Benchmarks experience sharp decline; Nifty dips below 24k mark

Indian equity benchmarks experienced a sharp decline and ended with losses of around one and half percent on Thursday due to intense selling in market heavyweights Infosys, Mahindra & Mahindra and Bajaj Finance amid a mixed trend in global equities. After starting the day on a cautious note, the benchmarks witnessed a sharp selloff thereafter, as traders remained on sidelines ahead of India’s GDP growth data for the latest July-September 2024 quarter (Q2 FY25) to be released on Friday. The GDP is expected to slow to 6.2-6.9 per cent this quarter due to factors like heavy rains and weak corporate margins. Concerns over U.S. President-elect Donald Trump's policy stance and uncertainty surrounding the U.S. rate cut trajectory too weighed on sentiment.

Traders overlooked India Ratings and Research’s (Ind-Ra) report that India’s fiscal deficit is expected to be 19 basis points lower at 4.75% of the gross domestic product (GDP) than budgeted in 2024-25, due to fiscal discipline and slower economic activity in the first half of the year. It noted that the government is on path to achieve the target of 4.5% in 2025-26. Traders paid no heed towards a private report that President-elect Donald Trump’s decision to impose a 25 percent tariff on Canada and Mexico after assuming office in January 2025 could end up helping India, among other countries, especially on items that are India’s top exports to the United States. Meanwhile, the Network Readiness Index 2024 (NRI 2024) report showed that India has improved its position by eleven slots and is now placed at 49th rank as against 60th rank scored in the NRI 2023 report. 

On the global front, European markets were trading higher with technology stocks rising after reports emerged that U.S. restrictions on sales of semiconductor technology and AI memory chips to China would not be as severe as previously expected. Asian markets ended mostly in red on Thursday amid much uncertainty about U.S. President-elect Donald Trump's tariff policies and the Federal Reserve's interest-rate path. Investors looked ahead to a key economic meeting of Chinese policymakers next month, where there could be more stimulus actions to boost the struggling economy. 

Back home, on the sectoral front, paper industry stocks were in focus as Indian Paper Manufacturers Association (IPMA) expressed concerns over rising imports of virgin fibre paperboard from countries like China and Chile, saying that below-cost shipments are hitting local producers and threatening their investments. Besides, cement industry stocks also were in watch, as rating agency ICRA in its latest report has revised down its volume growth forecast for the cement industry to 4-5 per cent at 445-450 million tonne for the current fiscal (FY25) on account of slower-than-expected ramp-up in construction activity across the housing and infrastructure sectors, post the General Elections.

Finally, the BSE Sensex fell 1190.34 points or 1.48% to 79,043.74, and the CNX Nifty was down by 360.75 points or 1.49% to 23,914.15.      

The BSE Sensex touched high and low of 80,447.40 and 78,918.92 respectively. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.06%, while Small cap index was up by 0.41%.

The top gaining sectoral indices on the BSE were Utilities up by 0.63%, Realty up by 0.09%, PSU up by 0.05% and Oil & Gas up by 0.02%, while IT down by 2.26%, TECK down by 2.12%, Auto down by 1.39%, Consumer Durables down by 1.20% and Bankex down by 0.81% were the top losing indices on BSE.

The lone gainer on the Sensex was SBI up by 0.55%. On the flip side, Infosys down by 3.46%, Mahindra & Mahindra down by 3.36%, Bajaj Finance down by 2.84%, Adani Ports & SEZ down by 2.73% and HCL Technologies down by 2.54% were the top losers.

Meanwhile, domestic rating agency India Ratings and Research (Ind-Ra) has said that the government will be able to register the fiscal deficit at 4.75 per cent in FY25, 0.19 per cent lower than the budget aim, by reigning in expenditure. It added the revenue expenditure, excluding subsidies, will be 0.12 per cent of GDP, lower than the budget estimate. Its chief economist and head of public finance Devendra Kumar Pant said the government capital expenditure will come out to be Rs 62,000 crore lower than the estimate of Rs 11.11 trillion.

Pant was quick to add that the government capex will still be 10.6 per cent higher than the year-ago period. The government was initially envisaging a 17.6 per cent growth in the key number. Even as there is a dip in the government capital expenditure projected, the capex to GDP in FY25 at 3.21 per cent is estimated to be at a two-decade high. It said ‘The FY25 capex growth has been impacted by the general elections in May 2024, and capex in 1H FY25 shrank 15.42 per cent year-on-year. To achieve the FY25 (BE) target, capex in 2H FY25 must grow 52.04 per cent, which appears to be a daunting task’.

It said among ministries, railways, and road, transport and highways will breach their FY25 capex allocations. There will be a slippage of 0.10 per cent of GDP on the subsidies front due to higher outgoes on food, fertiliser and petroleum subsidies, the agency said, pointing that the overall spending has been 54.55 per cent higher than the budgeted levels in the first half of the fiscal. On the revenue expenditure, excluding subsidies, the rating agency said actual spending by 43 ministries other than civil aviation, railways, and road, transport and highways in the April-September period was less than 40 per cent of their allocation.

It said the FY25 gross and net tax revenue will come at 12.02 per cent of GDP and 8.08 per cent of GDP, respectively, which will be a 17-year high, and added that income tax and corporate tax are estimated to contribute 80.94 per cent and 10.53 per cent, respectively, to the additional gross tax revenue. It noted that non-tax revenue and disinvestment receipts are to be lower than the budgeted amount of Rs 5.46 trillion and Rs 78,000 crore, respectively, in FY25.

The CNX Nifty traded in a range of 24,345.75 and 23,873.35. There were 4 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 1.63%, SBI up by 0.77%, Shriram Finance up by 0.63% and Cipla up by 0.47%. On the flip side, SBI Life Insurance down by 5.41%, HDFC Life Insurance down by 3.74%, Mahindra & Mahindra down by 3.35%, Infosys down by 3.34% and Adani Ports & SEZ down by 2.53% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 3.66 points or 0.04% to 8,278.41, France’s CAC rose 40.97 points or 0.57% to 7,184.00 and Germany’s DAX gained 138.82 points or 0.72% to 19,400.57. 

Asian markets ended mostly in red on Thursday amid much uncertainty about U.S. President-elect Donald Trump's tariff policies and the Federal Reserve's interest-rate path. Investors looked ahead to a key economic meeting of Chinese policymakers next month, where there could be more stimulus actions to boost the struggling economy. Japanese market finished notably higher as the dollar rebounded back up to the lower 151-yen range and reports emerged that U.S. restrictions on sales of semiconductor technology and AI memory chips to China would not be as severe as previously expected. Seoul’s KOSPI fluctuated before ending flat as the Bank of Korea cut its key policy rate for a second consecutive meeting and lowered its growth forecasts, citing weaker global demand, higher tariffs and more policy uncertainty.