Key gauges snap 2-day winning streak ahead of US Fed Rate Decision

Indian equity benchmarks took a breather on Thursday after two days of strong gains, with profit booking weighing on the markets ahead of a crucial monetary policy meeting of the U.S. Federal Reserve. After making a slightly positive start, markets fell sharply and remained under pressure throughout the session, as traders turned cautious with RBI Governor Shaktikanta Das’ statement that capital expenditure spending of the centre and states are picking up but high subsidy outgo is a concern. He said subsidy outgo was very high and government expenditure in the first quarter is pulling down the GDP numbers. Some concern also came as SBI report stated that they see Q2 real GDP growth slowing down further to 6.5 per cent in the September quarter of this fiscal year. Amid concerns over the country's economic growth rate and if it is slowing down, it said they expect FY25 growth to come closer to 7 per cent.

Markets continued to reel under pressure in late afternoon session amid unabated foreign fund outflows. Foreign institutional investors (FIIs) offloaded equities worth Rs 4,445.59 crore on Wednesday, according to exchange data. Traders overlooked a private report stating that urban and rural markets have shown a sequential recovery in consumer demand and rural areas continue to surpass urban areas in volume growth across most regions of India. Separately, highlighting the Government’s efforts to reduce compliance burdens and decriminalise laws to promote ease of doing business, Minister of Commerce and Industry, Piyush Goyal has emphasized the need to transform India into a powerhouse of engineering exports as the country advances towards the Viksit Bharat goal. 

On the global front, European markets were trading higher ahead of interest-rate decisions from the Bank of England and the U.S. Federal Reserve later in the day, with both the central banks expected to cut rates by 25 basis points. Asian markets settled mostly higher on Thursday as upbeat Chinese trade data offset concerns over the impact of Trump's policies on international trade, immigration and other key issues. China's exports grew 12.7 percent on a yearly basis in October, following an increase of 2.4 percent in September. On the other hand, imports dropped 2.3 percent annually after a 0.3 percent rise in the previous month due to weaker domestic demand.  

Finally, the BSE Sensex fell 836.34 points or 1.04% to 79,541.79, and the CNX Nifty was down by 284.70 points or 1.16% to 24,199.35.  

The BSE Sensex touched high and low of 80,563.42 and 79,419.34 respectively. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.67%, while Small cap index was down by 0.44%.

The top losing sectoral indices on the BSE were Metal down by 2.54%, Utilities down by 1.82%, Basic Materials down by 1.65%, Realty down by 1.45% and Power down by 1.42%, while there were no gaining sectoral indices on the BSE. 

The few gainers on the Sensex were SBI up by 0.53% and TCS up by 0.26%. On the flip side, Tata Motors down by 2.36%, Tech Mahindra down by 2.21%, JSW Steel down by 1.99%, Sun Pharma down by 1.96% and Asian Paints down by 1.86% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the incoming data on economic growth is ‘mixed’, but the positive factors outweigh the negative ones. He stressed that the underlying economic activity by and large remains strong. He said it can be noted that many analysts have been voicing concerns about growth, especially after official data showed growth slowing to a 15-quarter low of 6.7 per cent in the first quarter of FY25. However, the RBI has been holding onto its estimate of 7.2 per cent real GDP growth for FY25, even as some expect it to be lower than 7 per cent. 

RBI Governor said the RBI tracks over 70 high-speed indicators to arrive at its estimates and described both the positive factors pushing the number and the negatives pulling it down. The industrial production or IIP data, and moderation in urban demand being witnessed by fast-moving consumer goods companies are the negative factors. Besides, subsidy outgoes have increased in the September quarter and will impact the Q2 GDP number. The positives include the handsome growth in GST e-way bills, toll collections, air passenger traffic, and steel and cement industry performance. Amid the increased discussion on the auto sector prospects recently with concerns around rising inventory amid lower demand, Das said the sector has done exceedingly well in October with a 30 per cent growth which includes a 23 per cent rise in four-wheeler sales. Additionally, the agriculture and services sectors are also doing well.

On inflation, he said the October headline consumer price inflation number to be announced on November 12 will be higher than September’s 5.5 per cent, but added that the central bank had already pencilled in the higher numbers for the two months. He said the shift in stance of the monetary policy should not be seen as a precursor to a rate cut at the very next meeting of the rate-setting panel. He added that the panel is under no pressure on the next course of action.

The CNX Nifty traded in a range of 24,503.35 and 24,179.05. There were 4 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were Apollo Hospital up by 6.34%, SBI up by 0.42%, HDFC Life Insurance up by 0.40% and TCS up by 0.15%. On the flip side, Hindalco down by 8.42%, Trent down by 6.12%, Grasim Industries down by 3.07%, Shriram Finance down by 2.96% and Adani Enterprises down by 2.74% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 7.14 points or 0.09% to 8,173.82, France’s CAC rose 45.56 points or 0.62% to 7,415.17 and Germany’s DAX gained 246.05 points or 1.29% to 19,285.36.

Asian markets settled mostly higher on Thursday tracking Wall Street gains overnight after Donald Trump was elected as US president for the second time, while investors’ focus shifted to interest-rate decisions from the Bank of England and the Federal Reserve due later in the day. Chinese and Hong Kong shares rallied amidst robust Chinese exports data and hopes for more fiscal stimulus measures outweighed concerns over trade frictions posed by a second Donald Trump presidency. Although, Japanese shares declined as investors locked profits following the sharp gains in the last session.