Domestic indices magnify losses; Sensex drops over 850 points

Indian equity benchmarks extended their losses and were trading lower by over 1.30 percent each, which dragged both the Sensex and Nifty below their psychological 63,200 and 18,900 levels respectively. Meanwhile, the session was also proving weak for broader indices with BSE Mid cap and BSE Small cap trading with losses in the range of 2.10-2.40%. Weak cues from global markets weighed on the domestic sentiments. Sentiments remained weak amid worries about rising U.S. Treasury yields and the ongoing Israel-Hamas war. Israel Prime Minister Benjamin Netanyahu said the country is preparing for a ground invasion of Gaza. Depreciation in Indian rupee against dollar also weighed down sentiments. Rupee weakened by 7 paise to 83.24 against the dollar at the Inter-bank Foreign Exchange market on account of increased demand for the American currency from importers and banks.

On the global front, Asian markets were trading in red following negative cues from the US markets overnight amid disappointing earnings reports. Back home, all the sectoral indices on the BSE were trading in red led by Realty, Telecom, Industrials, PSU and Consumer Disc. In the stock specific development, Sona BLW Precision Forgings rallied after the company reported its highest-ever quarterly revenue and net profit for the July-September quarter (Q2FY24) period. On consolidated basis, the company has reported 34.05% rise in its net profit at Rs 124.06 crore for the quarter under review as compared to Rs 92.55 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 63159.14, down by 889.92 points or 1.39% after trading in a range of 63151.70 and 63774.16. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.14%, while Small cap index down by 2.39%.

The top losing sectoral indices on the BSE were Realty down by 2.61%, Telecom down by 2.29%, Industrials down by 2.12%, PSU down by 2.04% and Consumer Disc down by 1.93%, while there were no gainers. 

The only gainers on the Sensex were Axis Bank up by 0.29% and HCL up by 0.13%. On the flip side, Tech Mahindra down by 2.82%, Bajaj Finance down by 2.77%, Mahindra & Mahindra down by 2.57%, Bajaj Finserv down by 2.46% and Nestle down by 2.37% were the top losers.

Meanwhile, government think tank NITI Aayog has initiated a study to develop a comprehensive action plan to bridge India's trade deficit with China over time and align trading strategies with emerging geopolitical situation and potential risks to safeguard supply chains. The Aayog has invited bids from consultants to lead the two studies in areas of reducing trade gap with China and boosting local manufacturing. The move also comes against the backdrop of simmering tensions between India and China since the Galwan clash in June 2020.

The centrality of China to India’s supply chain in certain industries raises dependency and vulnerability of the Indian supply chains and production networks particularly during crisis situations such as the COVID-19 and geopolitical conflicts. The terms of reference of study includes analysing the trends in India-China trade (at product category level) over the recent years to discern patterns of trade dependency and underlying reasons for the same. The study will analyse the supply chains of India-China trade and also comparable supply chains of India's trade with other Asian countries to derisk India's trade. It will also examine product categories where India has comparative advantage and a sizeable market in China to scale up exports to China.

According to the Aayog, the study should recommend key policies to boost domestic production and productivity in sectors comparable to the global economy not only to reduce the trade deficit with China, but also to capitalise on global supply chain shifts. The study should analyse the type and quantum off foreign investment which may bridge the technology gap and utilise the abundant domestic manpower for competitive products. The study will also have to examine tariff, non-tariff barriers, regulatory ecosystem and market access concerns for Indian exports to China.

The CNX Nifty is currently trading at 18858.05, down by 264.10 points or 1.38% after trading in a range of 18850.30 and 19041.70. There were 2 stocks advancing against 48 stocks declining on the index.

The only gainers on Nifty were Axis Bank up by 0.31% and HCL up by 0.16%. On the flip side, UPL down by 2.93%, Tech Mahindra down by 2.90%, Bajaj Finance down by 2.78%, Mahindra & Mahindra down by 2.63% and Bajaj Finserv down by 2.57% were the top losers.

All Asian markets were trading lower; Hang Seng declined 144.69 points or 0.85% to 16,940.64, Nikkei 225 slipped 680.38 points or 2.22% to 30,589.54, Taiwan Weighted lost 245.28 points or 1.52% to 16,113.61, Straits Times fell 11.56 points or 0.38% to 3,067.22, KOSPI dropped 57.64 points or 2.5% to 2,305.53, Shanghai Composite weakened 6.39 points or 0.22% to 2,967.72 and Jakarta Composite plunged 109.7 points or 1.63% to 6,724.69.