Sensex, Nifty end marginally higher amid volatility

Snapping two-day losing streak, Indian equity benchmarks traded in a narrow range throughout the day and ended the session with marginal gains on Wednesday, following a rally in IT and TECK stocks amid a surge in the US markets. After opening on a positive note, the markets oscillated between gains and losses for most part of the day, as market participants have entered the 'wait-and-watch' mode for CPI figures and retail sales data from the US, which will help firm bets on a rate cut by the US Federal Reserve and provide further market cues.  Traders remained cautious with a private report that the RBI is unlikely to consider softening rates this fiscal year even after the consumer inflation gauge declined below the mandated 4% target for the first time in five years, with street attributing the fall to a statistical base effect and might not indicate a durable victory against sticky prices just yet.  Some cautiousness also came with private report that India's trade deficit expanded to $23.50 billion in July, up from $19 billion a year earlier, Merchandise exports declined by 1.4% year-on-year to $33.98 billion, while imports increased by 5% to $56.18 billion. In June, exports had risen by 2.6% to $35.2 billion.

Markets managed to keep their heads above water in afternoon session, after government data showed India's wholesale inflation, measured using the Wholesale Price Index, eased by 2.04 per cent on an annual basis in July as against a 16-month high of 3.36 per cent in June. Traders got support as India and the US have signed a ‘landmark’ agreement that provides a framework for both sides to explore cooperation in the micro, small and medium enterprises (MSME) sector. External Affairs Ministry Spokesperson Randhir Jaiswal said the Memorandum of Understanding (MoU) would enable MSMEs of the two countries to foster trade. But markets erased some gains and ended flat with positive bias as investors adopted a cautious stance due to weak domestic sentiment and the risks of earnings downgrades. Foreign fund outflows also weighed on domestic sentiments. On Tuesday, foreign institutional investors (FIIs) were net sellers of stocks to the tune of Rs 2,107.17 crore; thus far in August FIIs have net sold shares worth Rs 27,148.16 crore in the cash segment. 

On the global front, European markets were trading higher as investors digested key Eurozone data and looked forward to the release of U.S. CPI data later in the day for additional clues on the interest-rate outlook. Asian markets settled mostly higher on Wednesday following the broadly positive cues from Wall Street, as data showing a smaller than expected increase in U.S. producer prices raised hopes of a 50-basis point interest rate cut by the US Fed in September. Traders also awaited the release of the more closely watched report on US consumer price inflation for July later in the day.  Back home, on the sectoral front, power stocks were in focus as an Icra report stated that the state-owned power distribution companies are facing financial constraints despite improving their aggregate technical and commercial losses. The agency has cited delays in realising payments from state government departments for power supply as one of the reasons for the constrain of discom finances and assigned a negative outlook for the power distribution segment. 

Finally, the BSE Sensex rose 149.85 points or 0.19% to 79,105.88, and the CNX Nifty was up by 4.75 points or 0.02% points to 24,143.75.   

The BSE Sensex touched high and low of 79,228.94 and 78,895.72 respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.41%, while Small cap index was down by 0.57%.

The top gaining sectoral indices on the BSE were IT up by 1.41%, TECK up by 1.33%, Consumer Durables up by 0.13%, Consumer discretionary up by 0.09% and Auto up by 0.04%, while Metal down by 1.51%, Basic Materials down by 1.04%, Energy down by 0.95%, Power down by 0.90% and Oil & Gas down by 0.78% were the top losing indices on BSE. 

The top gainers on the Sensex were TCS up by 2.30%, HCL Technologies up by 2.09%, Infosys up by 1.44%, Tech Mahindra up by 1.41% and Mahindra & Mahindra up by 1.02%. On the flip side, Ultratech Cement down by 2.46%, JSW Steel down by 1.93%, Tata Steel down by 1.81%, Adani Ports & SEZ down by 1.48% and Power Grid Corporation down by 0.97% were the top losers.

Meanwhile, CRISIL in its latest report has said that as the economic landscape in India continues to shine with optimism, Indian companies are increasingly turning their gaze towards international markets, seeking new avenues for growth. This surge in global expansion is anticipated to drive an increase in revenues for both global and domestic banks providing cross-border support.

It stated, in recent years, Indian corporations have significantly ramped up their international operations. Currently, approximately 83 per cent of large India-based corporations utilize at least one bank for cross-border trade and payments, a rise from 71 per cent two years ago. This increase reflects a broader trend of Indian firms seeking to leverage domestic economic strength to capitalize on global opportunities.

Ruchirangad Agarwal, Relationship Director and Head of Corporate Banking - Asia and Middle East at Coalition Greenwich (a division of CRISIL) highlighted this trend and said, ‘Over the past 12 months, we have seen an increase in activity by large corporates in India across various outbound, cross-border corridors into other markets within the Asia-Pacific region, into Europe, and North America as well.’ Not only large corporations are venturing abroad; approximately 75 per cent of mid-sized Indian companies are also engaging with banks for international trade needs. These businesses primarily use banking services for traditional trade, cross-border payments, and managing receivables from global suppliers and clients.

The CNX Nifty traded in a range of 24,196.50 and 24,099.70. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were TCS up by 2.29%, HCL Technologies up by 1.96%, Tech Mahindra up by 1.47%, Infosys up by 1.25% and Mahindra & Mahindra up by 1.16%. On the flip side, Divi's Lab down by 4.03%, Hero MotoCorp down by 3.17%, Coal India down by 3.00%, Ultratech Cement down by 2.35% and Dr. Reddy's Laboratories down by 2.14% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 30.28 points or 0.37% to 8,265.51, France’s CAC rose 22.52 points or 0.31% to 7,298.39 and Germany’s DAX gained 54.26 points or 0.3% to 17,866.31.

Asian markets settled mostly higher on Wednesday tracking Wall Street gains overnight due to signs of cooling inflation in the United States. Softer producer prices data fuelled bets that the US Federal Reserve will begin cutting interest rates soon, while investors are awaiting the US CPI report due later in the day. Japanese shares advanced and the yen stabilized after Japanese Prime Minister Fumio Kishida made the surprise announcement  that he would not run for re-election, paving the way for Japan to have a new leader in September. However, Chinese shares declined ahead of key retail sales, home prices and industrial production data on Thursday that might show the economy is still faltering. Meanwhile, New Zealand shares rallied sharply after the country's central bank slashed its benchmark rate for the first time since March 2020 and flagged more interest rate cuts over coming months.