Benchmarks witness bloodbath as Middle East conflict deepens

Indian equity benchmarks made gap-down opening on Thursday amid rising tensions in the Middle East. Several reports indicate that the Israeli military has confirmed the deaths of eight soldiers, including a team commander, during ground operations in southern Lebanon. This escalation follows missile attacks from Iran targeting Tel Aviv, with Israel's military chief warning of an imminent response to Iran. Sensex and Nifty are trading under pressure with cut of over half a percent in early deals as the foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 5,579 crore on October 1. Some cautiousness came as the Sebi’s six-step plan to curb retail participation in speculative index derivatives may lead to a substantial drop in volumes - potentially by 30-40 per cent. Some pessimism came as Goods and services tax (GST) revenue growth rate declined to 6.5 per cent in September at Rs 1.73 lakh crore as the rise in collections from domestic transactions as well as imports slowed. In August 2024, the mop-up was Rs 1.75 lakh crore. 

On the global front, Asian markets are trading mostly lower, despite positive cues from Wall Street overnight, as traders remain cautious about escalating tensions in the Middle East following Iran's ballistic missile attack against Israel. Stronger-than-expected U.S. private sector employment data also dimmed prospects of aggressive rate cuts by the US Fed. Meanwhile, the services sector in Japan continued to expand in September, albeit at a slower pace. South Korea and China are closed for the National Day holiday, while Taiwan is closed due to Typhoon Krathon.

Back home, agriculture sector stocks are in focus as data made available by state-run weather bureau India Meteorological Department showed southwest monsoon rains in India hit four years high this season, experiencing about 108 per cent of the long period average at 934.8 mm. Above-normal monsoon rains helped farmers sow more crops this Kharif season and it bodes well for the overall agriculture sector, which is the mainstay source of livelihoods for millions of Indians. In stock specific development, Hindustan Zinc climbed as the company posts 2% increase in mined metal output.

The BSE Sensex is currently trading at 83713.97, down by 552.32 points or 0.66% after trading in a range of 83002.09 and 83752.81. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.54%, while Small cap index was down by 0.59%.

The only gaining sectoral indices on the BSE were Metal up by 0.52% and Basic Materials up by 0.14%, while Realty down by 1.82%, Auto down by 1.12%, Capital Goods down by 0.98%, Consumer discretionary down by 0.87% and Industrials down by 0.77% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 1.92%, Tata Steel up by 0.81%, SBI up by 0.36%, NTPC up by 0.34% and Infosys up by 0.24%. On the flip side, Asian Paints down by 2.31%, Tata Motors down by 1.97%, Larsen & Toubro down by 1.56%, Reliance Industries down by 1.36% and Kotak Mahindra Bank down by 1.18% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that corporate credit profile continued its robust performance in the first half of the current fiscal (H1FY25) with 202 issuers getting rating upgrades. Arvind Rao, Head of Credit Policy Group, Ind-Ra said large corporates and A-rated corporates witnessed a higher number of upgrades in the first half of the fiscal, taking the downgrade-to-upgrade (D/U) ratio to a low at 0.31 for the first half.

It said ‘The corporate credit profile continued its robust performance in 1HFY25, the fourth year in a row. During this period, Ind-Ra upgraded the ratings of 202 issuers, representing 20 per cent of the reviewed portfolio, while the ratings of 62 issuers were downgraded’. Rao further said that the D/U ratio is expected to moderate marginally in the current fiscal, compared to 0.37 in the 2023-24 fiscal.

He added ‘We expect issuer rating upgrades to outpace downgrades in the second half of the current fiscal’. Ind-Ra said that during the first half of the fiscal, large corporates saw a sharp improvement in rating upgrades. 'A' category and above ratings saw significantly lower rating downgrades. This was supported by continued robust economic growth amid sound domestic consumption demand amidst an uptick in rural demand, continued government focus on capex spending and strong services growth.

The CNX Nifty is currently trading at 25619.40, down by 177.50 points or 0.69% after trading in a range of 25451.60 and 25639.45. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 1.92%, ONGC up by 1.30%, Tata Steel up by 0.94%, SBI up by 0.33% and Grasim Industries up by 0.33%. On the flip side, BPCL down by 2.92%, Eicher Motors down by 2.84%, Asian Paints down by 2.32%, Shriram Finance down by 1.99% and Tata Motors down by 1.98% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 700.55 points or 3.12% to 21,743.18, Jakarta Composite fell 39.73 points or 0.53% to 7,523.53 and Straits Times was down by 6.29 points or 0.18% to 3,578.38, while Nikkei 225 surged 811.72 points or 2.15% to 38,620.48.