Benchmarks end marginally lower on Friday

Indian equity benchmarks ended marginally lower on Friday, dragged by selling in Realty, Utilities and banking stocks as investors turned cautious ahead of key macroeconomic data, i.e. inflation and Index of Industrial Production (IIP) data. Markets made negative start and stayed in red for most part of the day as traders got anxious with a private report stating that India’s retail inflation, based on the Consumer Price Index, likely rose to 5.1% in September from 3.65% in August, primarily due to an unfavourable base effect. In September 2023, CPI inflation was at 5.02%. Some concern also came amid a private report stating that Reserve Bank of India's (RBI) decision to keep the repo rate unchanged and change the policy stance to neutral indicates that inflation is still the main concern for the central bank. Besides, a mixed trend in global equity markets and unabated foreign fund outflows also hit investors' sentiment. Exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,926.61 crore on Thursday.

However, losses were limited as traders took some support as the World Bank retained India's gross domestic product (GDP) growth forecast for FY25 at 7% propelled by higher agricultural production and robust employment growth from policy initiatives, spurring private consumption. Also, the World Bank in its South Asia Development Update said India's manufacturing output would increase by 9 per cent if more women joined the workforce. Some support also came as the Union Government has released tax devolution of Rs 1,78,173 crore to State Governments on October 10, 2024, as against the normal monthly devolution of Rs 89,086.50 crore, in view of the upcoming festive season and to enable States to accelerate capital spending, and also finance their development/ welfare related expenditure. Meanwhile, the Securities and Exchange Board of India (Sebi) has extended the deadline to implement direct payout of securities to demat account from October 14 to November 11 to ensure a hassle free implementation.

On the global front, European markets were trading mostly in green as official data showed the U.K. economy returned to growth in August, but the pace of expansion was weaker than in the first half of the year. The real economy grew 0.2 percent in August after showing nil growth in July and June. The rate came in line with expectations. Asian markets ended mixed on Friday as investors looked ahead to a weekend press briefing from China's finance minister, where details on the country's fiscal policy adjustments geared towards fostering economic revival will be revealed. 

Back home, on the sectoral front, stocks related to airline sector remained in watch as Credit rating agency ICRA’s report stated that the overall air cargo volumes likely to witness healthy growth of around 9-11% YoY to around 3.6-3.7 million tonnes in FY2025, supported by 11%-13% expansion in international and 4%-6% growth in domestic cargo. There was some reaction in pharma stocks with a private report that the Indian pharmaceutical market (IPM) grew by 5.3 per cent in September this year, driven by major therapies showing positive value growth. Among them, urology, cardiac, and dermatology therapies saw nearly double-digit value growth of 11.8 per cent, 9.7 per cent, and 9.5 per cent, respectively, driving the overall IPM growth.

Finally, the BSE Sensex fell 230.05 points or 0.28% to 81,381.36, and the CNX Nifty was down by 34.20 points or 0.14% to 24,964.25.      

The BSE Sensex touched high and low of 81,671.38 and 81,304.15 respectively. There were 16 stocks advancing against 14 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.44%, while Small cap index was up by 0.44%.

The top gaining sectoral indices on the BSE were Metal up by 1.25%, Healthcare up by 0.85%, Oil & Gas up by 0.64%, IT up by 0.59% and Consumer Durables up by 0.50%, while Realty down by 0.74%, Utilities down by 0.68%, Bankex down by 0.61%, Auto down by 0.45% and Power down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.63%, Tech Mahindra up by 1.57%, JSW Steel up by 1.02%, Hindustan Unilever up by 0.96% and Infosys up by 0.83%. On the flip side, TCS down by 1.84%, Mahindra & Mahindra down by 1.83%, ICICI Bank down by 1.64%, Maruti Suzuki down by 1.30% and Power Grid Corporation down by 1.30% were the top losers.

Meanwhile, after the Reserve Bank of India projected more than 7 per cent of GDP growth for the entire financial year 2024-25, State Bank of India (SBI) in its report has said that histrorically a rate cut with such a high growth has rarely, if ever, occurred in India or globally. The report also noted that it raises an interesting question as to whether RBI is preparing the grounds for an ensuing rate cut harmonizing with current momentum in growth. The report raises the intriguing possibility that the RBI might be laying the groundwork for a rate cut, despite the strong momentum in economic growth.

It points out that such a move would be unprecedented, apart from a brief period in 2016 when a new Monetary Policy Committee (MPC) had taken over. It stated ‘This raises an interesting question as to whether RBI is preparing the grounds for an ensuing rate cut harmonizing with current momentum in growth.’ The scenario is particularly noteworthy because, in most countries, including India, rate cuts typically occur when economic growth is slowing down, not when it is accelerating.

It highlighted that, barring the case of the Philippines, countries that have implemented rate cuts generally did so when their GDP growth was lower than the average of the preceding four quarters. In contrast, India’s projected growth remains robust, making the possibility of a rate cut all the more unusual. Besides, the report suggested that the RBI may be strategically offering markets ample time to prepare for an eventual shift in monetary policy. With foresight, the central bank appears to be signaling that it is keeping a close watch on both growth and inflation dynamics, possibly hinting at future policy adjustments.

The CNX Nifty traded in a range of 25,028.65 and 24,920.05. There were 28 stocks advancing against 22 stocks declining on the index. 

The top gainers on Nifty were Trent up by 2.52%, Hindalco up by 2.27%, HCL Technologies up by 1.73%, Tech Mahindra up by 1.56% and ONGC up by 1.35%. On the flip side, TCS down by 1.93%, Mahindra & Mahindra down by 1.80%, ICICI Bank down by 1.62%, Cipla down by 1.52% and Adani Enterprises down by 1.39% were the top losers.

European markets were trading mostly in green; France’s CAC rose 3.11 points or 0.04% to 7,544.70 and Germany’s DAX gained 11.25 points or 0.06% to 19,222.15, while UK’s FTSE 100 decreased 16.86 points or 0.2% to 8,220.87.