24 (FY24), registering a year-on-year growth of 8.4 per cent, as compared to overall passenger vehicle dispatches of 38,90,114 units in fiscal year 2022-23. As per the latest data issued by the SIAM, two-wheeler sales were up 13.3 per cent last fiscal at 1,79,74,365 units, as compared to 1,58,62,771 units in the financial year 2022-23.

Finally, the BSE Sensex fell 845.12 points or 1.14% to 73,399.78 and the CNX Nifty was down by 246.90 points or 1.10% points to 22,272.50.   

The BSE Sensex touched high and low of 73,905.80 and 73,315.16 respectively. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell by 1.50%, while Small cap index was down by 1.54%.

The only gaining sectoral indices on the BSE were Oil & Gas up by 0.40% and Energy up by 0.21%, while IT down by 1.58%, Bankex down by 1.55%, Capital Goods down by 1.49%, Power down by 1.44% and Industrials down by 1.41% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki India up by 1.24%, Nestle India up by 0.62% and Sun Pharma up by 0.10%. On the flip side, Wipro down by 2.47%, Bajaj Finserv down by 2.40%, ICICI Bank down by 2.30%, Larsen & Toubro down by 2.10% and Bajaj Finance down by 2.09% were the top losers.

As per the data, the mining output growth accelerated to 8 per cent in February against 4.8 per cent in the year-ago month. The manufacturing sector's output growth decelerated to 5 per cent in February against 5.9 per cent a year ago. The power generation growth also slowed to 7.5 per cent in February from 8.2 per cent growth in the same month of last year. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of February 2024 stood at 139.6, 144.5 and 187.1 respectively.

As per use-base classification, the output of primary goods logged 5.9 per cent growth in February this year, down from 7 per cent a year ago. The capital goods segment growth fell to 1.2 per cent in February 2024 compared to 11 per cent in the year-ago period. The expansion in the intermediate goods segment was 9.5 per cent in the month under review, higher than the 1 per cent recorded in the same period a year ago. Infrastructure/construction goods reported a growth of 8.5 in February 2024 against a 9 per cent expansion in the year-ago period. In February this year, consumer durables output expanded 12.3 per cent. It had contracted by 4.1 per cent in February 2023. Consumer non-durable goods output declined by 3.8 per cent during the month compared to a 12.5 per cent expansion in February 2023.

The indices stood at 148.2 for Primary Goods, 106.2 for Capital Goods, 158.9 for Intermediate Goods and 179.8 for Infrastructure/ Construction Goods for the month of February 2024. Further, the indices for Consumer durables and Consumer non-durables stood  at 121.6 and 148.9 respectively for the month of February 2024.

The CNX Nifty traded in a range of 22,427.45 and 22,259.55. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were ONGC up by 5.33%, Hindalco up by 2.35%, Maruti Suzuki up by 1.27%, Nestle up by 0.69% and Britannia up by 0.21%. On the flip side, Shriram Finance down by 2.85%, Bajaj Finserv down by 2.46%, Wipro down by 2.42%, ICICI Bank down by 2.36% and Larsen & Toubro down by 2.13% were the top losers.

European markets were trading mostly in green; France’s CAC rose 59.24 points or 0.74% to 8,070.07 and Germany’s DAX gained 152.37 points or 0.85% to 18,082.69, while UK’s FTSE 100 decreased 35.59 points or 0.45% to 7,959.99.

Asian markets settled mostly down on Monday due to heightened geopolitical uncertainties in the Middle East following Iran's drone attack against Israel. Israel's hours-long war cabinet meeting ended Sunday night without a decision on how Israel will respond to Iran's attack. Concerns over US inflation and uncertainty over the pace of Fed rate cuts this year have also dampened market sentiments. Japanese shares declined tracking the broadly negative cues from Wall Street last Friday. However, Chinese shares gained due to renewed regulatory support from Beijing, while state-backed property developer China Vanke said it's making plans to resolve short-term liquidity pressure and operational difficulties. China's central bank on Monday left a key policy interest rate unchanged as widely expected when rolling over maturing medium-term loans.