Benchmarks snap 2-day gaining streak on Thursday

Indian equity benchmarks swung between gains and losses on Thursday and finally settled in red due to a sell-off in Realty and Banking stocks amid a weak trend in European equities. Markets made a negative start, as traders were anxious with Fitch Ratings stating that India has some room to cut capital expenditure in FY24 as there may be pressure on revenue as the buoyancy assumptions in the Union budget may be inflated. But, key gauges erased losses and recovered gradually in afternoon deals, as traders took support with exchange data showing that Foreign Institutional Investors (FIIs) turned net buyers in the domestic capital market on Wednesday as they purchased shares worth Rs 61.72 crore. Some support also came as data put out by the Reserve Bank of India (RBI) in its latest monthly bulletin showed that transmission of repo rate to banks’ deposit and lending rates seems to be better in an interest rate easing cycle than in the monetary tightening period.  However, the recovery was short-lived as key indices once again fell sharply in late afternoon deals, due to a sluggish start in the European market led by a 50bps hike by the Swiss National Bank. Meanwhile, industry body PHDCCI has approached the government seeking reintroduction of the Credit Linked Capital Subsidy Scheme to facilitate technology upgradation of micro and small enterprises.

On the global front, European markets were trading lower amid U.S. Federal Reserve's rate hike move that was widely expected. Investors also concerned about the health of the banking industry after US Treasury Secretary Janet Yellen commented that the regulators are not looking to provide any 'blanket' deposit insurance to stabilise the US banking system, without working with law makers.  Asian markets settled mostly higher on Thursday despite the U.S. Federal Reserve raised rates by 25 basis points and signaled another hike to fight inflation.

Back home, select hotel industry stocks were in limelight as a Crisil Market Intelligence report stated that premium hotels are expected to log in strong growth across operating parameters, especially on the revenue side, which is expected to surge 80 per cent this fiscal and a further 15-20 per cent next, buoyed by the continued recovery across categories. Steel industry's stocks also were in focus as Icra in its latest report has said that it revised its outlook for domestic steel demand to 7-8 per cent for the next fiscal. There were some reaction in oil & gas industry stocks with report that India's imports of crude oil in February rose about 8% from a year earlier, as fuel demand hit over 2-decade highs in the world's third-biggest oil importer and consumer.

Finally, the BSE Sensex fell 289.31 points or 0.50% to 57,925.28 and the CNX Nifty was down by 75.00 points or 0.44% to 17,076.90.

The BSE Sensex touched high and low of 58,396.17 and 57,838.85, respectively. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.45%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Power up by 0.67%, Utilities up by 0.50%, Telecom up by 0.36%, FMCG up by 0.28% and Metal up by 0.24%, while Realty down by 1.01%, Bankex down by 0.92%, PSU down by 0.90%, IT down by 0.81% and TECK down by 0.52% were the top losing indices on BSE.

The top gainers on the Sensex were Nestle up by 1.25%, Maruti Suzuki up by 1.07%, Bharti Airtel up by 0.99%, Tata Motors up by 0.73% and ITC up by 0.68%. On the flip side, SBI down by 1.69%, Kotak Mahindra Bank down by 1.49%, Asian Paints down by 1.49%, HCL Technologies down by 1.40% and Wipro down by 1.34% were the top losers.

Meanwhile, Icra in its latest report has said that it revised its outlook for domestic steel demand to 7-8 per cent for the next fiscal. Earlier, it had estimated the demand to grow in the range of 6-7 per cent. It mentioned with the central government's capex outlay in FY2024, Icra has revised upwards its steel consumption growth estimate for FY24 to 7-8 per cent. In 2023-24, the capital expenditure is budgeted at Rs 10 lakh crore which will constitute 3.3 per cent of GDP.

In the ongoing fiscal also, the domestic steel consumption growth has remained strong supported by the government's push for infrastructure-led economic growth. The consumption of finished steel in India was 107.20 million tonne during April-February of FY23.

Jayanta Roy, Senior Vice-President & Group Head - Corporate Sector Ratings at ICRA, said ‘With steel consumption expected to grow in high-single digits next year, we expect the industry's capacity utilisation rate to improve to around 80 per cent in FY2024, despite the commissioning of some new expansion projects.’

The CNX Nifty traded in a range of 17,205.40 and 17,045.30. There were 19 stocks advancing against 30 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Hindalco up by 1.49%, Maruti Suzuki up by 1.29%, Nestle up by 1.01%, ONGC up by 0.76% and Tata Motors up by 0.75%. On the flip side, SBI down by 1.83%, Bajaj Auto down by 1.55%, Kotak Mahindra Bank down by 1.53%, HCL Technologies down by 1.50% and Asian Paints down by 1.40% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 88.1 points or 1.16% to 7,478.74, France’s CAC fell 54.58 points or 0.77% to 7,076.54 and Germany’s DAX lost 131.29 points or 0.86% to 15,084.90.

Asian markets settled mostly higher on Thursday, despite an overnight slump in Wall Street shares after the US Federal Reserve raised rates by 25 basis points and signalled another hike this year to fight against inflation. Following the US Fed's move, the Hong Kong central bank also lifted its benchmark rate by 25 bps to 5.25%. However, Japanese shares fell marginally after Janet Yellen's comments that the Fed’s regulators are not considering a blanket insurance for bank deposits in the United States. Meanwhile, Indonesian market was closed on account of Hindu Saka New Year holiday.