Benchmarks end higher on Monday

Indian equity benchmarks bounced back from early lows and ended higher on Monday led by gains in FMCG, Banking and Consumer Durables stocks. Markets opened on a weak note and traded with volatility in first half, weighed down by concerns over a potential recession in the US following weaker-than-expected jobs data. Some concern also came as exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 620.95 crore on Friday.  Traders also remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out later in the week.

However, markets stabilized in second half of trading session and managed to close in the green, as traders found support with RBI data showing that India's forex reserves jumped by $2.299 billion to a new high of $683.987 billion for the week ended on August 30. In the previous reporting week, the forex reserves had jumped by $7.023 billion to a high of $681.688 billion. Some support also came with a private report stating that food inflation, which has moderated a bit lately is further expected to come down in the coming months, citing progressing Southwest monsoon and sufficient water in reservoirs across regions. Meanwhile, Union Minister of Commerce and Industry, Piyush Goyal has suggested that the government should have a working group on tourism between the nations of the Mediterranean and India, as there is a huge potential for cooperation and mutual benefit. He said that India offers a large market for Mediterranean goods and services given the close connection both nations have shared over the decades. 

On the global front, European markets were trading higher ahead of consumer price inflation figures from Germany, Spain and France due later in the week. The governing council of the European Central Bank will meet on Thursday, and it is widely expected that the board will reduce interest rates for the second time this year. Asian markets settled mostly down on Monday as weaker-than-expected U.S. job growth signaled an economic slowdown and fueled worries that the Federal Reserve may have waited too long to cut interest rates.

Back home, on the sectoral front, telecom stocks were in focus with a private report that India has emerged as the world’s second-largest market for 5G smartphones, trailing only behind China. 5G smartphones are becoming increasingly prominent across various price ranges in India. Defence stocks were buzzing amid report that the potential market opportunity for Indian defence companies is expected to rise at 14 per cent CAGR (compound annual growth rate) over financial year (FY) 2024-FY 2030E (estimated), driven by the government’s indigenisation focus on export opportunity. 

Finally, the BSE Sensex rose 375.61 points or 0.46% to 81,559.54, and the CNX Nifty was up by 84.25 points or 0.34% to 24,936.40.    

The BSE Sensex touched high and low of 81,653.36 and 80,895.05 respectively. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.28%, while Small cap index was down by 0.65%.

The top gaining sectoral indices on the BSE were FMCG up by 1.65%, Bankex up by 1.15%, Consumer Durables up by 0.73% and Consumer Discretionary up by 0.04%, while Oil & Gas down by 1.63%, Energy down by 1.22%, PSU down by 1.11%, Metal down by 0.77% and IT down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.95%, ICICI Bank up by 2.43%, ITC up by 1.96%, Kotak Mahindra Bank up by 1.59% and Indusind Bank up by 1.40%. On the flip side, Tech Mahindra down by 2.68%, NTPC down by 1.32%, Tata Steel down by 1.22%, Tata Motors down by 0.96% and Power Grid Corporation down by 0.41% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that education loans, primarily those to fund courses overseas, will continue to be among the fastest-growing segments for non-banking financial companies (NBFCs) because of rising demand for higher education. Their assets under management (AUM) is expected to grow at a healthy clip of 40-45 per cent to cross Rs 60,000 crore this fiscal.

It stated after robust growth of over 80 per cent and 70 per cent in fiscals 2023 and 2024, respectively, NBFCs’ education loan assets under management (AUM) rose to Rs 43,000 crore as on March 31, 2024. On the asset quality front, it said metrics should remain stable despite country-specific concerns.

Ajit Velonie, Senior Director, CRISIL Ratings, said ‘The number of Indian students studying abroad is estimated to have doubled in the past five years to around 13.4 lakh as of last fiscal. Only a tenth are being funded by these NBFCs, and even including education loans by banks, the financed quantum is not much higher. What that indicates is that a large portion of overseas education is being funded through alternative means - informal financing, self-funding, or perhaps other forms of loans’.

He added ‘That shows education loan companies have significant headroom for growth. Rising ticket sizes because of ascending tuition fees, inflation and living expenses are also tailwinds. Strong micro-market intelligence and fast turnaround times have allowed NBFCs to carve out a niche in the education loans space. Their specialised business model–backed by strong understanding of relevant geographies, courses, universities, tenures and profiles of students and their families–affords customisation of products, enabling better assessment of employability and risk-adjusted pricing.’

The CNX Nifty traded in a range of 24,957.50 and 24,753.15. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.85%, Shriram Finance up by 2.30%, ICICI Bank up by 2.09%, ITC up by 1.95% and Britannia Industries up by 1.74%. On the flip side, ONGC down by 2.91%, Tech Mahindra down by 2.48%, BPCL down by 1.19%, Tata Steel down by 1.14% and Hindalco down by 1.06% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 49.49 points or 0.6% to 8,230.96, France’s CAC rose 44.38 points or 0.6% to 7,396.68 and Germany’s DAX gained 93.58 points or 0.51% to 18,395.48.

Asian markets settled mostly down on Monday tracking Friday's weakness on Wall Street with caution ahead of August US inflation data due this week and the US central bank's policy meeting on September 17 and 18, while weaker than expected US job growth fuelled worries that the central bank might have waited too long to cut interest rates. Moreover, lingering worries over US and Chinese growth has also dampened sentiments. Chinese and Hong Kong shares led regional losses as weaker than forecasted inflation figures deepened economic worries. Japanese markets declined in cautious trade as technology shares followed their U.S. peers lower. Revised data from the Cabinet Office showed that, Japan's GDP expanded by an annualised 2.9% in the second quarter against preliminary estimate of 3.1%.