Domestic indices trade lower in early deals

Indian equity benchmarks made negative start on Monday amid geopolitical tensions between Israel and Gaza. Israeli troops prepare for a ground assault on the Hamas-controlled Gaza Strip. Domestic indices are trading lower with cut of 0.20% each in early deals as investors are closely watching Q2-FY24 quarterly results of India Inc. Also, investors are keeping eye on wholesale price inflation data for September, for more directional cues. Traders were concerned as India's merchandise exports saw a fall of 2.6 percent year on year, contracting to $34.47 billion in September. The fall was also significantly reflected in imports, which contracted by 15 percent to $53.84 billion in September 2023 against September 2022. However, downside remained capped as some support came in with the International Monetary Fund’s (IMF) statement that the overall macroeconomic environment in India is ‘pretty sound’, it is fiscally disciplined and the central bank moved fast to bring inflation under control.

On the global front, Asian markets are trading in red as traders remain cautious on renewed concerns about the outlook for interest rates after US data showed hotter-than-expected consumer price inflation and a slump in consumer sentiment. They also kept an eye on developments in the conflict in the Middle East between Israel and Hamas.

Back home, the government has given a final call to all legal entities engaged in sugar trade to declare their stocks on a food ministry website by October 17, and warned that strict action will be taken against those for violation. In stock specific development, Avenue Supermarts declined after Q2 net profit slipped 9.1 per cent to Rs 623.35 crore for Q2-FY24.

The BSE Sensex is currently trading at 66120.83, down by 161.91 points or 0.24% after trading in a range of 66039.38 and 66238.15. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.20%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.72%, Metal up by 0.66%, Auto up by 0.50%, Basic Materials up by 0.40% and PSU up by 0.29%, while Realty down by 0.50%, Power down by 0.40%, Bankex down by 0.33%, Utilities down by 0.28% and FMCG down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.31%, Titan Company up by 1.07%, Tata Motors up by 0.89%, JSW Steel up by 0.84% and Tata Steel up by 0.64%. On the flip side, Nestle down by 1.46%, Asian Paints down by 1.17%, Indusind Bank down by 0.93%, TCS down by 0.78% and Bajaj Finserv down by 0.77% were the top losers.

Meanwhile, the International Monetary Fund (IMF) said the overall macroeconomic environment in India is ‘pretty sound’, it is fiscally disciplined and the central bank moved fast to bring inflation under control. briefing on the 'Asia and Pacific Region's Economic Outlook', Krishna Srinivasan, Director of the Asia and Pacific Department, IMF said ‘They have been fiscally disciplined. They expect the fiscal at 5.9 per cent this year. The central bank has moved fast to bring inflation under control. The most recent number was 5 per cent (for September). So, inflation is coming down. So, overall, the macroeconomic environment is pretty sound in India’.

Talking about what kind of policy interventions are needed at this juncture in India to lift growth, he said that given the significant potential of India, the country should think about structural reforms. He said ‘Where I think in terms of if you want to really exploit the significant potential India has, then I think the need is for structural reforms. Again, there India has made significant strides, very impressive strides, in the area of digitalization and beefing up infrastructure where the efforts have been truly impressive. But beyond that, there could be reforms aimed at improving the business environment, labor reforms, removing trade restrictions. All these go into building an environment which will support investor competence more -- more so in India. So, structural reforms will be the key in supporting, I think’.

Further, regarding what kind of impact could sharp spike in bond yields and crude oil have on emerging market India and what could be done to shield the financial systems, his suggestion was to borrow ‘carefully’. He noted ‘In terms of the rising yields, you said, I think there -- I think this is true for every country, where if -- when interest rates start rising, I think it's important to keep in mind that sectors which are highly leveraged are likely to hurt more. And that's not just true for India, but it's true for other countries in the region. And that's why it's important to borrow carefully. And that applies to both the private sector and the public sector’.

Meanwhile, the IMF has just raised India's GDP growth forecast for India for the financial year 2023-24 to 6.3 per cent, its second upward revision since the April report. IMF attributed stronger-than-expected consumption during April-June for the upward projection in the growth estimate. The growth forecast was raised from 5.9 per cent in April, 6.1 per cent in July, to 6.3 per cent now, taking it closer to the 6.5 per cent predicted by the Indian authorities. For 2024-25, IMF pegged India's GDP growth at 6.3 per cent, though unchanged from its earlier two projections. IMF projected India's consumer inflation at 5.5 per cent this fiscal, against RBI's 5.4 per cent forecast.

The CNX Nifty is currently trading at 19716.95, down by 34.10 points or 0.17% after trading in a range of 19691.85 and 19743.40. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 1.54%, Coal India up by 1.54%, Titan Company up by 1.17%, HCL Technologies up by 1.17% and ONGC up by 1.11%. On the flip side, Divi's Lab down by 1.47%, Nestle down by 1.40%, Asian Paints down by 1.15%, Indusind Bank down by 0.89% and Bajaj Finserv down by 0.88% were the top losers.

All Asian markets are trading lower; Nikkei 225 slipped 632.09 points or 1.96% to 31,683.90, Taiwan Weighted lost 157.23 points or 0.94% to 16,625.34, Hang Seng declined 75.77 points or 0.43% to 17,737.68, KOSPI dropped 31.94 points or 1.3% to 2,424.21, Straits Times fell 21.59 points or 0.68% to 3,164.20, Jakarta Composite weakened 17.76 points or 0.26% to 6,909.02, Shanghai Composite was down by 12.3 points or 0.4% to 3,075.80.