Domestic indices trade with cut of around one and half percent

Domestic equity indices magnified their losses and were trading with cut of around one and half percent in late morning deals as investors curbed their risk appetite amid the escalating Middle East conflict. Concerns over a potential escalation in the Middle East grew after Iran launched ballistic missiles at Israel earlier in the week, fueling fears that oil supplies from the region could be disrupted if the conflict intensifies. Further, cautiousness also prevailed in the markets 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. On the BSE sectoral front, most of the sectoral indices were trading in red, with only exception of metal counter. Stocks from Realty, Capital Goods, Auto, Industrials, Consumer Disc counters were the prominent losers. Oil and gas industry related stocks were in focus amid concerns that escalating tensions in the Middle East could threaten supplies from major producers. Brent crude briefly surpassed $75 per barrel, while West Texas Intermediate topped $72, with both benchmarks rising nearly 5% over the past three days.

On the global front, Asian markets were trading mostly in red as the China stimulus rally appeared to ease. Back home, in the stock specific development, Dabur India (Dabur) slipped after the management said it expects consolidated revenue to decline in mid-single digits in July to September quarter (Q2FY25) as heavy rain and floods across the parts of the country impacted out of home consumption and consumer offtake. 

The BSE Sensex is currently trading at 83037.02, down by 1229.27 points or 1.46% after trading in a range of 82870.43 and 83752.81. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.31%, while Small cap index down by 1.30%.

The only gaining sectoral index on the BSE were Metal up by 0.02%, while Realty down by 3.06%, Capital Goods down by 2.11%, Auto down by 1.93%, Industrials down by 1.76% and Consumer Disc down by 1.68% were the top losing indices on BSE.

The few gainers on the Sensex were JSW Steel up by 2.06%, Tata Steel up by 0.51%, SBI up by 0.25% and Ultratech Cement up by 0.03%. On the flip side, Asian Paints down by 3.97%, Tata Motors down by 3.19%, Larsen & Toubro down by 3.05%, Axis Bank down by 2.52% and Kotak Mahindra Bank down by 2.28% were the top losers.

\Meanwhile, amid suggestions for excluding food inflation while setting benchmark interest rates, former Reserve Bank of India (RBI) Governor Raghuram Rajan has said that he is against excluding food prices from headline inflation, as it would erode the ‘great faith’ of people in the central bank, which has been mandated by the government to keep inflation in check. He further said it is best that inflation target a basket which is what the consumer consumes because that affects the consumers perception of inflation and ultimately inflationary expectations.  

He said ‘you cannot affect food prices in the short run, but if food prices stay high for a long time that does imply there are constraints on producing food relative to the demand, which means to balance that you have to bring down inflation in other areas, which is what the central banks can do.’ 

According to him, the RBI can target the aggregate price level. The weightage of food in the overall consumer price inflation, which stands at 46 per cent currently, was done in 2011-12, and needs to be revisited. India introduced the inflation-targeting framework in 2016 under which the Reserve Bank of India is mandated to keep retail inflation at 4 per cent, with a margin of 2 per cent on either side. The benchmark policy rates are decided bi-monthly by the RBI on the basis of movement in consumer price index, which includes food, fuel, manufactured goods and select services. The RBI projects retail inflation for 2024-25 at 4.5 per cent, lower than 5.4 per cent in the last fiscal. 

The CNX Nifty is currently trading at 25422.25, down by 374.65 points or 1.45% after trading in a range of 25411.60 and 25639.45. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.23%, ONGC up by 0.80%, Tata Steel up by 0.72%, Dr. Reddy's Lab up by 0.35% and SBI up by 0.33%. On the flip side, BPCL down by 4.07%, Asian Paints down by 3.93%, Eicher Motors down by 3.75%, Shriram Finance down by 3.53% and Tata Motors down by 3.28% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 453.57 points or 2.06% to 21,990.16, Jakarta Composite plunged 40.15 points or 0.53% to 7,523.11 and Straits Times fell 0.76 points or 0.02% to 3,583.91. However, Nikkei 225 surged 775.65 points or 2.01% to 38,584.41.