Markets extend losses for second straight day

Falling for the second day in a row, Indian equity benchmarks witnessed a sharp decline and ended with losses of over a percent on Tuesday amid a global selloff and investor caution ahead of the US Federal Reserve’s interest rate decision. Heavy selling pressure in Telecom, Metal and Auto shares, along with depreciating rupee, added to the market woes. Markets made a negative start and drifted lower throughout the day as traders were anxious with data released by the commerce department showing that India’s trade deficit reached a record high of $37.8 billion in November, amid a surge in merchandise imports, mainly driven by a 4.3-time jump in inbound shipments of gold. Imports increased by 27% to a record of almost $70 billion during the month. On the other hand, exports contracted 4.8% to a 25-month low of $32.1 billion in November. The contraction came in a month after witnessing robust 17% Y-o-Y growth in October, which was due to inventory-building by the West ahead of the Christmas season.  

Markets extended fall in late afternoon deals, as sentiments remained down-beat with CRISIL’s report stating that high interest rates and fiscal consolidation have contributed to slower economic growth for India in the current financial year (FY25) so far. India’s real gross domestic product (GDP) is likely to move closer to trend growth of 6.5-7 per cent this year. It added some technical factors such as net product taxes and the GDP deflator have also disrupted the GDP’s trajectory. Adding to investor caution, exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 278.70 crore on Monday. Traders overlooked the country's G20 Sherpa Amitabh Kant’s statement that India's circular economy could generate a market value of over $2 trillion and create 10 million jobs by 2050. He said the circular economy can be a driver of growth, and this transition not only promises cost savings but also positions India to capitalise on the global circular economy market.

On the global front, European markets were trading mostly in green as investors looked ahead to the Federal Reserve and Bank of England's rate decisions. Asian markets ended down on Tuesday as traders remained concerned about the ongoing economic uncertainties in China amid lack of adequate financial policy measures. They also seemed reluctant to make significant moves ahead of the US Fed's upcoming interest rate decision tomorrow.

Finally, the BSE Sensex fell 1064.12 points or 1.30% to 80,684.45, and the CNX Nifty was down by 332.25 points or 1.35% to 24,336.00.        

The BSE Sensex touched high and low of 81,613.64 and 80,612.20 respectively. All the 30 stocks were declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.65%, while Small cap index was down by 0.52%.

The top losing sectoral indices on the BSE were Telecom down by 2.18%, Metal down by 1.77%, Auto down by 1.70%, Energy down by 1.64% and Oil & Gas down by 1.59%, while there were no gaining sectoral indices on the BSE.  

The top losers on the Sensex were Bharti Airtel down by 2.83%, Indusind Bank down by 2.46%, JSW Steel down by 2.40%, TCS down by 2.07% and Asian Paints down by 1.94%, while there were no gainers on the Sensex. 

Meanwhile, the country's G20 Sherpa Amitabh Kant has said that India's circular economy could generate a market value of over $2 trillion and create 10 million jobs by 2050. He said the circular economy can be a driver of growth, and this transition not only promises cost savings but also positions India to capitalise on the global circular economy market. This is a huge opportunity because, by 2050, India's circular economy could generate a market value of over $2 trillion and create close to 10 million jobs. Currently, the size of the Indian economy is $3.7 trillion.

Noting that industrialisation and urbanisation are creating an unsustainable India, he said ‘we need circular economy as a beacon of hope'. The country's natural resources are depleted at an unsustainable pace, generating massive amounts of waste. While pointing out that India is generating about close to 1.6 lakh tonnes of municipal solid waste per day, he said this underscores the urgency to move towards a model that decouples economic growth from resource extraction.

Kant said ‘It will be impossible to live in India. It will be impossible to work in India...therefore, the circular economy offers a really compelling solution to the dilemma that India is facing due to rapid urbanisation and industrialisation by keeping resources in use for as long as possible, extracting maximum value from them and regenerating natural systems.’ According to Kant, the circular model not only reduces waste and environmental harm but also creates new economic opportunities. He added that India's transition to circularity requires a deliberate and coordinated effort across sectors, and it has to be driven by innovation, R&D and robust policy intervention.

The CNX Nifty traded in a range of 24,624.10 and 24,303.45. There were 2 stocks advancing against 48 stocks declining on the index.

The top gainers on Nifty were Cipla up by 0.14% and ITC up by 0.13%. On the flip side, Shriram Finance down by 5.27%, Grasim Industries down by 3.21%, Hero MotoCorp down by 3.01%, Bharti Airtel down by 2.80% and JSW Steel down by 2.76% were the top losers.

European markets were trading mostly in green; France’s CAC rose 20.23 points or 0.27% to 7,377.31 and Germany’s DAX gained 33.34 points or 0.16% to 20,347.15, while UK’s FTSE 100 decreased 61.26 points or 0.75% to 8,200.79. 

Asian markets ended down on Tuesday tracking Wall Streets’ fall overnight ahead of this week's interest rate decisions from the US Federal Reserve, the Bank of Japan and Bank of England, that could provide hints on where interest rates are headed in 2025. Japanese shares finished lower after the yen steadied after six days of losses, while investors were betting on the Bank of Japan to keep interest rates steady this week. Chinese shares declined, despite Chinese Premier Li Qiang urging government officials to swiftly carry out key economic tasks for the coming year. Moreover, Seoul shares fell as the country's Constitutional Court began the process of reviewing the impeachment of South Korean president Yoon Suk Yeol.