Markets snap 2-day gaining spree

After two days of gains, Indian equity benchmarks ended lower by around half percent on Wednesday amid a volatile trading session, led down by selling in Oil & Gas, Energy and PSU stocks coupled with weakness across Asian markets. After making a cautious start, key gauges managed to keep their heads above water in first half of trading session, as traders took support with 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. In a report, 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. Besides, External Affairs Minister S Jaishankar has said India is open to pursuing business with China, but the question is in what sector and under what terms. 

However, key indices failed to hold gains and slipped into red in late afternoon deals, as investors braced for the release of the US CPI data later today. 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 tomorrow. Some concern came with a private report stating 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.   

On the global front, European markets were trading higher even as official data showed the U.K. economy unexpectedly stagnated in July. Real gross domestic product showed nil growth for the second straight month as falls in production and construction was offset by an increase in services output, the Office for National Statistics reported. Asian markets settled mostly down on Wednesday 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 later in the day that could offer additional clues on the outlook for interest rates and the economy.

Back home, on the sectoral front, there was some reaction in coal and power stocks as the government data showed that coal supply to the power sector in August dropped 5.4 per cent to 58.07 million tonnes (MT) as compared to the year-ago period. The supply of coal to the power sector was 61.43 MT in August of the previous fiscal year. IT stocks also were in watch with a private report that the Indian IT sector is forecasted to witness a robust double-digit Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of 17.5% from FY24 to FY27.

Finally, the BSE Sensex fell 398.13 points or 0.49% to 81,523.16, and the CNX Nifty was down by 122.65 points or 0.49% to 24,918.45.    

The BSE Sensex touched high and low of 82,134.95 and 81,423.14 respectively. There were 7 stocks advancing against 23 stocks declining on the index.

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

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.16% and FMCG 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 down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.18%, Bajaj Finance up by 1.57%, Hindustan Unilever up by 0.58%, Sun Pharma up by 0.52% and Bajaj Finserv up by 0.41%. On the flip side, Tata Motors down by 5.74%, SBI down by 1.83%, NTPC down by 1.76%, Adani Ports &SEZ down by 1.58% and Larsen & Toubro down by 1.51% were the top losers.

Meanwhile, 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. He also asked them to focus on improving the global NCAP (New Car Assessment Programme) ratings of their products so that exports get further push. 

CEA said the Indian private sector roughly contributes about one third of the overall R&D spending in the economy while the remaining two thirds comes from the government. He said ‘again, our studies show that it is not due to lack of government support for R&D spending in general, but it also depends on our ability to think over a much longer horizon...seeing the R&D expenditure as an investment, rather than as an expenditure against the profit and loss account’. So in that sense, he said enhancing the investment in R&D and becoming global leaders, it will be an important contributor to the 'aatmanirbharta' programme in terms of placing Indian manufacturing in the global roadmap. Besides, he said, auto manufacturers should not see public mobility as a form of competition but as a complement.

Talking about the Indian economy, Nageswaran said ‘it is doing quite well amidst the global uncertainty. Thanks to the strong corporate and financial sector balance sheets, and thanks to massive investments in supply side infrastructure in the last 8-10 years...our potential growth of the economy is somewhere between 6.5-7 per cent and if we sustain some more reforms, especially at the state and local government level, then it is possible for us to raise this number to somewhere between 7-7.5 per cent’. He added that sustainably, going towards 8 per cent would also require the global economy growing well.

The CNX Nifty traded in a range of 25,113.70 and 24,885.15. There were 16 stocks advancing against 34 stocks declining on the index. 

The top gainers on Nifty were Bajaj Auto up by 4.03%, Asian Paints up by 2.23%, Bajaj Finance up by 1.65%, Shriram Finance up by 0.86% and Britannia Industries up by 0.80%. On the flip side, Tata Motors down by 5.73%, ONGC down by 2.94%, Wipro down by 1.85%, Larsen & Toubro down by 1.56% and Adani Enterprises down by 1.55% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 2.2 points or 0.03% to 8,208.18, France’s CAC rose 16.14 points or 0.22% to 7,423.69 and Germany’s DAX gained 54.43 points or 0.3% to 18,320.35.