Benchmarks end near day’s lows on Thursday

Indian equity benchmarks struggled to maintain previous-session recovery and ended near day’s lows on Thursday due to losses in Metal, IT and Utilities stocks amid weak global cues. Key gauges made a negative start and stayed in red for most part of the day, as investors booked profits following the Reserve Bank of India's monetary policy committee (MPC) decision to kept the repo rate unchanged at 6.5 per cent for the ninth time in a row. The central bank maintained its hawkish stance due to persistently high food inflation. The RBI also keeps the gross domestic product (GDP) growth projection unchanged at 7.2 per cent for the financial year 2024-25 (FY25). Traders took a note of 16th Finance Commission chairman Arvind Panagariya’s statement that India needs to open its economy further, privatise banks and introduce factor market reforms to lift its growth beyond 6.5-7% levels. 

However, key gauges erased all of their initial losses and managed to trade in green in early afternoon deals, taking support from the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that domestic economic activity continues to be resilient. On the supply side, steady progress in south-west monsoon, higher cumulative kharif sowing, and improving reservoir levels augur well for the kharif output. Some support also came as the Finance Bill 2024 was passed by Lok Sabha with a few amendments moved by the government. Finance Minister Nirmala Sitharman said the approach of the government has been to bring greater simplification of tax laws and procedures and enable growth and employment in the country. But markets failed to hold gains and fell sharply in late afternoon deals, as continuous foreign fund outflows and weak trend in the U.S markets drove domestic equities lower. According to exchange data, foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 3,314.76 crore.

On the global front, European markets were trading lower as investors awaited more U.S. economic data and comments from Federal Reserve officials for additional clues on whether the Fed is behind the curve on inflation and interest rates. Asian markets settled mostly lower on Thursday as stocks wilted under pressure amid concerns about the outlook for the U.S. economy, despite US Fed officials reassuring markets that the world's largest economy is not headed for a recession. Heightened geopolitical tensions also weighed on the markets. 

Back home, on the sectoral front, mining stocks were in watch as Mines Secretary V L Kantha Rao stated that the mines ministry is working on rolling out the Critical Mineral Mission this year.  Union Budget 2024-25 has proposed launching Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. Its mandate will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism.

Finally, the BSE Sensex fell 581.79 points or 0.73% to 78,886.22, and the CNX Nifty was down by 180.50 points or 0.74% points to 24,117.00.  

The BSE Sensex touched high and low of 79,626.92 and 78,798.94 respectively. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.44%, while Small cap index was down by 0.16%.

The lone gaining sectoral index on the BSE was Healthcare up by 0.22%, while Metal down by 2.02%, IT down by 1.82%, Utilities down by 1.62%, Oil & Gas down by 1.46% and Basic Materials down by 1.45% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.57%, HDFC Bank up by 1.06%, Bharti Airtel up by 0.69%, ITC up by 0.31% and Indusind Bank up by 0.19%. On the flip side, Asian Paints down by 3.21%, Infosys down by 2.84%, Power Grid Corporation down by 2.74%, Ultratech Cement down by 2.53% and Larsen & Toubro down by 2.53% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that domestic economic activity continues to be resilient. On the supply side, steady progress in south-west monsoon, higher cumulative kharif sowing, and improving reservoir levels augur well for the kharif output. The likelihood of La Nina conditions developing during the second half of the monsoon season is likely to have a bearing on agricultural production in 2024-25.

RBI Governor further noted that manufacturing activity continues to gain ground on the back of improving domestic demand. The index of industrial production (IIP) growth accelerated in May 2024. Purchasing managers’ index (PMI) for manufacturing at 58.1 in July remained elevated. Services sector maintained buoyancy as evidenced by the available high frequency indicators. PMI services stood strong at 60.3 in July 2024 and is above 60 for seven consecutive months, indicating robust expansion.

On the global growth, Das said that global economic outlook exhibits steady though uneven expansion. Manufacturing is indicating slowdown, while services activity is holding up. Notwithstanding sticky services prices, inflation is receding grudgingly across major economies. With varying outlook for growth and inflation across countries, monetary policy is showing signs of divergence across jurisdictions. Several central banks are cautiously moving towards policy pivots through forward guidance and rate cuts; at the same time, there has been tightening by a few central banks. 

He further added that global financial markets are exhibiting volatility. Bond yields and the dollar index have softened since the last meeting. While the near-term outlook looks positive, there are significant challenges to medium-term global growth outlook. Demographic shifts, climate change, geopolitical tensions and fragmentations, rising public debt and new technologies, such as artificial intelligence, pose new sets of challenges. A coherent policy approach in which monetary policy is complemented by other policies to manage the policy trade-offs will be crucial to deal with such multiple challenges.

The CNX Nifty traded in a range of 24,340.50 and 24,079.70. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.63%, HDFC Life Insurance up by 1.57%, SBI Life Insurance up by 1.22%, Cipla up by 1.06% and HDFC Bank up by 1.03%. On the flip side, LTIMindtree down by 4.09%, Grasim Industries down by 3.60%, Asian Paints down by 3.37%, Apollo Hospitals down by 3.09% and Infosys down by 2.94% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 80.69 points or 0.99% to 8,086.19, France’s CAC fell 70.22 points or 0.97% to 7,195.79 and Germany’s DAX lost 109.02 points or 0.62% to 17,506.13.

Asian markets settled mostly lower on Thursday tracking Wall Street’s overnight fall following a poorly received US Treasury bond auction and with caution ahead of another US jobs report that might provide further evidence of weakness in the world’s largest economy. Japanese shares declined due to lingering concern over slowing US growth and recent market volatility, while the Bank of Japan’s Summary of Opinions contributed to early yen gains.