Markets remain in red after RBI raises inflation projections for FY24

Domestic equity indices remained in red and were trading with cut of around half a percent in late morning deals after RBI raised its inflation projections for FY24. Weakness prevailed in the markets after the Indian central bank’s monetary policy committee (MPC) kept base interest rates unchanged but raised inflation projections for FY24 to 5.4% from 5.1% earlier. Moreover, the inflation projection for the second quarter of FY24 has shot up to 6.2%. The MPC also maintained status quo on the ‘withdrawal of accommodation’ status. Meanwhile, market participants were also awaiting US inflation data to be released on Thursday. On the BSE sectoral front, traders were seen pilling up position in Utilities, Power, Industrials, Metal and PSU, while selling was witnessed in FMCG, Bankex, Consumer Durables and TECK.

On the global front, Asian markets were trading mixed, following negative cues from US markets overnight, as investors braced for July consumer price index data out from the U.S. on Thursday.  Private report said that inflation rate will come in at 3.3%, slightly higher from the 3% seen in June. Back home, in the stock specific development, Force Motors surged after the company reported a stellar performance in June quarter (Q1FY23).

The BSE Sensex is currently trading at 65621.97, down by 373.84 points or 0.57% after trading in a range of 65509.14 and 65956.25. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.06%, while Small cap index up by 0.36%.

The top gaining sectoral indices on the BSE were Utilities up by 0.57%, Power up by 0.40%, Industrials up by 0.21%, Metal up by 0.18% and PSU up by 0.07%, while FMCG down by 0.68%, Bankex down by 0.59%, Consumer Durables down by 0.52%, TECK down by 0.33% and Telecom down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 0.56%, Mahindra & Mahindra up by 0.55%, Wipro up by 0.44%, JSW Steel up by 0.30% and Tech Mahindra up by 0.20%. On the flip side, Asian Paints down by 2.46%, Tata Motors down by 1.45%, Nestle down by 1.11%, ICICI Bank down by 1.02% and Titan down by 1.00% were the top losers.

Meanwhile, automobile dealers' body Federation of Automobile Dealers Associations (FADA) has sought Goods and Services Tax (GST) reduction on entry-level two-wheelers to 18 per cent from 28 per cent currently. A delegation of the FADA submitted a letter to Minister of Road Transport and Highways (MoRTH) Nitin Gadkari in this regard.

FADA President Manish Raj Singhania said ‘with two-wheelers accounting for over 75 per cent of the volume and over 70 per cent of this stemming from the entry-level category, it's imperative to address the over 20 per cent decline we've observed since pre-Covid times’. To propel India towards becoming a $47 trillion economy by 2047, every segment of the domestic automobile industry must function at its zenith.

Singhania further said reducing the GST from 28 per cent to 18 per cent for entry-level two-wheelers is more than just an economic strategy; it's about empowering the common man and boosting rural mobility. He noted that while several categories within the auto sector have displayed commendable recovery post the Covid-19 pandemic, the entry-level two-wheeler sector remains notably affected. FADA believes that a GST revision would significantly alleviate the burden on potential buyers, especially in rural India, and catalyse the resurgence of this vital industry segment.

The CNX Nifty is currently trading at 19539.60, down by 92.95 points or 0.47% after trading in a range of 19495.40 and 19623.60. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 2.24%, Adani Enterprises up by 1.69%, BPCL up by 0.93%, Mahindra & Mahindra up by 0.63% and Coal India up by 0.58%. On the flip side, Asian Paints down by 2.44%, Tata Motors down by 1.36%, Nestle down by 1.20%, Britannia down by 1.15% and Apollo Hospital down by 1.14% were the top losers.

Asian markets were trading mixed; Taiwan Weighted lost 249.76 points or 1.5% to 16,621.18, Hang Seng declined 126.63 points or 0.66% to 19,119.40 and KOSPI dropped 6.98 points or 0.27% to 2,598.14. However, Shanghai Composite strengthened 2.5 points or 0.08% to 3,246.99, Jakarta Composite gained 11.35 points or 0.16% to 6,886.46, Straits Times rose 1.35 points or 0.04% to 3,315.14 and Nikkei 225 surged 288.3 points or 0.9% to 32,492.63.