Sensex, Nifty trade lower amid US rate worries, heightened geopolitical tensions

Indian equity benchmarks made gap-down opening on Wednesday tracking mixed cues from Wall Street overnight as well as weakness in Asian counterparts as skepticism over the outlook for interest rates continue ahead of the release of key inflation readings from the U.S. and Europe later in the week. The report on US personal income and spending in the month of April, due on Friday, includes readings on inflation said to be preferred by the US Fed. The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed's next monetary policy meeting on June 11-12.

Sensex and Nifty are trading lower with cut of around half a percent each in early deals as overnight surge in oil prices and a jump in U.S. Treasury yields to multi-week highs weighted on markets. Crude oil prices rose as geopolitical tensions flared in the Middle East, with reports of Israeli tanks reaching the center of Rafah in Gaza and a vessel attack in the Red Sea. Moreover, market participants remained on sidelines ahead of monthly F&O expiry on Thursday as well as ahead of the Lok Sabha exit poll results will be announced post the completion of all seven phases on June 01. The actual results will be announced on June 4th. 

On the sectoral front, sugar stocks are in focus with report that India may allow sugar exports after assessing the final sugarcane sowing and output in the 2024-25 season, as the world's biggest producer after Brazil is expecting a lower sugar output of 30 million tonnes next season. For the current 2023-24 season ending September, sugar production has reached 31.5 million tonnes so far, with the final output likely to touch 31.8 million tonnes as mills in Tamil Nadu and Karnataka wrap up crushing. In stock specific development, Wockhardt rose after narrowing its quarterly net loss from last year.

The BSE Sensex is currently trading at 74834.47, down by 335.98 points or 0.45% after trading in a range of 74754.35 and 74986.22. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.09%, while Small cap index was up by 0.23%.

The top gaining sectoral indices on the BSE were Telecom up by 0.51%, Capital Goods up by 0.32%, PSU up by 0.31%, Industrials up by 0.26% and Utilities up by 0.17%, while Auto down by 0.70%, Bankex down by 0.66%, Oil & Gas down by 0.38%, IT down by 0.35% and Realty down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 0.82%, Power Grid up by 0.74%, Sun Pharma up by 0.56%, ITC up by 0.24% and Nestle up by 0.18%. On the flip side, Mahindra & Mahindra down by 1.82%, ICICI Bank down by 1.26%, HDFC Bank down by 1.08%, Indusind Bank down by 1.08% and Tech Mahindra down by 0.95% were the top losers.

Meanwhile, the Economic Research Department of the State Bank of India (SBI) has released a detailed research report authored projecting a significant boost in India's economic growth, driven by a recovering global economy.  With strong performance across various economic indicators and favorable monsoon conditions, the report anticipates that India's GDP growth could touch 8 per cent in FY24. The report also highlights the potential impact of global economic resilience on India's growth trajectory. Despite the challenges faced by the global economy, including geopolitical tensions and extreme weather events, global growth remains resilient, supported by easing inflationary pressures and strong employment conditions.

SBI's in-house developed Artificial Neural Network (ANN) model, using 30 high-frequency indicators, forecasts Q4 FY24 GDP growth at 7.4 per cent. The report identifies a consistent growth trend across both urban and rural sectors in India. Urban economic momentum is indicated by strong performance in passenger vehicle sales, airport passenger traffic, GST collections, credit card transactions, petroleum consumption, and toll collection. Rural economic indicators also show a positive trend, with diesel consumption and two-wheeler sales increasing. An 'above normal' monsoon forecast bodes well for the rural economy, enhancing the supply of essential commodities like pulses, oilseeds, and cereals.

Corporate India continues to demonstrate resilience, with around 2,400 listed entities reporting strong numbers in Q4 FY24. While top-line growth stood at 9 per cent, EBIDTA increased by approximately 21 per cent. However, there was some pressure on profitability, with PAT growth declining to around 12 per cent from 42 per cent in the previous two quarters. Corporate Gross Value Added (GVA) grew by around 18 per cent in Q4 FY24, showing a slight reduction from previous quarters. With the global economy showing signs of recovery and easing inflationary pressures, India is well-positioned to achieve robust growth.

The CNX Nifty is currently trading at 22782.80, down by 105.35 points or 0.46% after trading in a range of 22762.25 and 22825.50. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 0.70%, Hindalco up by 0.63%, Power Grid up by 0.56%, Sun Pharma up by 0.55% and Coal India up by 0.45%. On the flip side, Mahindra & Mahindra down by 1.99%, SBI Life Insurance down by 1.82%, HDFC Life Insurance down by 1.53%, ICICI Bank down by 1.29% and Tata Consumer Products down by 1.20% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 289.87 points or 1.54% to 18,531.29, Nikkei 225 slipped 161.43 points or 0.42% to 38,693.94, Taiwan Weighted lost 139.96 points or 0.64% to 21,718.45, Jakarta Composite plunged 105.68 points or 1.46% to 7,147.95, KOSPI dropped 38.37 points or 1.41% to 2,684.48 and Straits Times fell 2.84 points or 0.09% to 3,327.25, while Shanghai Composite was up by 10.32 points or 0.33% to 3,119.89.