Key indices end flat amid volatility

Indian equity benchmarks ended on a flat note in the volatile session on Tuesday as traders remained on sidelines ahead of F&O monthly expiry. Markets made a cautious start but soon entered into green terrain as traders took support with ICRA’s report stating that business opportunities worth Rs 2 lakh crore are expected to open up for engineering, procurement, and construction (EPC) players over the next decade for the completion of four priority interlinking river (ILR) projects.  Some support also came as S&P Global Ratings retained India's growth forecast at 6.8 per cent for the current fiscal and said it expects the RBI to start cutting interest rates in its October monetary policy review. In the economic outlook of Asia Pacific, S&P Global Ratings also retained its GDP growth forecast for the 2025-26 fiscal at 6.9 per cent and said solid growth in India will allow the Reserve Bank to focus on bringing inflation in line with its target. 

However, markets erased gains to trade marginally lower in early afternoon deals as investors weighed escalating tensions between Israel and Hezbollah and kept a close eye on oil price movements for direction. Israeli airstrikes on Hezbollah strongholds in Lebanon early Monday resulted in the deaths of at least 492 people, including 35 children, according to Lebanon's health ministry. Some concern also came as the annual Periodic Labour Force Survey report stated that India's unemployment rate remained unchanged at 3.2% in 2023-24 (July-June), as female unemployment rose to 3.2 percent from 2.9 percent in the previous year. But selling proved short-lived as key gauges once again entered into green terrain in second half of trading session amid foreign fund inflows. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 404.42 crore on Monday. Some optimism also came as private report stated that India’s aspiration to be a $7-trillion economy by the end of the decade can be achieved as a strong Prime Minister Narendra Modi rolls out the digital and physical infrastructure that’s drawing multinationals involved in manufacturing advanced products and services. But, in the final minutes of trade, markets failed to hold gains and ended flat, dragged by losses in FMCG, Telecom and Realty shares. 

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading higher after China's central bank unveiled its biggest stimulus since the pandemic to support the economy and counter a prolonged downturn in the property sector. The central bank said it will lower borrowing costs and inject more liquidity into the system that would free up more money for lending. Regulators also unveiled plans to support stable development of the stock market.

Finally, the BSE Sensex lost 14.57 points or 0.02% to 84,914.04, and the CNX Nifty was up by 1.35 points or 0.01% to 25,940.40.     

The BSE Sensex touched high and low of 85,163.23 and 84,716.07 respectively. There were 15 stocks advancing against 15 stocks declining on the index. 

The broader indices ended mixed; the BSE Mid cap index rose 0.21%, while Small cap index was down by 0.04%.

The top gaining sectoral indices on the BSE were Metal up by 2.78%, Power up by 1.38%, Utilities up by 1.18%, Basic Materials up by 0.95%, Oil & Gas up by 0.61% while, FMCG down by 0.75%, Telecom down by 0.57%, Realty down by 0.32%, Consumer Durables down by 0.31%, Bankex down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.29%, Power Grid Corporation up by 2.65%, Tech Mahindra up by 1.88%, HCL Technologies up by 1.49% and Mahindra & Mahindra up by 0.78%. On the flip side, Hindustan Unilever down by 2.56%, Ultratech Cement down by 1.54%, Kotak Mahindra Bank down by 1.23%, Indusind Bank down by 1.20% and Titan Company down by 1.00% were the top losers.

Meanwhile, ICRA in its latest report has said that business opportunities worth Rs 2 lakh crore are expected to emerge for engineering, procurement, and construction (EPC) entities over the next decade, with the completion of four priority interlinking river (ILR) projects. It stated approximately a third of this value (around Rs 80,000 crore) is projected to be awarded over the next four years to companies involved in large-scale irrigation projects.

The National Water Development Agency (NWDA) has identified 30 ILR projects, comprising 16 peninsular river links and 14 Himalayan river links, to be jointly funded by the central and state governments. The central government’s focus on the water sector has increased significantly in recent years. ICRA highlighted this focus, noting a substantial rise in the budgetary allocation to the Ministry of Jal Shakti (MoJ), surpassing Rs 78,000 crore in 2024-25 (revised budget estimates), largely driven by significant funding for the Jal Jeevan Mission.

Chintan Lakhani, Vice President and Sector Head - Corporate Ratings at ICRA, stated ‘The four priority links are just the beginning of the ILR project’s decade-long implementation plan. While the current share of these projects in the ministry’s budget is minimal, at 5 per cent (i.e., Rs 3,908 crore), it is expected to increase as more projects are approved and construction gathers momentum.’

The NWDA has prioritised four projects–Ken-Betwa, Kosi-Mechi, Parbati-Kalisindh-Chambal, and Godavari-Cauvery–for early implementation. ICRA estimates that these priority links will be completed at a cost of Rs 2.6 lakh crore by 2034-35. Besides, it said the Godavari-Cauvery link is the largest of the four (accounting for 45 per cent of the total project cost), while the Kosi-Mechi link is the smallest (at 4 per cent). The Ken-Betwa project, which represents 21 per cent of the cost of the priority links, is already under implementation.

The CNX Nifty traded in a range of 26,011.55 and 25,886.85. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.32%, Hindalco up by 4.12%, Power Grid Corporation up by 2.77%, Tech Mahindra up by 1.97% and Adani Enterprises up by 1.86%. On the flip side, SBI Life Insuran down by 2.78%, Hindustan Unilever down by 2.51%, Grasim Industries down by 1.61%, Ultratech Cement down by 1.51% and Shriram Finance down by 1.39% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 31.39 points or 0.38% to 8,291.10, France’s CAC rose 119.41 points or 1.59% to 7,627.49 and Germany’s DAX gained 135.22 points or 0.72% to 18,982.01.

Asian markets ended mostly higher on Tuesday amid increasing expectations that the US central bank will lower borrowing costs for the second consecutive meeting, following last week’s 50 basis points cut. Chinese shares rose after its central bank PBoC unveiled its biggest stimulus measures since the pandemic to support the Chinese economy. Japanese shares gained as traders returned from a holiday. Meanwhile, BoJ Governor Kazuo Ueda has reiterated his cautious tone and said the central bank can wait to act until economic uncertainties become clearer, dampening speculation of an October rate hike.