Benchmarks end deep in red on weak global cues

Indian equity benchmarks ended deep in the red on Friday in line with weak global equities ahead of release of jobs data in the US, which may help Federal Reserve take a decision on interest rates later this month. Markets made a negative start and gradually declined throughout the day, as market participants remained on sidelines ahead of the Goods and Services Tax (GST) Council meeting scheduled to hold on September 09, where members could likely decide on four options regarding tax treatment of health insurance. The cost to the exchequer could potentially range from nearly Rs 650 crore to Rs 3,500 crore. Foreign fund outflows also dented sentiments. As per NSE data, Foreign Institutional Investors (FII) were net sellers of Indian equities worth Rs 688.69 crore on September 05.

Markets continued to trade under pressure in late afternoon deals amid selling seen across the sectors. Traders got cautious, as Minister of Road Transport and Highways Nitin Gadkari said that India, an oil guzzler with a massive fossil fuel market, will find it difficult to cut crude imports by 25 per cent. India imported 87.7 per cent of its crude oil in 2023-24. Traders took a note of Boston Consulting Group (BCG) in association with FICCI and the Indian Banks’ Association (IBA) latest report titled ‘Banking for a Viksit Bharat’ stating that a 20-fold increase in the financial services sector is needed for India’s goal to achieve a $30 trillion Gross Domestic Product (GDP) by 2047. The report estimates that banks will need a capital base of $4 trillion, with one-third of this needing to be fresh capital deployment. Meanwhile, the Ministry of Trade and Industry of Singapore has said that India and Singapore agreed to cooperate in the development of the semiconductor ecosystem. Both countries signed a Memorandum of Understanding (MoU) for cooperation in the sector. 

On the global front, Asian markets ended mostly down on Friday, while European markets were trading lower, tracking weak cues from global markets after U.S. private payrolls data showed the weakest growth since 2021, heightening fears of a slowing labor market. All eyes now remain on the all-important U.S. jobs report due that could offer additional clues on the outlook for interest rates and the economy. Back home, on the sectoral front, stocks related to railway sector were in watch as the Railway Board said that the freight loading statistics for August 2024 highlighted the remarkable performance of Indian Railways as a total of 126.97 MT of freight was loaded in August alone, contributing to a cumulative total of 653.22 MT for the financial year 2024-25 up to August.

Finally, the BSE Sensex fell 1017.23 points or 1.24% to 81,183.93, and the CNX Nifty was down by 292.95 points or 1.17% to 24,852.15.    

The BSE Sensex touched high and low of 82,254.79 and 80,981.93 respectively. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.41%, while Small cap index was down by 0.96%.

The top losing sectoral indices on the BSE were Telecom down by 3.23%, PSU down by 2.48%, Oil & Gas down by 2.19%, Energy down by 2.09% and Bankex down by 1.93%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Asian Paints up by 1.13%, Bajaj Finance up by 1.03%, JSW Steel up by 0.79% and Hindustan Unilever up by 0.08%. On the flip side, SBI down by 4.40%, ICICI Bank down by 2.09%, NTPC down by 2.08%, HCL Technologies down by 1.95% and Reliance Industries down by 1.92% were the top losers.

Meanwhile, Commerce and Industry Minister Piyush Goyal has mooted the idea of introduction of border adjustment tax and suggested discussions on this with the steel industry with a view to protect the domestic players by providing a level-playing field against increasing imports. He said that this tax is in compliance with the World Trade Organization (WTO). The idea assumes significance as the industry is seeking protection from imports at predatory prices. 

The minister also asked the industry to target 500 million tonnes of steel production in the next 10 years. At present, the industry is eyeing 300 million tonnes of output by 2030. He suggested the industry find newer and better ways on lowering carbon emissions and promoting high productivity and quality steel in the country. He said ‘let’s try and utilise AI (artificial intelligence) to optimise our production, reduce waste, and improve efficiency across the value chain and work towards a circle economy in a bigger way’.

The minister added that the government was not able to extend the benefits of the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme to the sector due to a shortage of funds. He said ‘on the Border Adjustment Tax, electricity duty, iron ore duties, when you are exporting steel, we are loaded with these taxes. Imported steel which comes into India doesn’t have to pay all these taxes. Border Adjustment Tax is a WTO-compliant mechanism, which if all the industries - CII, FICCI, Assocham - everyone take out, we may be in a position to get traction and get it also into the country’.

The CNX Nifty traded in a range of 25,168.75 and 24,801.30. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 0.97%, Asian Paints up by 0.87%, JSW Steel up by 0.60%, LTIMindtree up by 0.36% and Nestle India up by 0.20%. On the flip side, SBI down by 4.26%, BPCL down by 2.34%, ICICI Bank down by 2.14%, NTPC down by 2.05% and HCL Technologies down by 2.04% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 27.1 points or 0.33% to 8,214.61, France’s CAC fell 10.02 points or 0.13% to 7,421.94 and Germany’s DAX lost 68.17 points or 0.37% to 18,508.33.

Asian markets ended mostly down on Friday ahead of key US jobs data later in the day, that could influence the pace and magnitude of rate cuts by the US Federal Reserve. Chinese shares declined after Zou Lan, head of Chinese central bank's monetary policy department, said there is room to lower the amount of cash banks must hold as reserves while it faces some constraints in cutting interest rates. Japanese shares fell as a stronger yen weighed on exporters, while data showed Japanese household spending rose less than expected in July. Meanwhile, Hong Kong's share market trading was cancelled due to a typhoon alert.