Key gauges snap five-day losing streak; Nifty settles above at 23,750 mark

Indian equity benchmarks snapped five-day losing streak and ended on strong note on Monday driven by positive global cues and strong performances by financials and heavyweights. Indian equities started the session on a firm note and extended gains as the day progressed as traders took support as India has made significant progress in technology and innovation, securing the 49th rank in the Network Readiness Index 2024 (NRI 2024), an improvement of 11 places compared to last year. This year, the country not only climbed the rankings but also improved its overall score to 53.63, reflecting its consistent efforts in advancing technology, research, and digital infrastructure. 

However, markets trimmed some of their initial gains in late afternoon trade as traders turned cautious with latest data by the Reserve Bank of India showing that India’s foreign exchange reserves fell by $1.9 billion to $653 billion, around six months low, in the week ended December 13. The reserves fell to their lowest since June 28. Some concern also came with Monetary Policy Committee (MPC) Member Nagesh Kumar’s statement that the ongoing economic slowdown in the country has become serious enough to demand immediate policy attention. Advocating for 25 basis points (bps) cut in the repo rate during the December MPC meeting, he highlighted the urgent need to address the dual challenges of declining growth and inflationary concerns. But markets regained some traction and managed to close the day in firm green, taking support from private report that India is finalising its trade strategy with the United States as Donald Trump prepares to return to office as President. The government is consulting with industry to identify export priorities, referred to as ‘offensive asks’, while keeping all options open, including a potential mini-trade deal and a response to Trump’s anticipated trade retaliation.

On the global front, European markets were trading mostly in green even as official data showed the U.K. economy stalled in the third quarter. Real gross domestic product remained flat in the third quarter, revised down from the 0.1 percent rise estimated initially as the services sector posted nil growth and the moderate expansion in construction was offset by the fall in industrial production. This follows a 0.4 percent expansion seen in the second quarter. Asian markets settled mostly higher on Monday after the Federal Reserve's preferred inflation gauge came in below expectations, fueling hopes for more rate cuts by the U.S. Federal Reserve in 2025.

Back home, metal stocks were in focus as the Indian Steel Association has filed for a safeguard investigation and proposed a potential safeguard duty on imports of non-alloy and alloy steel flat products. There was some reaction in auto stocks as data collated by the Society of Indian Automobile Manufacturers (SIAM) showed that India’s passenger vehicle (PV) exports during the first 11 months of 2024 grew by 7.79 per cent to 6,64,648 units while the two-wheeler shipments to overseas countries saw a nearly 22 per cent year-on-year jump to 3,602,151units. 

Finally, the BSE Sensex rose 498.58 points or 0.64% to 78,540.17, and the CNX Nifty was up by 165.95 points or 0.70% to 23,753.45.           

The BSE Sensex touched high and low of 78,918.12 and 78,189.19 respectively. There were 21 stocks advancing against 9 stocks declining on the index. 

The broader indices ended mixed; the BSE Mid cap index rose 0.10%, while Small cap index was down by 0.60%.

The top gaining sectoral indices on the BSE were Realty up by 1.39%, Bankex up by 1.00%, Metal up by 0.84%, Oil & Gas up by 0.83% and FMCG up by 0.75%, while Telecom down by 0.35%, Industrials down by 0.22%, Auto down by 0.12%, Healthcare down by 0.04% and Consumer discretionary down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.07%, Tech Mahindra up by 1.68%, HDFC Bank up by 1.63%, Indusind Bank up by 1.58% and Reliance Industries up by 1.33%. On the flip side, Zomato down by 2.82%, Maruti Suzuki down by 0.89%, Nestle down by 0.55%, HCL Technologies down by 0.52% and Bajaj Finserv down by 0.32% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that operating margin of writing and printing paper manufacturers is set to contract 400-500 basis points to 15-16 per cent this financial year (FY25) - following a similar correction last fiscal from the unusually high level of fiscal 2023 - driven by costlier hardwood and softwood and softening realisations.

Further, it stated revenue is projected to decline 2-3 per cent this fiscal year-on-year - after a price-led decrease of 6-7 per cent last fiscal - largely reined in by subdued realisations. Volume is expected to grow a tepid 2-4 per cent this fiscal owing to the continued shift towards digital communication, partly offset by the government’s focus on expenditure in the education sector and increased work from office.

Gautam Shahi, Director, CRISIL Ratings, said that on the profitability front, two factors will drive the compression this fiscal. One, writing and printing paper realisation will continue to correct from the abnormal highs of fiscal 2023, driven by low-cost imports from China and East Asia amid modest demand, resulting in a decline of 5-7 per cent in writing and printing prices. Two, domestic wood costs will continue to surge due to increased demand from competing wood-based industries and reduced wood output caused by lower plantation during the pandemic. Besides, Shahi asserted that imported wood prices are expected to rise 18-20 per cent due to international supply disruptions.

The CNX Nifty traded in a range of 23,869.55 and 23,647.20. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.36%, ITC up by 2.12%, Hindalco up by 1.87%, Trent up by 1.73% and HDFC Bank up by 1.72%. On the flip side, Hero MotoCorp down by 1.50%, Maruti Suzuki down by 0.84%, HCL Technologies down by 0.55%, HDFC Life Insurance Company down by 0.53% and Bajaj Finserv down by 0.43% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 4.67 points or 0.06% to 8,089.28 and Germany’s DAX gained 6.15 points or 0.03% to 19,890.90, while France’s CAC fell 1.47 points or 0.02% to 7,273.01.

Asian markets settled mostly higher on Monday tracking Wall Street gains last Friday as the release of softer than expected US inflation figures fuelled expectations for more interest rate cuts by the US Federal Reserve in 2025. Underlying sentiment was also underpinned by the passing of a crucial funding bill in the US, which helped avert a year-end government shutdown. Hong Kong shares gained with expectations that China will ramp up economic support measures. Market sentiments improved further as Trump indicated he would like Chinese video app TikTok to continue operating in the country, a move that could help ease tensions between US and China. Moreover Japanese shares gained, led by automakers and technology shares.