Post Session: Quick Review

Local markets lost steam in last leg of trade and ended near day’s low levels on Wednesday. Traders were cautious ahead of India’s inflation data due on tomorrow. Besides, U.S. consumer price inflation data going to be out later in the day. Most part of the day, markets managed to trade in green. As for broader indices, the BSE Mid cap index and Small cap index ended in red. 

Markets made cautious start and turned volatile tracking weakness in Asian counterparts and mixed cues from Wall Street overnight due to lingering concerns surrounding U.S. and Chinese growth. Further, markets managed to trade above neutral lines in late morning session. Traders took note of Fitch Ratings’ statement that India remains committed to reducing the budget deficit over the medium term, despite its focus on higher public capex and demands of the coalition government. It said India has achieved or outperformed its budget deficit targets in the last few years, thereby improving its fiscal credibility. Some support also came as exchange data showed Foreign Institutional Investors (FIIs) bought equities worth Rs 2,208.23 crore on Tuesday. In afternoon session, markets remained in green even after private report stated that India’s gross domestic product (GDP) growth to soften to 6.7% in FY25, below the Reserve Bank of India’s forecast of 7.2% and downside risks to its FY26 GDP forecast of 7.2% as growth signals are currently mixed. In late afternoon session, indices erased all their gains and slipped sharply, as traders avoided to take risk. Finally, Nifty and Sensex settled below the psychological 25,000 and 81,550 levels respectively. 

On the global front, European markets were trading mostly in green ahead of key U.S. consumer price inflation data due later in the day and a European Central Bank (ECB) policy meeting on Thursday. The ECB is expected to cut its deposit rate by 25 basis points on Sept. 12 and again in December. Asian markets ended mostly in red amid Bank of Japan board member Junko Nakagawa said the central bank would continue to raise interest rates if the economy and inflation move in line with the bank’s forecasts. Back home, automobile stocks remained in focus as Chief Economic Advisor (CEA) V Anantha Nageswaran has asked automobile manufacturers to invest in Research and development (R&D) in order to make a world-class industry.

The BSE Sensex ended at 81,523.16, down by 398.13 points or 0.49% after trading in a range of 81,423.14 and 82,134.95. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.52%, while Small cap index was down by 0.57%. (Provisional)

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.16% and FMCG was up by 0.15%, while Oil & Gas down by 2.25%, Energy down by 1.77%, PSU down by 1.73%, Metal down by 1.35% and Utilities was down by 1.29% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 2.18%, Bajaj Finance up by 1.57%, Sun Pharma Inds. up by 0.88%, Hindustan Unilever up by 0.58% and HCL Tech. up by 0.39%. On the flip side, Tata Motors down by 5.77%, NTPC down by 1.56%, Adani Ports down by 1.53%, Larsen & Toubro down by 1.51% and SBI down by 1.45% were the top losers. (Provisional)

Meanwhile, Fitch Ratings in a report has said that India remains committed to reducing the budget deficit over the medium term, despite its focus on higher public capex and demands of the coalition government. It said India has achieved or outperformed its budget deficit targets in the last few years, thereby improving its fiscal credibility.

The agency said India using RBI dividend to lower its fiscal deficit target for the fiscal year ending March 2025, reinforces its view that the country prefers fiscal consolidation over additional spending. It added still, India's deficit, and interest-to-revenue and debt ratios remain high compared with the 'BBB' category sovereign peers.

The rating agency said ‘...we believe its (India) government remains committed to reducing the budget deficit over the medium term, even amid the demands that governing in the coalition will impose on the newly elected administration - and despite the government's sustained focus on supporting economic growth through higher public capex’.

In the full Budget presented in July, the government lowered the fiscal deficit target to 4.9 per cent for the current financial year against 5.1 per cent estimated in February's interim Budget. In May, the RBI board approved a Rs 2.11 lakh crore dividend to the government for 2023-24 fiscal. Recently, Fitch Ratings affirmed India's sovereign rating at 'BBB-' with a stable outlook citing a strong medium-term growth outlook and solid external financing position.

The CNX Nifty ended at 24,918.45, down by 122.65 points or 0.49% after trading in a range of 24,885.15 and 25,113.70. There were 12 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bajaj Auto up by 3.94%, Asian Paints up by 2.20%, Bajaj Finance up by 1.43%, Britannia up by 0.65% and Shriram Finance up by 0.61%. On the flip side, Tata Motors down by 5.74%, ONGC down by 3.48%, Wipro down by 2.17%, SBI down by 1.80% and Hindalco down by 1.79% were the top losers. (Provisional)

European markets were trading mostly in green; France’s CAC rose 11.15 points or 0.15% to 7,418.70 and Germany’s DAX was up by 31.02 points or 0.17% to 18,296.94. On the flip side, UK’s FTSE 100 was down by 6.45 points or 0.08% to 8,199.53. 

Asian markets settled mostly down on Wednesday tracking Wall Street’s mixed close overnight with caution ahead to August's CPI inflation report that could influence the Federal Reserve's policy moves next week. Market sentiments were weakened further as democratic candidate Kamala Harris put her republican rival Donald Trump on the defensive in a combative presidential debate with a stream of attacks on his fitness for office, his support of abortion restrictions and his myriad legal worries. Chinese shares declined as the US House of Representatives passed the Biosecure Act, restricting US ties with specific Chinese biotech firms to safeguard national security. Japanese shares fell and the yen surged to an eight-month high after Bank of Japan official hinted at more monetary tightening.