Post Session: Quick Review

Indian equity benchmarks wipe out initial gains and ended Wednesday’s session on flat note amid sudden selling in dying hours of trade. Traders preferred to remain on side-lines ahead of India’s gross domestic product (GDP) data for the April-June quarter, scheduled to be released on August 31. However, markets maintained their upward trend most part of the day following positive cues from global markets, as the latest batch of U.S. economic data helped ease recent concerns about the outlook for interest rates. The broader indices, the BSE Mid cap index and Small cap index ended with gains of over half a percent each. 

Markets made positive start and extended their gains as foreign fund inflows boosted the investor sentiments. BSE data showing that Foreign Portfolio Investors (FPIs) were net buyers, purchasing shares worth Rs 61.51 crore. Besides, RBI data showed that interrupting a two-month streak of decline, outward foreign direct investment (FDI) rose sequentially to $1.85 billion in July over $1.07 billion in June, an increase of 73 per cent. Indices remained higher in afternoon session, as sentiment were positive with report that the Centre is likely to infuse capital in certain regional rural banks (RRBs) during 2023-24, depending on their performance and adoption of digitization. Traders overlooked CARE Ratings stating that the erratic monsoon, which is affecting sowing, and global developments will keep the food inflation at elevated levels and would also hit the demand in rural India owing to lower income and inflation. However, in last leg of trade, markets witnessed selling pressure and ended flat amid profit booking. 

On the global front, European markets were trading mostly in red as losses in utilities, led by Denmark's Orsted, kept a lid on gains, while insurers rose on positive results from Prudential. Asian markets ended mostly in green as weak U.S. labor market data bolstered bets that the Fed's rate hike cycle could be nearing the end. Back home, Oil Minister Hardeep Singh Puri said that India will buy oil from all sources that offer it at the lowest possible prices. India has been buying crude oil from Russia, which is now its top oil supplier, at discounted prices since the west imposed import curbs following its invasion of Ukraine last year.

The BSE Sensex ended at 65,087.25, up by 11.43 points or 0.02% after trading in a range of 65,052.74 and 65,458.70. There were 16 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.55%, while Small cap index was up by 0.83%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.40%, Realty up by 1.38%, TECK up by 0.75%, Metal up by 0.72% and IT was up by 0.71%, while Bankex down by 0.61%, Utilities down by 0.57%, Oil & Gas down by 0.54%, Power down by 0.52% and PSU was down by 0.33% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were JIO Financial up by 4.99%, Tata Steel up by 2.01%, Maruti Suzuki up by 1.87%, Mahindra & Mahindra up by 1.31% and Infosys up by 1.18%. On the flip side, Power Grid down by 1.45%, SBI down by 1.30%, ICICI Bank down by 1.01%, Indusind Bank down by 0.78% and HDFC Bank down by 0.67% were the top losers. (Provisional)

Meanwhile, expressing some concern over India’s monsoon and inflation, CARE Ratings in a report titled 'Erratic Monsoon, Food Prices, and Rural Demand' has said that the erratic monsoon, which is affecting sowing, and global developments will keep the food inflation at elevated levels and would also hit the demand in rural India owing to lower income and inflation. It added the government's budgeted cuts on subsidies introduced during the pandemic can further weaken rural demand.

According to the report, an uneven monsoon increases the risk to domestic food prices, while global developments don't support domestic inflationary conditions either. It said the food inflation will maintain an elevated trajectory in the coming months, gradually receding by October in conjunction with the influx of fresh harvest into the market. The report said ‘our analysis indicates that food and beverage inflation is projected to peak, reaching an average of 9.4% in the second quarter of FY24. Subsequently, we expect a gradual cooling, with an estimated 6.9% in the third quarter of FY24, followed by a further decline to 5.9% in the fourth quarter of FY24’.

The risk to global food prices remains elevated with recent weather-related disruptions in South Asian countries and geopolitical developments. CARE Ratings said ‘higher global food prices can pass through to domestic consumption baskets as import dependency remains high on some items like edible oil and pulses. India's import dependency of pulses and edible oil for domestic consumption currently stands at around 55 per cent and 9 per cent, respectively’. The erratic progress of the southwest monsoon has resulted in a spike in the prices of the domestic food basket, which has a weight of about 40 per cent in the CPI inflation basket.

A deficit monsoon has adversely affected kharif sowing with a decline in the sowing of pulses (-8.3 per cent yoy), oilseeds (-0.9 per cent yoy), and cotton (-1.8 per cent yoy). Lower rainfall and the resultant lower reservoir levels will have implications for the rabi crops that have a higher dependency on irrigation. The cumulative water levels in 146 key reservoirs across India have dipped below the 10-year average as a result of slow monsoon progress over the past week. Pulses, coarse grains, and oil seeds remain India's most rain-dependent food crops, with a higher proportion of unirrigated areas. A deficit in the sowing of these crops can further add to the inflationary pressures.

The CNX Nifty ended at 19,347.45, up by 4.80 points or 0.02% after trading in a range of 19,334.75 and 19,452.80. There were 30 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were JIO Financial Serv. up by 4.99%, Tata Steel up by 2.13%, Maruti Suzuki up by 1.82%, Eicher Motors up by 1.50% and Mahindra & Mahindra up by 1.43%. On the flip side, Power Grid down by 1.61%, BPCL down by 1.36%, SBI down by 1.30%, Dr. Reddy's Lab down by 1.29% and Hero MotoCorp down by 1.21% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC fell 44.7 points or 0.61% to 7,328.73 and Germany’s DAX was down by 81.32 points or 0.51% to 15,849.56. On the flip side, UK’s FTSE 100 was up by 4.06 points or 0.05% to 7,469.05. 

Asian markets ended mostly higher on Wednesday, following positive cues from the US markets overnight, as soft U.S. data released overnight reinforced views that the Federal Reserve is nearing the end of its rate tightening cycle. Sentiments also got boost as reports said that China's largest banks are preparing to cut interest rates on existing mortgages and deposits. Meanwhile, investors awaited China PMI data for directional cues. Japanese markets ended higher amid rising U.S. yields pushed the yen to its lowest in almost 10 months.