Key gauges end lower amid global uncertainty, profit-taking

Indian equity benchmarks witnessed a sharp sell-off on Monday and ended with losses of around one and half percent, due to heavy selling in frontline stocks Reliance Industries, Axis Bank and Mahindra & Mahindra amid rising geopolitical risks in the Middle East and weakness in Japanese markets. The markets opened lower and extended the losses as the day progressed as investors avoided to take any long positions ahead of key economic indicators from India, including manufacturing, services, composite indices, current account deficit (CAD), external debt, and government budget figures, to be release during this week. Foreign fund outflows also added to the gloom. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,209.10 crore on Friday, according to exchange data. 

The negative trade persisted till the end, with both indices closing near their day’s lows, as traders were cautious with the Reserve Bank's former governor Raghuram Rajan’s statement that with 7 per cent economic growth, India is not creating enough jobs as reflected by the number of applicants for vacant posts in some states. He suggested the government needs to focus on promoting labour-intensive industries to generate employment. Investors overlooked commerce and industry minister Piyush Goyal’s statement that actual investments under the Production Linked Incentive (PLI) schemes were Rs 1.46 lakh crore till August and expected to increase to Rs 2 lakh crore in the coming years. This has resulted in production/sales worth Rs 12.5 lakh crore and employment generation of around 9.5 lakh (direct & indirect) which is expected to reach 12 lakh soon. Traders also paid no heed towards reports that the Department for Promotion of Industry and Internal Trade (DPIIT) is working on about 100 rules and laws of various departments of government to bring Jan Vishwas 2.0 bill, with an aim to achieve a greater ease of doing business environment in the country. The work is being done as the priority area under the first 100-day thrust of the present government. 

On the global front, European markets were trading lower after official data showed the U.K. economy grew at a slower-than-estimated pace in the second quarter on weaker industrial and construction sectors. Asian markets finished mostly lower on Monday, as Middle East worries escalated and investors awaited comments from ECB President Christine Lagarde and Federal Reserve Chair Jerome Powell for additional clues on the rate outlook. 

Back home, on the sectoral front, textile stocks were in watch as the Union Minister of Textiles Giriraj Singh said the textiles industry will grow to $350 billion by 2030 generating crores of jobs. He added the 100-day achievements lay the foundation for achieving the set targets by 2030 and focus on all aspects of the value chain of the textiles sector. Metal stocks were in focus with a private report that the growth trajectory of iron ore continues as production for the current fiscal year 2024-25 (April-August) surged to 116 MMT during the April-August period, up from 108 MMT during the same timeframe last year, marking a healthy increase of 7.4 per cent. 

Finally, the BSE Sensex fell 1272.07 points or 1.49% to 84,299.78, and the CNX Nifty was down by 368.10 points or 1.41% to 25,810.85.     

The BSE Sensex touched high and low of 85,359.65 and 84,257.14 respectively. There were 5 stocks advancing against 25 stocks declining on the index. 

The broader indices ended mixed; the BSE Mid cap index fell 0.28%, while Small cap index was up by 0.07%.

The few gaining sectoral indices on the BSE were Metal up by 1.06% and Basic Materials up by 0.60%, while Auto down by 1.91%, Bankex down by 1.82%, Realty down by 1.80%, Telecom down by 1.19% and Consumer Discretionary down by 1.17% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 2.82%, NTPC up by 1.27%, Tata Steel up by 1.17%, Asian Paints up by 0.55% and Titan Company up by 0.19%. On the flip side, Reliance Industries down by 3.23%, Axis Bank down by 3.12%, Mahindra & Mahindra down by 2.70%, ICICI Bank down by 2.58% and Nestle down by 2.12% were the top losers.

Meanwhile, in order to meet the growing energy demands of the country, Crisil Ratings has said that India’s oil marketing companies (OMCs) are expected to add 35-40 million tonnes (MT) of crude oil refining capacity by the end of the fiscal 2029-30. This will take the total installed capacity of the country for crude refining capacity to 295 MT by 2030.

This expansion will be driven by the projected growth in domestic oil consumption as India's existing refining capacity is already operating at optimal levels of 100-103 per cent utilisation. The expansion will require a capital expenditure of around Rs 1.9-2.2 lakh crore, with most of the capacity additions being brownfield expansions.

Further, it stated that these investments are expected to carry low project risk, and steady returns from the refining business will help strengthen the credit profiles of OMCs. Over the past decade, India has seen a capacity increase of 42 MT, reaching 257 MT in fiscal 2024. This was primarily in response to growing domestic demand, as exports remained steady at 60-65 MT per year during this period.

The CNX Nifty traded in a range of 26,134.70 and 25,794.10. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.93%, NTPC up by 1.37%, Hindalco up by 1.14%, Britannia Industries up by 1.06% and Tata Steel up by 0.82%. On the flip side, Hero MotoCorp down by 4.03%, Axis Bank down by 3.29%, Trent down by 3.20%, Reliance Industries down by 3.13% and Bharat Electronics down by 3.05% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 49.32 points or 0.59% to 8,271.44, France’s CAC fell 122.14 points or 1.57% to 7,669.65 and Germany’s DAX lost 105.41 points or 0.54% to 19,368.22.

Asian markets finished mostly lower on Monday, on risk aversion ahead to this week's US economic data. Sharp selloff in technological and financial sector stocks pressured the local indices. Japan's Nikkei tumbled on risk of more hawkish measures under new Prime minister elect Shigeru Ishiba. Weaker industrial data and sluggishness in export-oriented stocks with the stronger local currency yen also saddled the index further. Bucking the trend, Shanghai and Hang Seng stocks soared amidst optimism over Chinese economic rebound with the latest slew of aggressive stimulus measures from Beijing.