Markets end off day's highs; Nifty settles above 23,500 mark

Indian equity benchmarks witnessed a sudden fall and erased majority of their gains in the final hour of trading but managed to end on a positive note on Tuesday led by gains in Realty and Auto stocks. Markets opened on a positive note and witnessed a sharp surge during the first half of the trading session as traders took encouragement with the National Sample Survey Office (NSSO) stating that the unemployment rate for people aged 15 years and above in urban areas dipped to 6.4 per cent in the July-September quarter. Joblessness, or unemployment rate, is defined as the percentage of unemployed people in the labour force. The unemployment rate in the September quarter of FY24 was 6.6 per cent. Some support also came as a report by CRISIL stated that the tariff hikes proposed by Donald Trump may pose threat to India’s exports but the country’s surplus in services trade and robust remittances flow may provide comfort. 

Markets extended their gains in afternoon deals, taking support from reports that the finance ministry tweaked norms for capital restructuring by central public sector enterprises (CPSEs) and introduced flexibilities for them to better add to their value creation strategy. Adding more optimism among traders, industry chamber CII stated that the government initiatives such as Make in India and production linked incentive schemes for different sectors are helping attract foreign investors to set up bases in India. In a letter to Commerce and Industry Minister Piyush Goyal, CII Director General Chandrajit Banerjee said that the government's increased investments in infrastructure such as roads, railways and ports are making the domestic industry more competitive. However, rising tensions between Russia and Ukraine dampened market sentiment in the final hour of trading, causing the Sensex and Nifty to retreat sharply from day's highs. Besides, investors booked profit amidst consistent FII selling and weak Q2 earnings. Profit booking was also seen ahead of the upcoming Maharashtra state election.

On the global front, European markets were trading lower as markets focused on the health of the corporate sector and the potential monetary policy trajectory. Asian markets settled mostly higher on Tuesday amidst growing hopes of more stimulus measures and expectations from the rate review by the Peoples Bank of China due on Wednesday. 

Finally, the BSE Sensex rose 239.37 points or 0.31% to 77,578.38, and the CNX Nifty was up by 64.70 points or 0.28% to 23,518.50.   

The BSE Sensex touched high and low of 78,451.65 and 77,411.31 respectively. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.94%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were Realty up by 1.45%, Auto up by 1.41%, Consumer Discretionary up by 1.21%, Consumer Durables up by 1.01% and IT up by 0.73%, while Metal down by 0.90%, Energy down by 0.69% and Oil & Gas down by 0.59% were the few losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.55%, Tech Mahindra up by 2.28%, HDFC Bank up by 2.21%, Sun Pharma up by 1.60% and Tata Motors up by 1.47%. On the flip side, Reliance Industries down by 1.53%, SBI down by 1.44%, Tata Steel down by 1.31%, Bajaj Finserv down by 1.21% and Maruti Suzuki down by 1.13% were the top losers.

Meanwhile, RBI Governor Shaktikanta Das has asked banks to proactively monitor their portfolios, identify areas of over-concentration, and take pre-emptive measures to address potential risks and challenges. He also asked bank boards to strengthen the internal governance framework to curb unethical practices, such as mis-selling of products or opening of accounts without proper KYC verification. He also said bank boards need to continuously assess external factors like regulatory changes, shifting market winds, overall macroeconomic changes and advances in technology.

The Governor further said boards should also be fully cognisant of the organisation’s internal strengths, vulnerabilities, and operational conditions so that they have a clear situational awareness. He stressed that boards must be cognizant of build-up of concentrations in their business model. Excessive reliance on specific sectors, markets, or customer segments can expose the bank to amplified risks, particularly in times of economic stress or industry shifts. Boards can play a proactive role by regularly monitoring the bank’s portfolios, identifying potential areas of over-concentration, and taking pre-emptive steps to maintain a balanced approach.

Besides, he said the boards must also remain vigilant to operational risks, particularly those arising from IT outsourcing and reliance on third-party vendors. He also said that the incentives for bank staff should be carefully structured so as not to encourage them to indulge in unethical practices. While such practices may yield short-term gains, they ultimately expose the bank to significant long-term risks, including reputational damage, supervisory scrutiny, and financial penalties. He added that the Indian banking sector is transitioning through a time which is replete with opportunities as well as risks and challenges.

The CNX Nifty traded in a range of 23,780.65 and 23,464.80. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 3.15%, Tech Mahindra up by 1.88%, HDFC Bank up by 1.81%, Dr. Reddy's Laboratories up by 1.66% and Eicher Motors up by 1.59%. On the flip side, SBI Life Insurance down by 2.92%, Hindalco down by 2.00%, Reliance Industries down by 1.85%, HDFC Life Insurance down by 1.67% and SBI down by 1.46% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 38.49 points or 0.47% to 8,070.83, France’s CAC fell 96.58 points or 1.33% to 7,181.65 and Germany’s DAX lost 236.36 points or 1.23% to 18,952.83.

Asian markets settled mostly higher on Tuesday after most Wall Street stocks ticked higher to recover some of their sharp slide from last week and as the US market now looked ahead to the release of tech giant Nvidia's earnings. Japanese markets gained despite the prospect of slower-than-expected interest rate cuts by the Federal Reserve. Chinese and Hong Kong markets were rose with expectations that Beijing will unveil more stimulus after a raft of measures at the end of September aimed at kick starting the economy, with an eye on the property sector. But concern over potential tariff hikes on Chinese products by President-elect Donald Trump's future administration kept investors cautious.