Sensex, Nifty end flat amid volatility

Shedding most of the gains made during the day, Indian equity benchmarks ended flat on Wednesday as investors remained on sidelines ahead of domestic GDP (gross domestic product) data for the April-June quarter, scheduled to be released post-market hours on Thursday. Markets made the gap up opening  and stayed in green for better part of the day, as traders took support 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 digitisation. Sentiments remained up-beat as 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. Some support came as BSE data showing that Foreign Portfolio Investors (FPIs) were net buyers, purchasing shares worth Rs 61.51 crore.

However, key gauges witnessed profit booking in the last hour. Markets give up all their gains and closed flat. Traders also turned cautious with CARE Ratings’ report 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. Some anxiety also came as rating agency ICRA stating that the information technology (IT) services industry’s revenue growth will likely slow down to 3-5 per cent in this financial year (FY24) due to persistent macroeconomic uncertainty and weak demand in the US and Europe. Meanwhile, the Securities and Exchange Board of India (Sebi) has proposed to halve the issue size for tapping social stock exchanges (SSEs) and bring down the minimum application amount from Rs 2 lakh to Rs 10,000.

On the global front, European markets were trading mostly in red after data showed inflation rising in some German states. Spanish inflation also accelerated and a measure of economic confidence in the euro zone fell again in August, raising worries about the inflation and growth outlook. Asian markets ended mostly higher on Wednesday following the broadly positive cues from global markets, as softer-than-expected consumer sentiment and job openings data, helped ease concerns about interest rates, lifting investor sentiment. Chinese stimulus measures are also aiding market sentiment. 

Finally, the BSE Sensex rose 11.43 points or 0.02% to 65,087.25 and the CNX Nifty was up by 4.80 points or 0.02% to 19,347.45.          

The BSE Sensex touched high and low of 65,458.70 and 65,052.74, respectively. There were 17 stocks advancing against 14 stocks declining on the index.

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

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 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 Financial Services down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were JIO Financial Services up by 4.99%, Tata Steel up by 2.09%, Mahindra & Mahindra up by 1.53%, Maruti Suzuki up by 1.50% and Infosys up by 1.19%. On the flip side, Power Grid Corporation down by 1.59%, SBI down by 1.31%, ICICI Bank down by 0.97%, HDFC Bank down by 0.71% and Indusind Bank down by 0.55% were the top losers.

Meanwhile, Icra Ratings in its latest report has said that Indian IT services sector's revenue growth will slow down to 3-5 per cent in the current fiscal (FY24) from 9.2 per cent in the previous financial year. It said the profitability will also take a beating in this financial year and the operating profit margin will narrow by up to 1 percentage point to 20-21 per cent.

It said Indian IT services companies witnessed a sharp moderation in growth momentum between Q3 FY23 to Q1 FY24 owing to the evolving macroeconomic headwinds in key markets of the US and Europe. It stated its sample set recorded a revenue growth of 3.8 per cent in the first quarter in USD terms, the lowest in the last 10 quarters. He added among the geographies, growth in the US witnessed a sharp moderation compared to that in Europe.

Icra Ratings’ sector head Deepak Jotwani said there has been persistent uncertainty in the key markets for IT companies which has resulted in pauses and deferral of non-critical projects and slowdown in discretionary IT spends by key sectors like banking, financial services and insurance, retail, technology and communication. Jotwani said lower operating leverage will limit the impact of the slower revenue growth on the profitability, and the ability of most companies to work with multiple levers such as onshore-offshore mix, employee utilisation levels, employee pyramid optimisation, and ability to manage costs will help.

The CNX Nifty traded in a range of 19,452.80 and 19,334.75. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were JIO Financial Services up by 4.99%, Tata Steel up by 2.09%, Maruti Suzuki up by 1.75%, Eicher Motors up by 1.24% and Mahindra & Mahindra up by 1.19%. On the flip side, Power Grid Corporation down by 1.49%, BPCL down by 1.49%, Hero MotoCorp down by 1.42%, Dr. Reddy's Lab down by 1.31% and SBI down by 1.28% were the top losers.

European markets were trading mostly in red; France’s CAC fell 24.07 points or 0.33% to 7,349.36 and Germany’s DAX lost 51.51 points or 0.32% to 15,879.37, while UK’s FTSE 100 increased 26.57 points or 0.36% to 7,491.56. 

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.