Bourses fail to hold gains in late afternoon session

 Indian equity markets took U-turn and traded in red during late afternoon session. Traders overlooked Reserve Bank Governor Shaktikanta Das’ statement that India’s forex reserves have touched a record level of $675 billion on August 2. The new record surpasses the previous high of $670.857 billion set on July 19, with the last reported figure standing at $667.386 billion as of July 26. Furthermore, he said “current account deficit to remain imminently manageable during this fiscal”. On the global front, Asian markets were trading mixed amid lingering concern over slowing U.S. growth. European markets were trading lower as fears over slowing U.S. growth returned to the fore, offsetting mostly upbeat earnings. Back home, Reserve Bank of India (RBI) kept its growth and inflation projections steady at 7.2% and 4.5% respectively for the ongoing fiscal year, reflecting expectations of a normal monsoon.

The BSE Sensex is currently trading at 78987.18, down by 480.83 points or 0.61% after trading in a range of 78819.52 and 79626.92. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index declined 0.16%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.38%, Bankex up by 0.05% and Telecom was up by 0.01%, while IT down by 1.76%, Metal down by 1.70%, TECK down by 1.39%, Realty down by 1.32% and Utilities was down by 1.25% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.13%, HDFC Bank up by 1.09%, ITC up by 0.59%, Bharti Airtel up by 0.41% and Indusind Bank up by 0.31%. On the flip side, Infosys down by 3.00%, Asian Paints down by 2.81%, Power Grid down by 2.60%, Ultratech Cement down by 2.31% and Larsen & Toubro down by 2.25% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. Consequently, the standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the inflation front, the MPC highlighted that headline inflation has moderated from its peak but unevenly. Looking ahead, food price momentum has remained elevated in July. In Q2:2024-25, though favourable base effects are large, the sharper uptick in price momentum relative to earlier expectations is likely to result in a shallower softening of CPI headline inflation. Inflation is expected to edge up in Q3 as favourable base effects taper off. The steady progress in monsoon, pick-up in kharif sowing, adequate buffer stocks of foodgrains and easing global food prices are positives for containing food price pressures. Adverse climate events remain an upside risk to food inflation. Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5 per cent with Q2 at 4.4 per cent; Q3 at 4.7 per cent; and Q4 at 4.3 per cent. CPI inflation for Q1:2025-26 is projected at 4.4 per cent. 

On the economic growth front, going forward, the Indian Meteorological Department’s (IMD) projection of above normal southwest monsoon and healthy kharif sowing will support improving rural demand. The sustained momentum in manufacturing and services suggests steady urban demand. High frequency indicators of investment activity as evident in strong expansion in steel consumption, high capacity utilisation, healthy balance sheets of banks and corporates, and the Government’s continued thrust on infrastructure spending, point to a robust outlook. Improving world trade prospects could support external demand. Headwinds from geopolitical tensions, volatility in international commodity prices and geoeconomic fragmentation, however, pose risks to the outlook. Taking all these factors into consideration, real GDP growth for 2024-25 is projected at 7.2 per cent with Q1 at 7.1 per cent; Q2 at 7.2 per cent; Q3 at 7.3 per cent; and Q4 at 7.2 per cent. Real GDP growth for Q1:2025-26 is projected at 7.2 per cent.

The CNX Nifty is currently trading at 24148.90, down by 148.60 points or 0.61% after trading in a range of 24092.15 and 24340.50. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were HDFC Life Insurance up by 2.17%, Tata Motors up by 2.13%, HDFC Bank up by 1.24%, Cipla up by 1.12% and SBI Life up by 0.85%. On the flip side, LTIMindtree down by 3.36%, Grasim Industries down by 3.23%, Infosys down by 2.97%, Asian Paints down by 2.89% and Apollo Hospital down by 2.70% were the top losers.

Asian markets were trading mixed; Taiwan Weighted lost 425.18 points or 2.04% to 20,870.10, Nikkei 225 slipped 258.47 points or 0.74% to 34,831.15, Jakarta Composite plunged 11.94 points or 0.17% to 7,200.19 and KOSPI was down by 11.68 points or 0.46% to 2,556.73. On the flip side, Shanghai Composite strengthened 0.07 points or 0% to 2,869.90, Straits Times rose 12.5 points or 0.38% to 3,262.22 and Hang Seng was up by 13.97 points or 0.08% to 16,891.83.

European markets were trading lower; UK’s FTSE 100 decreased 82.77 points or 1.01% to 8,084.11, France’s CAC fell 67.98 points or 0.94% to 7,198.03 and Germany’s DAX was down by 87.44 points or 0.5% to 17,527.71.