Selling pressure continues to hit Indian markets

A heavy selling pressure continued to hit Indian equity benchmarks in early noon deals, with both Sensex and Nifty falling over a percent, amid weak cues from other Asian markets. Sentiments remained pessimistic, amid a private report stating that private equity and venture capital (PE/VC) funds' investments into Indian entities declined by nearly a fourth to $27.5 billion in January-June 2023 against the year-ago period. Besides, India ordered a halt to its largest rice export category in a move that will roughly halve shipments by the world's largest exporter of the grain, triggering fears of further inflation on global food markets.

On the global front, Asian markets were trading mostly in red, after Overall consumer prices in Japan were up 3.3 percent on year in June. That was shy of expectations for an increase of 3.5 percent but was up from 3.2 percent in May. On a seasonally adjusted monthly basis, inflation rose 0.1 percent - in line with expectations following the flat reading in the previous month.

The BSE Sensex is currently trading at 66756.45, down by 815.45 points or 1.21% after trading in a range of 66725.35 and 67190.52. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell by 0.10%, while Small cap index was up by 0.06%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.29%, Industrials up by 1.03%, PSU up by 0.72%, Metal up by 0.34% and Utilities up by 0.28%, while IT down by 4.11%, TECK down by 3.65%, Consumer Durables down by 0.74%, Energy down by 0.68% and FMCG down by 0.53% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.79%, JSW Steel up by 1.89%, Tata Motors up by 1.17%, NTPC up by 0.96% and SBI up by 0.92%. On the flip side, Infosys down by 7.92%, Tech Mahindra down by 4.51%, HCL Technologies down by 3.31%, Reliance Industries down by 3.27% and Hindustan Unilever down by 2.90% were the top losers.

Meanwhile, S&P Global Ratings has projected Indian banking sector's weak loans will decline to 3-3.5 per cent of gross advances by March 31, 2025 on the back of structural improvement, including healthy corporate balance sheets, tighter underwriting standards, and improved risk-management practices. It also said that stronger balance sheets and higher demand should boost bank loan growth, but deposit growth would lag.

In its mid-year global bank outlook, S&P said India's economic growth prospects should remain strong over the medium term, with GDP expanding 6-7.1 per cent annually in fiscal years 2024-2026. It said India to remain the fastest-growing economy in Asia-Pacific, and the fastest-growing large economy globally.

It further said the small and midsize enterprise sector and low-income households are vulnerable to rising interest rates and high inflation. But it believed that interest rates in India are unlikely to rise materially. This should limit the risk for the country's banking industry. S&P further said that slower global growth and external demand will weigh on economic activity and could fuel further inflation. However, given that India is domestically oriented, it expects the economic growth to be less affected. It assumed the impact on the banking sector will also be modest.

The CNX Nifty is currently trading at 19750.05, down by 229.10 points or 1.15% after trading in a range of 19748.00 and 19887.40. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.80%, JSW Steel up by 1.51%, Adani Enterprises up by 1.13%, ONGC up by 1.08% and Tata Motors up by 1.08%. On the flip side, Infosys down by 8.03%, Tech Mahindra down by 4.59%, Reliance Industries down by 3.62%, HCL Technologies down by 3.43% and Hindustan Unilever down by 2.94% were the top losers. 

Asian markets were trading mostly in red; Nikkei 225 slipped 186.27 points or 0.58% to 32,304.25, Taiwan Weighted lost 134.19 points or 0.79% to 17,030.70, Jakarta Composite plunged 20.38 points or 0.3% to 6,843.81, Shanghai Composite weakened 3.59 points or 0.11% to 3,165.93 and Straits Times fell 3.33 points or 0.1% to 3,271.05, while KOSPI increased 9.53 points or 0.37% to 2,609.76 and Hang Seng advanced 87.24 points or 0.46% to 19,015.26.