Sensex, Nifty turn negative in early noon deals

Erasing all of their gains, Indian equity benchmarks turned negative in early afternoon session, with both Sensex and Nifty trading in red, on the back of selling at Banking and Realty counters along with mixed cues from Asian markets amid heightened geopolitical tensions and uncertainty over when the Fed will cut rates. Street overlooked the first ever HSBC Flash India PMI data showing that the health of the Indian private sector economy improved substantially in January, as a sharper upturn in new work intakes fuelled output growth. The headline HSBC Flash India Composite PMI Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors - was at 61.0 in January, inside expansion territory for the thirtieth successive month.

On the global front, Asian markets were trading mixed, after the manufacturing sector in Japan continued to contract in January, and at a slightly slower rate, with a manufacturing PMI score of 48.0. That's up barely from 47.9 in December, and it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

The broader indices were trading in green; the BSE Mid cap index rose 0.24%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Telecom up by 1.44%, Metal up by 1.34%, PSU up by 1.23%, FMCG up by 0.95% and Basic Materials up by 0.65%, while Bankex down by 1.17%, Realty down by 0.91%, Auto down by 0.34%, IT down by 0.27% and Consumer discretionary down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.06%, Bajaj Finserv up by 1.77%, Power Grid up by 1.60%, Tata Steel up by 1.46% and SBI up by 1.26%. On the flip side, Axis Bank down by 4.74%, ICICI Bank down by 2.86%, Asian Paints down by 2.24%, TCS down by 1.32% and Kotak Mahindra Bank down by 0.93% were the top losers.

Meanwhile, rating agency ICRA in its latest report has highlighted that the marketing margins on retail sales of auto fuels for the Indian oil marketing companies (OMCs) have improved in the recent weeks with reduction in crude prices. It said the prices moderated in the last few months owing to tepid Chinese oil demand coupled with elevated production and inventory levels in the US, despite tightening supply, post the extension of supply cuts by the OPEC+. 

According to the report, the Special Additional Excise Duty (SAED) on petroleum products was reduced in line with international product prices. It had witnessed multiple revisions since it was initially imposed in July 2022. In the latest revision on January 01, 2024, the SAED was decreased on diesel and ATF to nil and remained nil on petrol. The end of summer season and reduction in demand along with higher product supplies decreased the crack spreads for gasoline. The gasoil prices also fell due to demand-side issues. There was no pick-up in China’s consumption, which put pressure on the overall demand for the products.

ICRA’s outlook on the refining & marketing sector remains stable. Petroleum, oil & lubricants (POL) consumption in India witnessed YoY growth of 5% in 9M FY2024 with a similar growth rate expected for FY2024. Further, the POL consumption is expected to witness a 3-4% growth in FY2025, driven by economic growth, increasing mobility and air travel. The domestic refining capacity is expected to increase to 306 million MT over the next three to four years from the current capacity of 254 million MT as of December 2023 to support the increased consumption and exports. ICRA expects the capacity utilisation of the PSU and the private refiners to remain healthy in FY2024.

The OMCs have planned a significant capex in the refining segment. The credit profile of the incumbents is likely to improve with better profitability. Moreover, several incumbents in the sector enjoy sovereign ownership and exceptional financial flexibility. 

The CNX Nifty is currently trading at 21226.65, down by 12.15 points or 0.06% after trading in a range of 21137.20 and 21408.60. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy's Lab up by 3.00%, Hindalco up by 2.99%, Bajaj Finserv up by 2.01%, Hindustan Unilever up by 1.96% and Power Grid up by 1.66%. On the flip side, Axis Bank down by 4.60%, ICICI Bank down by 2.72%, Hero MotoCorp down by 2.29%, Asian Paints down by 2.28% and TCS down by 1.23% were the top losers.

Asian markets were trading mixed; Hang Seng advanced 348.51 points or 2.27% to 15,702.49, Taiwan Weighted added 1.24 points or 0.01% to 17,875.83, Straits Times rose 5.39 points or 0.17% to 3,140.64 and Shanghai Composite strengthened 45.39 points or 1.64% to 2,816.37, while Jakarta Composite plunged 38.01 points or 0.52% to 7,218.22, KOSPI dropped 8.92 points or 0.36% to 2,469.69 and Nikkei 225 slipped 291.09 points or 0.8% to 36,226.48.