Indian equity benchmarks made gap-down opening on Monday amid tariff uncertainties after President Donald Trump’s decision to impose tariffs and sanctions on Colombia for impeding his immigration goals. Soon, markets managed to trim some of their losses but continued to trade in red in early deals amid foreign fund outflows. The exodus of FPIs from the Indian equity markets continues unabated, as they withdrew Rs 64,156 crore ($7.44 billion) this month so far on depreciation of the rupee, rise in the US bond yields and expectation of a tepid earning season. Traders were also concerned as the RBI said India's forex reserves dropped by $1.88 billion to $623.983 billion in the week ended January 17. However, down side remained capped amid the government data showed that the country's exports rose by 5.57 per cent to $59.93 billion during April-December this fiscal on account of healthy demand in the American market for domestic goods.
On the global front, Asian markets are trading mixed, paring early gains after the release of disappointing Chinese industrial profits, manufacturing and non-manufacturing data. Traders also remain cautious ahead of the monetary policy decisions from the US Fed and the European Central Bank later in the week. Traders are also reluctant to make any significant moves ahead of the extended holiday on account of Lunar New Year in some of the markets in the region, including South Korea and Taiwan. Indonesia is closed for Isra and Miraj holiday.
Back home, auto stocks are in focus after SIAM data showed that automobile exports from India rose 19 per cent year-on-year in 2024 led by a robust dispatch of two-wheelers, passenger vehicles and commercial vehicles. Overall shipments rose to 50,98,810 units last year, up 19 per cent from 42,85,809 units exported in 2023. In stock specific development, ICICI Bank traded higher as its Q3 standalone net profit increased to Rs 11,790 crore from Rs 10,270 crore (Y-o-Y).
The BSE Sensex is currently trading at 75862.45, down by 328.01 points or 0.43% after trading in a range of 75545.93 and 75916.27. There were 9 stocks advancing against 21 stocks declining on the index.
The broader indices were trading in red; the BSE Mid cap index fell 1.78%, while Small cap index was down by 2.93%.
The sole gaining sectoral indices on the BSE was Realty up by 0.17%, while Telecom down by 2.49%, Industrials down by 2.13%, Metal down by 1.77%, Power down by 1.66% and Utilities down by 1.63% were the top losing indices on BSE.
The top gainers on the Sensex were Hindustan Unilever up by 1.26%, ICICI Bank up by 0.56%, Nestle up by 0.43%, ITC up by 0.36% and Larsen & Toubro up by 0.18%. On the flip side, Zomato down by 2.64%, Indusind Bank down by 1.69%, Tata Steel down by 1.65%, Power Grid down by 1.52% and HCL Technologies down by 1.51% were the top losers.
Meanwhile, the apex exporters' body -- Federation of Indian Export Organisations (FIEO) President Ashwani Kumar said a weaker rupee is often seen as a boost for Indian exports by making goods more competitive globally, but the reality is more complex. He also said the recent depreciation of the domestic currency against the US Dollar represents a complex economic scenario with mixed outcomes. He said ‘A weaker rupee is not a one-size-fits-all solution to boost exports. A strategic, multi-pronged approach is needed to address the root causes of depreciation while mitigating its adverse effects’.
Explaining it further, he said that if the rupee depreciates by 2 per cent and the currencies of key competitors decline by 3-5 per cent, Indian exporters lose competitiveness in global markets. He added ‘This relative disadvantage erodes any potential price advantage Indian goods might gain’. The domestic currency has depreciated over 4 per cent last year. Kumar added that the depreciation also results in a rise in input cost, exchange rate volatility, inflationary pressure, and external debt burden. Many Indian exporters depend on imported raw materials and components. A weaker rupee significantly raises these input costs, often nullifying the perceived benefits of depreciation.
He said ‘Fluctuating exchange rates create uncertainty, making it difficult for exporters to price their products competitively and plan for the long term’ and added that the depreciation inflates the cost of imported goods like oil and commodities, driving up production costs and fuelling domestic inflation and this reduces consumer purchasing power. He added that a weaker domestic currency increases the cost of servicing foreign currency-denominated external debt, creating additional pressure on businesses and the government. Exports contracted for the second month in a row by about one per cent year-on-year to $38.01 billion due to global uncertainties, while imports rose by about 5 per cent to $59.95 billion.
The CNX Nifty is currently trading at 22994.00, down by 98.20 points or 0.43% after trading in a range of 22910.85 and 23007.45. There were 15 stocks advancing against 35 stocks declining on the index.
The top gainers on Nifty were Britannia up by 1.55%, Hindustan Unilever up by 1.14%, ICICI Bank up by 1.06%, Nestle up by 0.51% and SBI up by 0.50%. On the flip side, JSW Steel down by 2.36%, Bharat Electronics down by 1.94%, Shriram Finance down by 1.78%, HCL Technologies down by 1.58% and Indusind Bank down by 1.57% were the top losers.
Asian markets are trading mostly in red; Hang Seng surged 193.78 points or 0.97% to 20,259.97 and Shanghai Composite was up by 9.73 points or 0.3% to 3,262.36. On the other hand, Nikkei 225 slipped 113.77 points or 0.28% to 39,818.21 and Straits Times was down by 4.39 points or 0.12% to 3,799.87.