Benchmarks end flat with positive bias

Indian equity benchmarks pared most of the day's gains and ended flat with a positive bias on Tuesday, as investors continued to trade with caution ahead of the Budget announcement. After a positive start, key indices extended the gains as the session progressed and hit new milestones in the first half, as foreign investors have turned buyers in the Indian equities. According to exchange data, Foreign Institutional Investors (FIIs) bought equities worth Rs 2,684.78 crore on Monday. Traders took support with commerce ministry’s data showing that India's merchandise export increased by 2.56 per cent to $35.20 billion in June 2024 as compared to $34.32 billion in June last year. Traders took a note of Reserve Bank of India (RBI) data showing that India’s outward foreign direct investment (FDI) commitments rose to $2.14 billion in June 2024, compared to $1.14 billion in June 2023. Sequentially, they declined from $2.22 billion in May 2024.  Besides, encouraging quarterly results by some blue-chips have also supported the markets.  

Sentiments remained optimistic in late afternoon deals, taking support from CRISIL report stating that industrial activity in the current fiscal year is poised to gain support from domestic consumption, with an anticipated improvement in private consumption, which had weakened to 4 per cent last fiscal. However, the domestic markets failed to uphold the initial gains and ended flat. Traders turned cautious with commerce secretary Sunil Barthwal’s statement that India has flagged concerns over non-tariff barriers (NTBs) faced by its exporters with the Russian government. NTBs faced by Indian exporters are mainly in sectors such as marine products and pharmaceuticals. For instance, India has been finding it difficult to export marine products to Russia as exporters face certification and listing challenges related to exports.

On the global front, European markets were trading lower after analysts warned the euro area's economy, including the zone's gross domestic product, could be impacted if Donald Trump were to win the presidential election in November. Asian markets ended mixed on Tuesday, despite a blistering rally on Wall Street overnight. Investors weighed the case for a September rate cut after comments by Fed Chair Jerome Powell that the three inflation readings over the second quarter of this year showed ‘more progress’. Back home, on the sectoral front, auto stocks remained in focus as dealers' body FADA said automobile retail sales increased 9 per cent year-on-year in June quarter FY25 with all segments, barring tractors, reporting growth. Overall retail sales rose to 61,91,225 units in the April-June period from 56,59,060 units in the same quarter of FY24.

Finally, the BSE Sensex rose 51.69 points or 0.06% to 80,716.55, and the CNX Nifty was up by 26.30 points or 0.11% points to 24,613.00. 

The BSE Sensex touched high and low of 80,898.30 and 80,598.06 respectively. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.29%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Realty up by 1.62%, FMCG up by 0.89%, Telecom up by 0.89%, TECK up by 0.85% and IT up by 0.56%, while Capital Goods down by 0.53%, PSU down by 0.52%, Utilities down by 0.46%, Power down by 0.45% and Industrials down by 0.41% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.70%, Bharti Airtel up by 2.00%, Tech Mahindra up by 1.13%, Infosys up by 1.09% and Mahindra & Mahindra up by 0.95%. On the flip side, Kotak Mahindra Bank down by 2.11%, NTPC down by 1.35%, Reliance Industries down by 1.32%, Ultratech Cement down by 1.23% and Power Grid Corporation down by 0.42% were the top losers.

Meanwhile, with an aim to making India a global aviation hub, the government has introduced a uniform Integrated Goods and Services Tax (IGST) rate of 5% on all aircraft and aircraft engine parts, effective from July 15, 2024. This decision marks a significant milestone for the domestic Maintenance, Repair, and Overhaul (MRO) industry.

Commenting on this development, Union Civil Aviation Minister, Kinjrapu Rammohan Naidu noted that previously, the varying GST rates of 5%,12%, 18%, and 28% on aircraft components created challenges, including an inverted duty structure and GST accumulation in MRO accounts. This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector.

The Minister further emphasized the role of Prime Minister Narendra Modi's visionary leadership in making this change possible. He said ‘Under the guidance of Prime Minister Modi, we are committed to the Atma Nirbhar Bharat initiative. His support for transforming India into a leading aviation hub has been crucial in driving this policy forward.’ 

Union Minister also applauded the efforts of the Ministry of Civil Aviation, Ministry of Finance and other stakeholders who have worked diligently to achieve this policy adjustment recommended by the GST Council in its 53rd meeting on June 22, 2024. The uniform 5% IGST rate aims to reduce operational costs, resolve tax credit issues, and attract investment.

The CNX Nifty traded in a range of 24,661.25 and 24,587.65. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Coal India up by 3.01%, BPCL up by 2.71%, Hindustan Unilever up by 2.44%, Tata Consumer Products up by 2.28% and Bharti Airtel up by 1.81%. On the flip side, Shriram Finance down by 2.16%, Kotak Mahindra Bank down by 1.99%, Dr. Reddy's Lab down by 1.55%, Reliance Industries down by 1.44% and NTPC down by 1.35% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 23.19 points or 0.28% to 8,159.77, France’s CAC fell 61.37 points or 0.8% to 7,571.34 and Germany’s DAX lost 87.97 points or 0.47% to 18,502.92.

Asian markets ended mixed on Tuesday, despite strong rally on Wall Street overnight. Hong Kong shares declined due to concerns over a further escalation in geopolitical conflicts if former President Donald Trump wins the White House again in November. Japanese shares gained as traders returned to their desks after a holiday, while a weak yen gives exporters a boost. Globally, investors were optimistic on September rate cut after comments by Fed Chair Jerome Powell that the three inflation readings over the second quarter of this year showed more progress.