Benchmarks end lower on Wednesday

Indian equity benchmarks erased most of their initial losses but ended lower on Wednesday following a decline in Asian markets driven by concerns over US economic growth. Markets made a gap down opening and remained in red for whole day, as traders got cautious with Credit rating agency ICRA’s report stating that the increasing delinquencies in the microfinance sector, which is likely to push up the Non-banking finance companies - microfinance institutions (NBFC-MFI) credit costs to 320-340 bps in FY2025 from 220 bps in FY2024. The evolving asset quality risks will dampen sectoral growth and earnings in the current fiscal. ICRA expects NBFC-MFIs’ AUM growth to dip to 17-19% in FY2025 from 29% in FY2024. Some concern came as a private report stated that despite robust macro-economic growth, India grapples with micro unpredictability due to technology among others. 

However, selective buying in heavyweight stocks helped trim the losses towards the end. Traders took some support with report that India's services sector experienced its fastest growth in five months this August, driven by resilient demand and easing inflationary pressures, according to HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global. India's PMI climbed to 60.9 in August, up from July's 60.3, surpassing the preliminary estimate of 60.4. Some support also came with the government data showing that foreign direct investment in India jumped 47.8 per cent to $16.17 billion in April-June this fiscal on healthy inflows in services, computer, telecom and pharma sectors. FDI inflows were at $10.94 billion in April-June 2023-24. Traders took note of External Affairs Minister S Jaishankar’s statement that ties between India and Singapore have become 'extremely strong' in the last two decades, and that the time is ripe for India and Singapore to take their bilateral relationship to the next level. But, markets failed to erase all the losses and ended marginally lower. 

On the global front, European markets were trading lower as investors fretted about weakening U.S. and Chinese growth. Asian markets settled mostly down on Wednesday as weak manufacturing data added to concerns that the U.S. economy could be headed to a recession. Investors also looked ahead to the release of all-important U.S. jobs data on Friday for potential clues to Federal Reserve rate cuts. Back home, on the sectoral front, auto stocks were in focus with a private report that the domestic passenger vehicle industry volumes declined by low single digit in August 2024 as compared with August 2023, because of weak retail demand trends and higher inventory levels at the dealerships. 

Finally, the BSE Sensex fell 202.80 points or 0.25% to 82,352.64, and the CNX Nifty was down by 81.15 points or 0.32% to 25,198.70.    

The BSE Sensex touched high and low of 82,408.54 and 81,833.69 respectively. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.15%, while Small cap index was down by 0.26%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.94%, Realty up by 0.60%, FMCG up by 0.40%, Basic Materials up by 0.25% and Consumer discretionary up by 0.07%, while Metal down by 1.11%, IT down by 0.91%, PSU down by 0.88%, Telecom down by 0.82%, TECK down by 0.71% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.48%, Hindustan Unilever up by 1.74%, Ultratech Cement up by 1.31%, Sun Pharma up by 1.18% and Reliance Industries up by 0.43%. On the flip side, ICICI Bank down by 1.11%, SBI down by 1.06%, Axis Bank down by 1.05%, Mahindra & Mahindra down by 1.00% and Infosys down by 0.95% were the top losers.

Meanwhile, the government data has showed that foreign direct investment (FDI) equity inflow in India jumped 47.8 per cent to $16.17 billion in April-June this fiscal (FY25) on healthy inflows in services, computer, telecom and pharma sectors. FDI inflows were at $10.94 billion in April-June 2023-24. The data showed that overseas inflows in May rose to $5.85 billion and in June to $5.41 billion from $2.67 billion and $3.16 billion, respectively, in the year-ago period. In April, FDI inflows were down marginally at $4.91 billion against $5.1 billion in April 2023.

The Department for Promotion of Industry and Internal Trade (DPIIT) data showed total FDI, which includes equity inflows, reinvested earnings and other capital, grew by 28 per cent to $22.49 billion during the first quarter of this fiscal from $17.56 billion in April-June 2023-24. During the period, FDI equity inflows rose from major countries, including Mauritius, Singapore, the US, the Netherlands, the UAE, Cayman Islands and Cyprus. However, inflows declined from Japan, the UK, and Germany.

Sectorally, inflows rose in services, computer software and hardware, telecommunication, pharma and chemicals. The data also showed that Maharashtra received the highest inflow of $8.48 billion during the first quarter of this last fiscal. It was followed by Karnataka ($2.28 billion), Telangana ($1.08 billion) and Gujarat ($1.02 billion). FDI inflows declined in Delhi and Rajasthan compared to the year-ago period.

The CNX Nifty traded in a range of 25,216.00 and 25,083.80. There were 18 stocks advancing against 31 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Asian Paints up by 2.50%, Grasim Industries up by 1.91%, Hindustan Unilever up by 1.71%, Ultratech Cement up by 1.23% and Sun Pharma up by 1.19%. On the flip side, Wipro down by 3.06%, Coal India down by 2.81%, ONGC down by 2.27%, Hindalco down by 1.90% and LTIMindtree down by 1.15% were the top losers. 

European markets were trading lower; UK’s FTSE 100 decreased 49.81 points or 0.6% to 8,248.65, France’s CAC fell 69.43 points or 0.92% to 7,505.67 and Germany’s DAX lost 135.51 points or 0.72% to 18,611.60.

Asian markets settled mostly down on Wednesday. Taiwan and South Korean shares plummeted after an overnight rout in Wall Street tech shares following a steep drop for AI investor darling Nvidia and other chip shares. Japanese shares dented by tracking weak US manufacturing data that fuelled concerns that the American economy could be headed to a recession. Traders were cautiously awaiting Friday's upcoming US payrolls data for more clues on the economic and rate outlook. Meanwhile, Chinese and Hong Kong shares fell after a private survey showed growth in China's services sector activity slowed in August.