Benchmarks end marginally lower on Thursday

Indian equity benchmarks continued their downward trend to end marginally lower on Thursday amid disappointing quarterly results and soaring inflation. After making a cautious start, markets traded positive for the first couple of hours as traders took support with S&P Global Ratings’ statement that supply capacity in India is continuing to expand pretty quickly which will help contain inflationary pressure. S&P Senior Economist Asia Pacific Vishrut Rana has said the central bank's monetary policy and inflation target remains credible and the Reserve Bank of India (RBI) should be able to anchor inflationary expectations. Some support came with oil minister Hardeep Singh Puri’s statement that Donald Trump’s return to the White House will help bring more energy supplies to the global market, putting pressure on prices, benefitting India. However, markets erased initial gains to trade lower in late morning deals as data showed inflation based on wholesale price index (WPI) in India jumped in the month of October 2024 to 2.36% from 1.84% in September 2024, due to increase in prices of food articles, crude petroleum & natural gas and electricity. 

Markets continued to trade marginally lower in late afternoon deals, as some concern came with a WTO report stating that there has been an increase in the trade restrictive measures introduced by G20 member countries during mid-October 2023 to mid-October 2024. It said that during the review period, G20 economies introduced 91 new trade-restrictive and 141 trade-facilitating measures on goods, both of which mostly dealt with imports. Besides, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,502.58 crore on Wednesday, according to exchange data. Meanwhile, India’s Chief Economic Advisor (CEA) V. Anantha Nageswaran emphasised that India needs to enhance its investment appeal regardless of political changes in the United States, focusing on internal economic reforms and scaling up enterprise growth. He highlighted key areas for India’s economic strategy, including deregulation, support for small and medium enterprises (SMEs), and a balanced approach to market volatility.   

On the global front, European markets were trading higher with underlying sentiment supported by positive corporate and earnings news. Investors awaited the release of the eurozone's second estimate for gross domestic product growth and third-quarter flash employment data later in the day. Asian markets settled mostly down on Thursday on worries of a possible trade war between China and the United States in the wake of Donald Trump's return to the White House. 

Finally, the BSE Sensex fell 110.64 points or 0.14% to 77,580.31, and the CNX Nifty was down by 26.35 points or 0.11% to 23,532.70.  

The BSE Sensex touched high and low of 78,055.52 and 77,424.81 respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.41%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Realty up by 1.11%, Consumer Discretionary up by 0.81%, Telecom up by 0.64%, Auto up by 0.60% and Basic Materials up by 0.33%, while FMCG down by 1.35%, Utilities down by 0.88%, PSU down by 0.71%, Oil & Gas down by 0.48% and Power down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.23%, Kotak Mahindra Bank up by 1.18%, Tech Mahindra up by 0.78%, Mahindra & Mahindra up by 0.73% and HDFC Bank up by 0.70%. On the flip side, Hindustan Unilever down by 3.07%, Nestle down by 2.33%, NTPC down by 2.19%, Indusind Bank down by 1.92% and Power Grid Corporation down by 1.89% were the top losers.

Meanwhile, S&P Global Ratings has said supply capacity in India is continuing to expand pretty quickly which will help contain inflationary pressure. S&P Senior Economist Asia Pacific Vishrut Rana said the central bank's monetary policy and inflation target remains credible and the Reserve Bank of India (RBI) should be able to anchor inflationary expectations. He said 'That remains a manageable challenge.'

India's retail inflation soared to a 14-month high of 6.21 per cent in October -- above the RBI's tolerance band, mainly on account of rising food prices. It was 5.49 per cent in September. The RBI, which is mandated by the government to contain inflation at 4 per cent (+/- 2 per cent) has projected retail inflation to be 4.5 per cent in the current fiscal year.

Rana said ‘For policymakers and households to balance (consumption and sustainable growth) is to making sure that everyone spends within the means and that can increase savings.’ He said consumption is a major component for the Indian economy, with private consumption accounting for more than 55 per cent of the overall growth.

He added ‘We do see a strong consumption-driven growth outlook for economy. Overall, infrastructure is another component of growth. Urban consumption has been the key driver of growth over the past couple of years.’ Indian economy is very heavily domestically oriented, he said, adding that about 85 per cent of the Indian economy relies on domestic demand, meaning the consumer story is going to drive growth going forward.

The CNX Nifty traded in a range of 23,675.90 and 23,484.15. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 6.59%, Hero MotoCorp up by 2.06%, Grasim Industries up by 1.25%, Kotak Mahindra Bank up by 1.23% and HDFC Life Insurance up by 1.20%. On the flip side, Hindustan Unilever down by 2.92%, BPCL down by 2.50% Britannia Industries down by 2.47%, Tata Consumer Products down by 2.35% and Nestle down by 2.11% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 18.33 points or 0.23% to 8,048.66, France’s CAC rose 65.22 points or 0.9% to 7,282.05 and Germany’s DAX gained 213.15 points or 1.12% to 19,216.26.

Asian markets settled mostly down on Thursday, tracking mixed Wall Street cues overnight after data showed US inflation ticked higher in October 2024 and with expectations that the US Fed may not reduce interest rates as much as previously thought. Japanese shares edged down, despite the yen falling to fresh lows as major technology shares tracked their US peers lower. Chinese and Hong Kong shares declined on worries of a possible Sino-US trade war in the wake of Donald Trump's return to the White House. Market sentiments weakened even after China unveiling tax incentives on home and land transactions to shore up an ailing economy.