Benchmarks succumb to selling pressure on Thursday

Indian equity benchmarks gave up early gains to end lower on Thursday, with Sensex and Nifty falling over 250 and 90 points, respectively, succumbing to the selling pressure exerted by Oil & Gas and Utilities stocks. Indices started in green as traders got support after Finance Minister Nirmala Sitharaman said Indian inflation will remain steady in coming months, despite short-term rises in the prices of certain food items. Market participants were awaiting India’s Q1 Gross Domestic Product (GDP) data to be out later in the day for more directional cues. There are expectations that the country’s economy grew at its fastest pace in a year in the April-June quarter, driven by services and manufacturing.

However, soon markets cut their gains and turned lackluster, amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 494.68 crore on August 30. Traders were cautious as the Reserve Bank of India (RBI) in its latest report said that listed private non-financial companies’ sales growth moderated during Q1FY24. As per the data, sales growth (y-o-y) of listed private non-financial companies moderated to 2.1 per cent in Q1FY24 from 8.0 per cent in the previous quarter and 41.0 per cent a year ago. 

In the second half, markets added more losses, despite positive cues from European markets. Sentiments remained cautious as CareEdge Ratings in its latest report has said the India’s rural demand is vulnerable and could be further impacted by the ‘dual blows’ of lower income and high food inflation owing to an erratic monsoon. Meanwhile, emphasizing digital capability upgradation of Regional Rural Banks (RRBs) by November 1, 2023, Union Finance Minister Nirmala Sitharaman has said that banks should map RRBs with MSME clusters and put greater thrust on increasing network of rural branches in cluster areas identified by the Ministry of Micro, Small and Medium Enterprises.

On the global front, Asian markets ended mostly in red, as industrial output in Japan was down a seasonally adjusted 2.0 percent on month in July. That missed forecasts for a fall of 1.4 percent following the 2.4 percent increase in June. On a yearly basis, industrial production was down 2.5 percent following the flat reading in the previous month. European markets were trading mostly in green, as Eurozone inflation ceased to slow in August on energy prices but underlying inflation eased due to the slowdown in goods and services price growth. Back home, select textile industry stocks were in focus with Crisil’s report that home textile industry's revenues are expected to rise 7-9 per cent this fiscal as the sector regains global share following a correction in domestic cotton prices and restocking by big-box retailers in major overseas markets.

Finally, the BSE Sensex fell 255.84 points or 0.39% to 64,831.41 and the CNX Nifty was down by 93.65 points or 0.48% to 19,253.80.          

The BSE Sensex touched high and low of 65,277.04 and 64,723.63, respectively. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.02%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.89%, Realty up by 0.68%, Industrials up by 0.63%, Capital Goods up by 0.44% and Metal up by 0.31%, while Oil & Gas down by 1.32%, Utilities down by 1.28%, PSU down by 1.04%, Energy down by 0.84% and FMCG down by 0.71% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.22%, Titan up by 1.09%, Ultratech Cement up by 1.02%, Tata Steel up by 0.78% and ICICI Bank up by 0.42%. On the flip side, Bajaj Finance down by 1.34%, Asian Paints down by 1.33%, Indusind Bank down by 1.20%, SBI down by 1.12% and Hindustan Unilever down by 1.10% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said home textile industry's revenues are expected to rise 7-9 per cent this fiscal (FY24) as the sector regains global share following a correction in domestic cotton prices and restocking by big-box retailers in major overseas markets. It said in the last financial year, their revenues had declined 15 per cent.

According to report, operating profitability of the industry will improve 150-200 basis points to 14-14.5 per cent this fiscal, due to lower raw material cost and better operating leverage, but will still hover below the pre-pandemic levels. It noted improved operating performance will also have the industry maintaining a stable credit outlook despite moderate capex.

The report is based on an analysis of 40 companies, accounting for 40-45 per cent of the sectoral revenues. As much as 70-75 per cent of the industry-wide revenues are from exports, with the US, its biggest market, accounting for more than half of it.

The CNX Nifty traded in a range of 19,388.20 and 19,223.65. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.12%, Cipla up by 1.74%, HDFC Life Insurance up by 1.21%, JIO Financial up by 0.97% and Titan up by 0.72%. On the flip side, Adani Enterprises down by 3.73%, BPCL down by 3.24%, Adani Ports & SEZ down by 3.24%, Eicher Motors down by 2.03% and Britannia down by 1.82% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 1.39 points or 0.02% to 7,475.06 and Germany’s DAX gained 94.92 points or 0.59% to 15,986.85, while France’s CAC fell 8.97 points or 0.12% to 7,355.43.