Benchmarks make gap-down opening amid geopolitical tensions

Indian equity benchmarks made gap-down opening on Monday amid geopolitical tensions, following the sudden escalation of war between Israel and Palestine-based militant group Hamas over the weekend. But, markets tried to cut some of their losses and are trading lower with around half a percent each in early deals. Sharp rise in crude oil prices in morning deals also dampened the sentiments in domestic markets. Both Brent and WTI crude prices were up on concerns that the latest events in Israel could spiral into a more devastating proxy war and lead to oil supply disruptions. However, some support came in as CII's business confidence index improved to 67.1 in the July-September quarter of FY24, reflecting robust macro fundamentals of India's economy despite global headwinds.

On the global front, Asian markets are trading mixed in thin holiday trading on Monday, as traders are cautious amid the geopolitical tensions in the Middle East after Hamas' surprise violent attack on Israel over the weekend. Concerns about the outlook for interest rates also remain after data showed a much larger than expected addition of US jobs in the month of September. Hong Kong market trading is delayed due to Typhoon Koinu warning. The Japanese stock market is closed on account of Sports Day holiday, Taiwan is closed for National Day and South Korea is closed for Hangul Day.

Back home, sugar stocks are in limelight after the GST Council decided to cut GST on molasses to 5 per cent from 28 per cent in a relief to sugarcane farmers. IT sector stocks are in focus with Q2 earnings scheduled to start later in the week. In stock specific development, MCX jumped after it received regulatory approval to launch a new commodity derivatives platform. Titan Company declined after sharing its Q2 update.

The BSE Sensex is currently trading at 65676.82, down by 318.81 points or 0.48% after trading in a range of 65434.61 and 65686.33. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.00%, while Small cap index was down by 1.14%.

The only gaining sectoral indices on the BSE were IT up by 0.69% and TECK up by 0.49%, while Utilities down by 1.85%, Power down by 1.65%, PSU down by 1.56%, Telecom down by 1.44%, Oil & Gas down by 1.24% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.27%, TCS up by 1.10%, Tech Mahindra up by 0.61%, Infosys up by 0.46% and Wipro up by 0.32%. On the flip side, SBI down by 1.53%, Asian Paints down by 1.35%, Titan Company down by 1.33%, Tata Steel down by 1.31% and JSW Steel down by 1.26% were the top losers.

Meanwhile, with robust macro fundamentals of India's economy, the Confederation of Indian Industry’s (CII’s) business confidence index improved to 67.1 in the July-September quarter of FY24, despite global headwinds. The index showed a reading of 66.1 in the previous quarter (April-June FY24) and 62.2 in the same quarter last year. It said ‘The reading reaffirms the sustained positive momentum seen in host of high frequency indicators such as GST collection, air & rail passenger traffic, PMIs, among others in the second quarter’.

It further said the buoyancy seen in rural demand in the recent period, too, was mirrored by the results of the survey which established that nearly half of the respondents (52 per cent) anticipate an improvement in rural demand in the first half of the current fiscal. A majority of the respondents (66 per cent) feel that the Indian economy will grow in the range of 6-7 per cent in FY24, broadly in line with the forecast of RBI and other multilateral agencies.

On interest rates, more than half of the respondents (58 per cent) anticipate that RBI will stick with a pause on the repo rate in the second half of the current fiscal to let the lagged impact of the rate hikes effected so far to work through the system. The survey results highlighted that about 55 per cent of the respondents are of the view that improving ease of doing business along with government's thrust on capital spending, especially in infrastructure related sectors will help further crowd-in private investments. This will stimulate growth in other sectors of the economy through its multiplier effect.

The chamber further observed that improving domestic demand in the economy has bolstered the sentiments of the companies. According to the survey, two-third of the respondents expect sales and new orders to increase in the second quarter of FY24 by a higher clip than in the previous quarter. Mirroring this, half of the respondents (53 per cent) feel that capacity utilisation in their company would range between 75 and 100 per cent during Q2FY24. The 124th round of the CII Business Outlook Survey was conducted during September 2023 and saw the participation of around 200 firms of varying sizes and across all industry sectors and regions of the country.

The CNX Nifty is currently trading at 19550.05, down by 103.45 points or 0.53% after trading in a range of 19480.50 and 19553.25. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were TCS up by 1.31%, HCL Technologies up by 1.26%, Dr. Reddy's Lab up by 0.72%, Infosys up by 0.70% and Tech Mahindra up by 0.68%. On the flip side, Adani Ports & SEZ down by 2.97%, BPCL down by 2.51%, Adani Enterprises down by 1.86%, SBI down by 1.67% and Asian Paints down by 1.44% were the top losers.

Asian markets are trading mixed; Shanghai Composite weakened 21.54 points or 0.7% to 3,088.94 and Straits Times was down by 7.95 points or 0.25% to 3,166.44, while Jakarta Composite was up by 24.69 points or 0.36% to 6,913.21.