Weakness continues over Dalal Street

Weakness continued over the Dalal Street in early afternoon deals, with both Sensex and Nifty are trading notably lower, impacted by heavy selling at Bankex and FMCG counters. Sentiments were downbeat, as the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. Besides, it has projected real gross domestic product (GDP) growth for 2023-24 at 6.5 per cent with Q1 at 8.0 per cent; Q2 at 6.5 per cent; Q3 at 6.0 per cent; and Q4 at 5.7 per cent, with risks broadly balanced. Real GDP growth for Q1:2024-25 is projected at 6.6 per cent. The auto industry stocks were in watch, after the Society of Indian Automobile Manufacturers’ (SIAM) latest report showed that domestic passenger vehicles wholesales registered a 2.94 per cent year-on-year growth at 3,02,521 units in the month of July 2023, as against 2,93,865 units in July 2022.

On the global front, Asian markets were trading mixed, as producer prices in Japan were up 0.1 percent on month in July. That was shy of expectations for an increase of 0.2 percent following the upwardly revised 0.1 percent decline in June (originally -0.2 percent). On a yearly basis, producer prices climbed 3.6 percent, topping forecasts for 3.5 percent and down from the upwardly revised 4.3 percent increase in the previous month (originally 4.1 percent).

The BSE Sensex is currently trading at 65695.04, down by 300.77 points or 0.46% after trading in a range of 65509.14 and 65956.25. There were 7 stocks advancing against 22 stocks declining, while one stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.02%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Utilities up by 0.39%, Metal up by 0.28%, Energy up by 0.26%, Power up by 0.19% and Industrials up by 0.12%, while Bankex down by 0.69%, FMCG down by 0.64%, Consumer Durables down by 0.49%, Telecom down by 0.33% and Realty down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 0.95%, Tech Mahindra up by 0.58%, Wipro up by 0.57%, Reliance Industries up by 0.53% and JSW Steel up by 0.46%. On the flip side, Asian Paints down by 2.62%, Tata Motors down by 1.57%, ICICI Bank down by 1.10%, Kotak Mahindra Bank down by 1.08% and Nestle down by 1.05% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent. Besides, the standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. The MPC has also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth. These decisions are in consonance with the objective of achieving the medium term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. 

On the inflation front, the MPC highlighted that the spike in vegetable prices, led by tomatoes, would exert sizeable upside pressures on the near-term headline inflation trajectory. However, this jump is likely to correct with fresh market arrivals. It added that crude oil prices have firmed up amidst production cuts. Taking into account these factors and assuming a normal monsoon, it projected CPI inflation at 5.4 per cent for 2023-24, with Q2 at 6.2 per cent, Q3 at 5.7 per cent and Q4 at 5.2 per cent, with risks evenly balanced. CPI inflation for Q1:2024-25 is projected at 5.2 per cent. 

On the economic growth front, it noted that the recovery in kharif sowing and rural incomes, the buoyancy in services and consumer optimism should support household consumption. It also said healthy balance sheets of banks and corporates, supply chain normalisation, business optimism and robust government capital expenditure are favourable for a renewal of the capex cycle which is showing signs of getting broad-based. Taking all these factors into consideration, it has projected real gross domestic product (GDP) growth for 2023-24 at 6.5 per cent with Q1 at 8.0 per cent; Q2 at 6.5 per cent; Q3 at 6.0 per cent; and Q4 at 5.7 per cent, with risks broadly balanced. Real GDP growth for Q1:2024-25 is projected at 6.6 per cent.

The CNX Nifty is currently trading at 19560.80, down by 71.75 points or 0.37% after trading in a range of 19495.40 and 19623.60. There were 15 stocks advancing against 34 stocks declining, while one stock remained unchanged on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 2.31%, Adani Enterprises up by 1.65%, Mahindra & Mahindra up by 1.01%, BPCL up by 0.83% and ONGC up by 0.76%. On the flip side, Asian Paints down by 2.65%, Tata Motors down by 1.50%, Britannia down by 1.16%, Apollo Hospital down by 1.14% and Kotak Mahindra Bank down by 1.09% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 269.32 points or 0.83% to 32,473.65, Jakarta Composite gained 14.92 points or 0.22% to 6,890.03, Shanghai Composite strengthened 8.2 points or 0.25% to 3,252.69 and Straits Times rose 1.76 points or 0.05% to 3,315.55, while KOSPI dropped 3.56 points or 0.14% to 2,601.56, Hang Seng declined 34.68 points or 0.18% to 19,211.35 and Taiwan Weighted lost 236.24 points or 1.42% to 16,634.70.