Tuesday turns out to be yet another lackluster day for Indian markets

Tuesday turned out to be yet another lackluster day for Indian equity benchmarks, with both Sensex and Nifty ending lower by over 0.80% each, as investors waited for the release of key U.S. inflation readings this week that could influence the Fed's rate trajectory. A sharp surge in oil prices also weighed on markets after Ukraine said it has seized 1,000 sq km (386 square miles) of Russia's bordering Kursk region and Russian President, Vladimir Putin, vowed a ‘worthy response’ to the attack. Besides, the United States said it's preparing for significant attacks by Iran or its proxies against Israel as soon as this week. After a negative start, markets remained lower for the whole day, amid mixed macro-economic data. The government data showed that the index of industrial production (IIP) declined to a three-month low of 4.2 per cent in June from the upward revised figure of 6.2 per cent in the preceding month. 

Losses were limited in the first half of the trading session, as India’s retail inflation rate, based on the consumer price index (CPI), in July fell below the RBI’s medium-term target of 4 per cent for the first time since August 2019 on the back of a high base and sharp reduction in food prices. CPI decelerated to 3.54 per cent in July as against 5.08 in the preceding month and 7.44 per cent during the same month a year ago. However, the Dalal Street witnessed more intensified selling in late noon deals to end near day’s low points, impacted by weak cues from European markets. Traders got cautious, as SBI Report stated that the CPI inflation down, but road ahead could be bumpy. Investors also remained cautious as a forecast by the Export-Import Bank of India (Exim Bank) showed that India’s merchandise exports growth may slow to 4.2 per cent year-on-year (Y-o-Y) in the September quarter of 2024-25 (FY25), down from 5.8 per cent in the June quarter.

On the global front, European markets were trading mostly in red, even as the UK unemployment rate dropped unexpectedly in the second quarter. The data from the Office for National Statistics revealed that the unemployment rate fell to 4.2 percent in the three months to June period, while the rate was expected to rise marginally to 4.5 percent from 4.4 percent in the preceding period. Asian markets settled higher on Tuesday, after Japan's machine tool orders increased for the third straight month in July on the back of a surge in foreign demand. The preliminary data from the Japan Machine Tool Builders Association, or JMTBA, showed that machine tool orders climbed 8.4 percent year-on-year in July.

Back home, on the sectoral front, pharma stocks remained in watch, as the rating agency ICRA in its latest report has said that revenue of domestic active pharmaceutical ingredients (API) producing firms is expected to see a 7-8 per cent rise by 2029. It expects the revenues of its sample set of companies to expand at a CAGR of 7-8 per cent between 2023 and 2029, from an estimated size of $13-14 billion in 2023. Besides, power sector stocks were in focus, as CRISIL Ratings in its latest report has said that strong addition of renewable energy (RE) capacities will pull down the share of coal-based (thermal) plants in power generation by over 500 basis points (bps) to around 67% by next fiscal (FY26) after rising continuously in the past five through fiscal 2024. It said yet the plant load factor (PLF) of thermal plants will remain healthy because of limited capacity addition.

Finally, the BSE Sensex fell 692.89 points or 0.87% to 78,956.03, and the CNX Nifty was down by 208.00 points or 0.85% points to 24,139.00.   

The BSE Sensex touched high and low of 79,692.55 and 78,889.38 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 0.98%, while Small cap index was down by 1.16%.

The only gaining sectoral index on the BSE was Consumer Durables up by 1.45%, while Basic Materials down by 1.84%, Telecom down by 1.82%, PSU down by 1.73%, Bankex down by 1.45% and Metal down by 1.37% were the top losing indices on BSE.

The top gainers on the Sensex were Titan up by 1.78%, HCL Tech. up by 0.57%, Nestle up by 0.51%, Sun Pharma up by 0.26% and Reliance Industries up by 0.18%. On the flip side, HDFC Bank down by 3.46%, Bajaj Finance down by 2.15%, Tata Motors down by 2.10%, Tata Steel down by 2.07% and SBI down by 1.93% were the top losers.

Meanwhile, the government in its latest data has said that net direct tax collection grew 22.48 per cent to about Rs 6.93 lakh crore as of August 11 this fiscal. The mop-up includes personal income tax collection of Rs 4.47 lakh crore and corporate tax collection of Rs 2.22 lakh crore. 

Securities Transaction Tax (STT) mopped up Rs 21,599 crore, while other taxes (which include equalisation levy and gift tax) earned Rs 1,617 crore. Refunds worth Rs 1.20 lakh crore were issued between April 1 to August 11, a growth of 33.49 per cent.

Further, on a gross basis, it said direct tax collection grew 24 per cent to Rs 8.13 lakh crore. The collection includes PIT (personal income tax) of Rs 4.82 lakh crore and corporate tax of Rs 3.08 lakh crore. The government has budgeted to collect Rs 22.07 lakh crore in the current fiscal from direct taxes.

The CNX Nifty traded in a range of 24,116.50 and 24,359.95. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Titan up by 1.89%, Apollo Hospital up by 1.34%, Dr. Reddy's Lab up by 0.90%, Tata Consumer Products up by 0.68% and HCL Tech. up by 0.47%. On the flip side, BPCL down by 3.51%, HDFC Bank down by 3.43%, Shriram Finance down by 2.85%, HDFC Life Insurance down by 2.48% and Bajaj Finance down by 2.17% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 20.89 points or 0.26% to 8,189.36, France’s CAC fell 24.89 points or 0.34% to 7,225.78 and Germany’s DAX lost 56.09 points or 0.32% to 17,670.38.

Asian markets settled higher on Tuesday as investors were awaiting US producer and consumer price inflation data due this week for additional cues on the Federal Reserve's interest rate trajectory. Chinese and Hong Kong markets were gained ahead of quarterly and half-year earnings from some of China's top Companies as well as Chinese industrial production and retail sales readings due later in the week. Japanese shares rose as traders returned after a public holiday, while a weaker yen makes Japanese exports cheaper.