Domestic indices magnify losses in early noon session

Domestic equity markets magnified their losses and were trading with cut of over half percent in early noon session on account selling by funds and retail investors. Hectic selling in Hindustan Unilever, Mahindra & Mahindra, ITC and Tech Mahindra dragged the markets to trade lower. Weak cues from other Asian markets weighed on the domestic sentiments. Traders were cautious after Geopolitical tensions were on the radar as disruptions in the Red Sea raised shipping costs in Europe, while the Israeli conflict with Hamas threatened to spread to Lebanon. Traders also remained cautious with India Ratings and Research Chief Economist Devendra Kumar Pant’s statement that the Indian economy is facing the challenge of lower consumption growth as high inflation is impacting people in the lower income bracket. 

On the global front, Asian markets were trading mostly in red as China announced sanctions on five US defence-related companies in response to sanctions on Chinese companies and arm sales to Taiwan. Back home, on the BSE sectoral front, traders were seen pilling up positions only in Realty and Power, while selling was witnessed in FMCG, Healthcare, Metal, Basic Materials and Bankex. 

The BSE Sensex is currently trading at 71610.20, down by 415.95 points or 0.58% after trading in a range of 71574.78 and 72181.77. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.63%, while Small cap index down by 0.17%.

The only gaining sectoral indices on the BSE were Realty up by 0.68% and Power up by 0.04%, while FMCG down by 1.36%, Healthcare down by 0.98%, Metal down by 0.97%, Basic Materials down by 0.96% and Bankex down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were HCL up by 0.99%, Bharti Airtel up by 0.53%, Bajaj Finance up by 0.29%, Power Grid up by 0.29% and NTPC up by 0.27%. On the flip side, Hindustan Unilever down by 1.73%, Mahindra & Mahindra down by 1.35%, ITC down by 1.34%, Tech Mahindra down by 1.20% and Nestle down by 1.11% were the top losers.

Meanwhile, Economic think tank the Global Trade Research Initiative (GTRI) in its latest report has said that the increasing Red Sea crisis may impact trade as it is expected to push shipping costs by up to 60 per cent and insurance premium by 20 per cent. This conflict could also result in increased shipping costs (40-60 per cent) and delays due to rerouting (up to 20 days more), higher insurance premiums (15-20 per cent), and potential cargo loss from piracy and attacks.

According to the report, the situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Yemen-based Houthi militants. Due to these attacks, it said the shippers are taking consignments through the Cape of Good Hope, resulting in delays of about 20 days. The Houthi conflict's disruption of the Red Sea shipping lanes significantly impacts Indian trade, especially with the Middle East, Africa, and Europe. 

The report further said that India, heavily reliant on the Bab-el-Mandeb Strait for crude oil and LNG imports and trade with key regions, faces substantial economic and security risks from any disruption in this area. For overall merchandise trade with Europe and North Africa, about 50 per cent of imports and 60 per cent of exports, totalling $113 billion, might have used this route. It added that the conflict has necessitated India to consider alternative routes, such as the longer Cape of Good Hope, which could lead to increased energy costs.  

The CNX Nifty is currently trading at 21570.20, down by 140.60 points or 0.65% after trading in a range of 21562.50 and 21763.95. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 1.88%, HCL up by 0.74%, ONGC up by 0.72%, Bharti Airtel up by 0.45% and Eicher Motors up by 0.39%. On the flip side, UPL down by 2.86%, Divi's Lab down by 2.40%, Tata Consumer down by 1.88%, Apollo Hospital down by 1.85% and Hindustan Unilever down by 1.79% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 361.49 points or 2.24% to 16,173.84, Straits Times fell 1.71 points or 0.05% to 3,182.59, KOSPI dropped 5.70 points or 0.22% to 2,572.38, Shanghai Composite weakened 35.21 points or 1.22% to 2,893.97 and Jakarta Composite plunged 24.31 points or 0.33% to 7,326.31. However, Taiwan Weighted added 53.52 points or 0.3% to 17,572.66.