Domestic indices trade under pressure in early deals

Indian equity benchmarks made gap-down opening on Wednesday tracking weak cues from Wall Street overnight as well as lackluster trade in Asian counterparts, as strong US economic data sent Treasury yields higher and renewed concerns over the outlook for interest rates. Recent US data showed better than expected increases in job openings, manufacturing and factory orders in the month of February. The data raised questions about whether the US Fed will lower interest rates even in June. Domestic indices are trading under pressure in early deals amid selling in FMCG stocks. Foreign fund outflows dented sentiments. Foreign institutional investors (FII) sold shares net worth Rs 1,622.69 crore on April 03, 2024, according to the provisional data available on the NSE. Traders avoided to take any long positions as the RBI appointed MPC (Monetary Policy Committee) begin their 3-day meet to discuss policy measures. The RBI will announce the outcome on Friday. There are expectations that MPC may keep the repo rate unchanged.

However, Sensex and Nifty managed to trim some of their losses as some support came in after the World Bank said the Indian economy is projected to grow at 7.5 per cent in 2024, revising its earlier projections for the same period by 1.2 per cent. On the sectoral front, sugar industry stocks are in focus after Indian Sugar Mills Association (ISMA) has requested the government to allow the export of 10 lakh tonne of sugar in the current 2023-24 season, anticipating healthy closing stock by the season-end. Sugar production has reached 302.20 lakh tonne till March of the current season against 300.77 lakh tonne in the year-ago period. In stock specific development, UltraTech Cement gained after the company announced its plans to invest up to Rs 32,400 crore in the next three years as part of its ongoing expansion.

The BSE Sensex is currently trading at 73595.34, down by 308.57 points or 0.42% after trading in a range of 73540.27 and 73757.23. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.08%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Utilities up by 0.79%, Metal up by 0.79%, Oil & Gas up by 0.72%, PSU up by 0.62% and Power up by 0.49%, while Realty down by 1.27%, FMCG down by 0.87%, Telecom down by 0.70%, Bankex down by 0.41% and Healthcare down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.27%, Ultratech Cement up by 1.18%, Power Grid Corp up by 0.88%, Axis Bank up by 0.78% and Tata Steel up by 0.58%. On the flip side, Nestle down by 2.32%, Sun Pharma down by 1.46%, Bharti Airtel down by 1.05%, Hindustan Unilever down by 1.01% and ITC down by 0.97% were the top losers.

Meanwhile, the World Bank in its South Asia Development Update April 2024 has revised its earlier projection of Indian economy growth by 1.2 per cent to 7.5 per cent for FY23/24. It said overall, growth in South Asia is expected to be strong at 6.0 per cent in 2024, driven mainly by robust growth in India and recoveries in Pakistan and Sri Lanka. According to the report, South Asia is expected to remain the fastest-growing region in the world for the next two years, with growth projected to be 6.1% in 2025. It said ‘In India, which accounts for the bulk of the region's economy, output growth is expected to reach 7.5% in FY23/24 before returning to 6.6% over the medium term, with activity in services and industry expected to remain robust’. 

In India, the World Bank said, economic activity surprised on the upside in 2023Q4, with growth of 8.4 per cent from a year ago. The expansion was supported by rapid increases in investment and government consumption. More recent survey data point to continued strong performance. It added in February, India's composite purchasing managers index (PMI) stood at 60.6, well above the global average of 52.1 (a value above 50 indicates expansion). Growth in FY2023/24 is estimated to have exceeded earlier forecasts. According to the report, in India, inflation has remained within the Reserve Bank of India's 2-6 per cent target range since a spike in mid-2023, and the policy rate has remained unchanged since February 2023. Food price inflation has been elevated, partly reflecting a weak harvest due to El Nino.

In India, output growth is projected to reach 7.5 percent in FY2023/24 on the back of robust growth in Q3 of FY2023/24. Growth is expected to moderate to 6.6 percent in FY2024/25 before picking up in subsequent years as a decade of robust public investment yields growth dividends. The expected slowdown in growth between FY2023/24 and FY2024/25 mainly reflects a deceleration in investment from its elevated pace in the previous year. It further said growth in services and industry is expected to remain robust, the latter aided by strong construction and real estate activity. Inflationary pressures are expected to subside, creating more policy space for easing financial conditions.

As per the report, in Bangladesh, output is expected to rise by 5.7% in FY24/25, with high inflation and restrictions on trade and foreign exchange constraining economic activity. Following the contraction in FY22/23, Pakistan's economy is expected to grow by 2.3% in FY24/25 as business confidence improves. In Sri Lanka, output growth is expected to strengthen to 2.5% in 2025, with modest recoveries in reserves, remittances, and tourism.

The CNX Nifty is currently trading at 22369.15, down by 84.15 points or 0.37% after trading in a range of 22346.50 and 22408.05. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Shriram Finance up by 3.26%, ONGC up by 1.65%, Hindalco up by 1.52%, Ultratech Cement up by 1.22% and Tech Mahindra up by 1.17%. On the flip side, Nestle down by 2.33%, HDFC Life Insurance down by 1.56%, Sun Pharma down by 1.46%, Bajaj Auto down by 1.37% and Britannia Industries down by 1.33% were the top losers.

All Asian markets are trading lower; Nikkei 225 slipped 262.25 points or 0.66% to 39,576.66, Hang Seng declined 125.23 points or 0.74% to 16,806.29, Taiwan Weighted lost 72.52 points or 0.35% to 20,394.05, Jakarta Composite plunged 46.08 points or 0.64% to 7,190.90, KOSPI dropped 35.37 points or 1.28% to 2,717.79, Straits Times fell 22.41 points or 0.69% to 3,225.31 and Shanghai Composite was down by 7.5 points or 0.24% to 3,067.46.