Domestic indices trade deeply in red on weak global cues

Indian equity benchmarks made gap-down opening on Wednesday due to risk-off sentiment on bets that US Fed rate cuts this year may be lower than Wall Street's expectations. Markets are trading deeply in red with cut of over a percent each in early deals as the 10-year treasury yield in the US ticked over 4 per cent. Geopolitical tensions were also in focus after Iran launched missile strikes in Iraq, Syria and Pakistan, citing security threats. Traders took note of report that ratings agency Fitch has affirmed BBB- rating for India, with the outlook stated as stable. Market participants overlooked the Reserve Bank of India (RBI) governor, Shaktikanta Das, stating that retail inflation is slowly moderating and is steadily moving towards the target of 4 per cent. 

On the global front, most of the Asian markets traded lower led by Chinese stocks after a slew of data pointed to a patchy recovery in the world's second-biggest economy, while the dollar was near a one-month high as traders dialled back bets of early interest rate cuts. China's economy grew 5.2 per cent in the fourth quarter from a year earlier. Back home, Crisil report noted that corporates' revenues are likely to have grown 8-10 per cent in the 2023 December quarter on an annual basis. In stock specific development, HDFC Bank lead the loser on the Sensex and Nifty after its U.S.-listed shares fall 7 percent, the most since April 2022 post Q3 results.

The BSE Sensex is currently trading at 72384.19, down by 744.58 points or 1.02% after trading in a range of 71757.54 and 72484.80. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.21%, while Small cap index was down by 0.05%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.51%, IT up by 0.47%, TECK up by 0.41%, Energy up by 0.38% and Oil & Gas up by 0.38%, while Bankex down by 2.05%, Metal down by 1.29%, Realty down by 1.08%, Auto down by 0.86% and Basic Materials down by 0.71% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 0.91%, HCL Technologies up by 0.68%, Reliance Industries up by 0.58%, Larsen & Toubro up by 0.55% and Infosys up by 0.49%. On the flip side, HDFC Bank down by 5.63%, Axis Bank down by 1.97%, Tata Steel down by 1.71%, Kotak Mahindra Bank down by 1.55% and Tata Motors down by 1.08% were the top losers.

Meanwhile, with robust medium-term growth prospects and sound external finances, Fitch Ratings has affirmed India’s sovereign rating at ‘BBB-’ with a stable outlook. India’s rating has remained unchanged at ‘BBB-’ the lowest investment grade, since August 2006. In its sovereign rating action, Fitch said India is poised to remain one of the fastest-growing countries globally in the next few years, as the robust economic momentum is proving resilient.

The agency has projected India’s GDP growth at 6.9 per cent for the fiscal year ending March 2024 (FY24) before easing to 6.5 per cent in FY25. Investment is likely to remain a key growth driver, as the government’s capex drive is expected to continue, and private investment should accelerate gradually. Consumption is also likely to moderate further in the near term due to reduced household savings buffers.

It said India’s rating is underpinned by a robust medium-term GDP growth outlook and sound external finances, which remain intact as the country has effectively navigated a fraught external environment in the past few years. However, weak public finances - illustrated by high deficits, debt and interest/ revenue ratio compared with peers - continue to be the largest constraint for the rating. It added lagging structural metrics, including World Bank governance indicators and GDP per capita, also weigh on the rating.

The CNX Nifty is currently trading at 21812.45, down by 219.85 points or 1.00% after trading in a range of 21636.95 and 21851.50. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were TCS up by 0.91%, Larsen & Toubro up by 0.63%, HCL Technologies up by 0.55%, Reliance Industries up by 0.50% and LTIMindtree up by 0.47%. On the flip side, HDFC Bank down by 5.69%, Hindalco down by 2.42%, Axis Bank down by 1.97%, Bajaj Auto down by 1.84% and Tata Steel down by 1.79% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 436.68 points or 2.83% to 15,429.24, Taiwan Weighted lost 114.24 points or 0.66% to 17,232.63, KOSPI dropped 57.00 points or 2.34% to 2,440.59, Jakarta Composite plunged 42.81 points or 0.59% to 7,199.98, Straits Times fell 21.3 points or 0.67% to 3,163.69 and Shanghai Composite weakened 18.39 points or 0.64% to 2,875.60, while Nikkei 225 was up by 17.69 points or 0.05% to 35,636.87.