Benchmarks end on weak note on Wednesday

Indian equity benchmarks ended on a weak note on Wednesday as some announcements made by Finance Minister Nirmala Sitharaman in the Budget 2024 dampened the mood on Dalal Street. After opening on a negative note, key gauges showed further decline in the early to mid-part of the session, as traders were anxious with an analyst at Moody's Ratings stating that India's fiscal deficit glide path set out for 2025-26 is reasonable, but a coalition government at the Centre may pose challenges to pass bigger reforms that the economy needs. Some concern also came as data showed that the foreign institutional investors (FIIs) turned net sellers on July 23 as they sold equities worth Rs 2975 crore, while domestic institutional investors bought equities worth Rs 1418 crore on the same day. Adding to the worries, Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal said that though the Union Budget proposed to review the customs levies over the next six months for inverted duty correction, it will be a difficult task in many cases because of nil rate on some items under free trade agreements (FTAs). Additionally, a negative global market trend further dampened sentiment in the domestic markets.  

However, last-hour buying helped markets to erase some of the intraday losses, as traders took some support with Commerce and Industry Minister Piyush Goyal’s statement that removal of angel tax for all classes of investors will help attract investments in the segment and further promote the growth of budding entrepreneurs. Some support also came with Ajay Seth, Secretary at Department of Economic Affairs under Ministry of Finance stating that fiscal consolidation by way of gliding down on fiscal deficit path is being done while meeting all essential expenditure. The fiscal deficit target for 2024-25 is pegged at 4.9 per cent, better than what was estimated in the Interim Budget. But markets failed to erase all the losses and ended the day lower amid volatility ahead of the monthly F&O expiry session tomorrow.

On the global front, European markets were trading lower as a survey showed business activity in the eurozone slowed further in July, signalling a near-stagnation and raising concerns about economic recovery. Asian markets ended mostly lower on Wednesday as investors awaited the U.S. GDP data and the Fed's favored measure of inflation this week for additional clarity on whether the Federal Reserve will cut interest rates twice this year, in September and December. 

Finally, the BSE Sensex fell 280.16 points or 0.35% to 80,148.88, and the CNX Nifty was down by 65.55 points or 0.27% points to 24,413.50. 

The BSE Sensex touched high and low of 80,519.58 and 79,750.51 respectively. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.68%, while Small cap index was up by 1.91%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.69%, Energy up by 1.60%, Utilities up by 1.31%, Telecom up by 1.24% and Power up by 1.24%, while Bankex down by 0.96%, FMCG down by 0.23% and Auto down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.71%, NTPC up by 2.67%, Tata Motors up by 2.63%, Sun Pharma up by 1.08% and Power Grid Corporation up by 0.94%. On the flip side, Bajaj Finserv down by 2.43%, Axis Bank down by 1.83%, Bajaj Finance down by 1.81%, Hindustan Unilever down by 1.80% and Adani Ports & SEZ down by 1.58% were the top losers.

Meanwhile, Karun Rishi, president of USA India Chamber of Commerce has said that the future ready budget presented by Union Finance Minister Nirmala Sitharaman aims to realize the vision of Viksit Bharat by raising spending to generate more jobs and spur economic growth. The finance minister has maintained fiscal discipline, with a commendable reduction in the fiscal deficit target to 4.9% of GDP for FY25, down from the 5.1% target in the interim budget. Fiscal discipline is crucial for sustainable economic growth and maintaining investor confidence. The budget focuses on micro, small, and medium enterprises (MSMEs) to drive growth through job creation. For a country like India with a large population, MSMEs can be an engine of growth. This approach is expected to enhance the contribution of MSMEs to the economy and employment generation.

According to president, the budget sets the economy on a long-term growth path through upskilling and easing unemployment. He said skilled and employable manpower is essential for industrialization, and the government aims to leverage the power of both the private and public sectors to achieve this. The abolition of the angel tax is a landmark decision for the start-up ecosystem in India. This was a much-needed course correction. This bold step will foster a more vibrant start-up ecosystem in India, leading to increased innovation, employment generation and competitiveness. 

He further said the government signaled policy continuity and focus on the infrastructure sector by continuing to allocate 3.4% of GDP. The spending plan was unchanged from the interim budget presented in February before the national elections. The government has doubled spending on infrastructure over the past three years as a way to boost the economy. As a percentage of GDP, capital expenditure has risen from 1.7% in 2019-20 to 3.4% in the current year. This investment is expected to generate demand across various sectors and create much needed jobs, providing a strong multiplier effect on the economy. 

The CNX Nifty traded in a range of 24,504.25 and 24,307.25. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were HDFC Life Insurance up by 4.36%, Tech Mahindra up by 3.12%, BPCL up by 2.91%, NTPC up by 2.67% and Tata Motors up by 2.46%. On the flip side, Bajaj Finserv down by 2.09%, Tata Consumer Products down by 1.90%, Britannia Industries down by 1.88%, Axis Bank down by 1.82% and Bajaj Finance down by 1.67% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 13.55 points or 0.17% to 8,153.82, France’s CAC fell 72.86 points or 0.96% to 7,525.77 and Germany’s DAX lost 125.85 points or 0.68% to 18,431.85.

Asian markets ended mostly lower on Wednesday tracking Wall Street’s fall overnight and after the release of disappointing earnings from Tesla and Alphabet. Investors were awaiting the US GDP and inflation data for additional clarity on whether the Federal Reserve will cut interest rates this year. Meanwhile, lingering concerns over slowing economic growth in China also kept investors nervous. Japanese shares led regional losses due to the yen’s continued rally and caution ahead of a Bank of Japan policy decision next week. Seoul shares declined, followed by losses in the auto and tech sectors. Taiwan market was closed as Typhoon Gaemi lashed Manila.