Benchmarks end lower on widespread profit booking

Indian equity benchmarks erased previous session gains and buckled under heavy selling pressure on Wednesday, tracking deep losses in metal, auto and IT stocks amid widespread profit booking after recent gains. After making a slightly positive start, key gauges quickly slipped into red terrain, as traders turned cautious with a private report stating that India consumer price inflation probably edged up in June, snapping five months of declines, largely because of a jump in vegetable prices caused by the damage to crops wrought by extreme weather. Traders also awaited the onset of a new earnings season for domestic cues, with Tata Consultancy Services (TCS) - the country's largest IT company - scheduled to report its financial results for the April-June period on Thursday.

However, markets managed to recoup some of the losses in final hour of trading session, amid foreign fund inflows. Foreign institutional investors (FIIs) purchased shares worth Rs 314.46 crore on July 09. Traders also took some support with global rating agency, Moody’s report in which it kept India’s 2024 growth forecast unchanged at 6.8 percent from its March forecast. The rating firm predicted Indian economy to grow 6.4 percent in 2025. It said increasing domestic and overseas demand is supporting GDP growth in emerging markets (EMs), with wide variation by country. Traders took note of report that India and Russia are looking to raise bilateral trade to $100 billion by 2030, balance the lopsided trade, eliminate non-tariff trade barriers, and explore the possibility of a Eurasian Economic Union (EAEU)-India Free Trade Area. But, markets were unable to erase all the losses and ended with a significant dip as traders remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out on July 12.   

On the global front, Asian markets settled mostly higher on Wednesday, while European markets were trading higher as investors eyed the second round of testimony by Federal Reserve Chair Jerome Powell as well as key U.S. inflation readings for directional cues. Ahead of key readings on U.S. consumer inflation and producer inflation later this week, Powell reiterated before the Senate Banking Committee on Tuesday that officials seek more evidence inflation is slowing down. Back home, insurance industry stocks were in focus as data released by the General Insurance Council showed non-life insurers reported a 13.7 per cent year-on-year (Y-o-Y) growth in gross direct premium, underwritten in April-June quarter of FY25 (Q1FY25). This was driven by strong performance in health and motor segments. Aviation industry stocks were in limelight as Icra stated that the momentum in air passenger traffic is expected to continue and airlines' net loss is projected to be Rs 3,000-4,000 crore in the year ending March 2025, both trends similar to the previous financial year.

Finally, the BSE Sensex fell 426.87 points or 0.53% to 79,924.77, and the CNX Nifty was down by 108.75 points or 0.45% points to 24,324.45. 

The BSE Sensex touched high and low of 80,481.36 and 79,435.76 respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.19%, while Small cap index was down by 0.69%.

The top gaining sectoral indices on the BSE were Utilities up by 0.69%, Power up by 0.51%, Healthcare up by 0.33%, FMCG up by 0.15% and Oil & Gas up by 0.10%, while Auto down by 1.65%, Metal down by 1.60%, IT down by 0.99%, Basic Materials down by 0.87% and Consumer Disc down by 0.78% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 3.10%, Power Grid Corporation up by 1.53%, NTPC up by 1.22%, Hindustan Unilever up by 0.82% and Adani Ports & SEZ up by 0.71%. On the flip side, Mahindra & Mahindra down by 6.62%, Tata Steel down by 2.21%, TCS down by 2.05%, HCL Technologies down by 1.58% and SBI down by 1.38% were the top losers.

Meanwhile, Ministry of Communications has said that the Production Linked Incentive (PLI) Scheme for Telecom and Networking Products and for Large Scale Electronic Manufacturing of Electronics have led to a significant increase in production, employment generation, economic growth, and exports in the country. Ministry noted that within three years of the Telecom PLI scheme, the scheme has attracted an investment of Rs 3,400 crore, the telecom equipment production has exceeded the milestone of Rs 50,000 crore with exports totalling approximately Rs 10,500 crore, creating more than 17,800 direct jobs and many more indirect jobs. 

It said this milestone underscores the robust growth and competitiveness of India’s telecom manufacturing industry, driven by government initiatives to promote local production and reduce import dependency. The PLI scheme aims to enhance domestic manufacturing capabilities and make India a global hub for telecom equipment production. The scheme also offers financial incentives to manufacturers based on their incremental sales from products manufactured in India.

Besides, Ministry of Communications stated that the Production Linked Incentive Scheme for Large Scale Electronic Manufacturing of Electronics covers the manufacture of mobile phones and its components.  As a result of this PLI scheme, both the production and export of mobile phones from India has picked up greatly. India from being a large importer of mobile phones in 2014-15, when only 5.8 crore units were produced in the country, while 21 crore units were imported, in 2023-24, 33 crore units were produced in India and only 0.3 crore units were imported and close to 5 crore units were exported. The value of exports of mobile phones has gone up from Rs 1,556 crore in 2014-15 and just Rs 1,367 crore in 2017-18, to Rs 1,28,982 crore in 2023-24. Import of mobile phones was valued a Rs 48,609 crore in 2014-15 and has dropped to just Rs 7,665 crore in 2023-24.

The CNX Nifty traded in a range of 24,461.05 and 24,141.80. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 3.27%, SBI Life Insurance up by 2.05%, Divi's Lab up by 1.63%, Britannia Industries up by 1.58% and Grasim Industries up by 1.38%. On the flip side, Mahindra & Mahindra down by 6.69%, Hindalco down by 2.11%, Tata Steel down by 2.10%, TCS down by 1.77% and HCL Technologies down by 1.63% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 47.12 points or 0.58% to 8,186.93, France’s CAC rose 53.06 points or 0.71% to 7,561.72 and Germany’s DAX gained 118.02 points or 0.65% to 18,354.21.

Asian markets settled mostly higher on Wednesday, with expectations that the US central bank will cut its main interest rate as soon as September. Investors are awaiting US inflation data later this week and the second round of testimony by Federal Reserve Chair Jerome Powell for further cues on potential interest rate cuts. But, in testimony Tuesday before the Senate Banking Committee, Powell reiterated that while inflation has eased in recent months, a rate cut is not appropriate until the central bank has greater confidence that it is headed towards the 2% target. Japanese shares gained on a weaker yen that helps exporters and tracking strong gains in technology shares as Nvidia supplier TSMC's sales surged past expectations on AI infrastructure demand. However, Chinese shares declined after data showed consumer inflation in the country slipped to 0.2% in June from 0.3% in May, while producer prices posted an annual fall of 0.8% in June as expected and slower than the 1.4% fall in May.