Markets trade under pressure as Lok Sabha vote counting gets under way

Indian markets made gap-down opening on Tuesday as Election Commission of India (ECI) began counting of votes at 8 AM and early trends suggest that the BJP-led NDA will not win by a huge margin as the exit polls had expected. Sensex and Nifty are trading deeply in red with cut of over 2% each in early deals on account board based selling after witnessing a strong rally in the previous session. Some cautiousness came in as S&P Global Market Intelligence asserts that weak private consumption in India remains the largest concern, with rural demand in particular still straggling to catch up, at a time when the country's overall growth remains strong. For the second consecutive quarter, India's real GDP growth exceeded most forecasts, bringing the full financial year 2023-24 growth to 8.2 per cent. With this, India maintains its status of the world's fastest-growing large economy. However, markets trimmed most of their initial losses amid a sharp fall in crude oil prices overnight coupled with foreign fund inflows. Some support came in with a private report that strong growth and a narrower fiscal deficit can lead to a sovereign rating upgrade for India. 

Global cues remained weak with most of the Asian markets are trading lower as global investors consider the prospect the US economy ‘exceptionalism’ is starting to unwind as manufacturing activity in the world's largest economy further weakened. Back home, the capital markets regulator Sebi introduced a mobile app designed to demystify personal finance for investors with a suite of comprehensive tools. In stock specific development, Kalyan Jewellers India traded higher as it acquired the remaining 15% equity stake in Candere from Rupesh Jain for Rs 42 crore.

The BSE Sensex is currently trading at 74676.72, down by 1792.06 points or 2.34% after trading in a range of 73659.29 and 76300.46. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 3.16%, while Small cap index was down by 2.71%.

The top losing sectoral indices on the BSE were PSU down by 5.77%, Utilities down by 5.44%, Oil & Gas down by 5.23%, Power down by 5.20%, Energy down by 4.89%, while there was no gainer on the BSE sectoral front.

The few gainers on the Sensex were Hindustan Unilever up by 2.04%, Sun Pharma up by 1.19%, Nestle up by 1.07% and TCS up by 0.30%. On the flip side, Power Grid down by 5.89%, SBI down by 5.64%, NTPC down by 5.42%, Indusind Bank down by 4.73% and Larsen & Toubro down by 4.14% were the top losers.

Meanwhile, S&P Global Market Intelligence has asserted that weak private consumption in India remains the largest concern, with rural demand in particular still ‘straggling to catch up’, at a time when the country's overall growth remains strong. For the second consecutive quarter, India's real GDP growth exceeded most forecasts, bringing the full financial year 2023-24 growth to 8.2 per cent. With this, India maintains its status of the world's fastest-growing large economy. S&P Global Market Intelligence said India's strong GDP data added market optimism shortly ahead of the general election results to be announced on June 4. arguing private consumption in the country is weak, it noted ‘While positive, the headline figure does not remove concerns above the underlying strength of the economy and continues to point to uneven recovery’.  

It stated ‘Weak private consumption remains the largest concern, with rural demand in particular still straggling to catch up to India's strong overall growth. Latest high frequency data does signal that the rural demand is starting to pick up. An increase in two-wheeler sales and demand for diesel, as well as lower demand for the rural job guarantee scheme are all positive signs that the rural consumption may turn around in the coming quarters’. It also cautioned on the cloudy food inflation outlook. Food inflation in India has been consistently high. A moderation in inflation is observed since the start of 2024 but food prices remain persistently high. Retail inflation clocked 4.83 per cent in April 2024, the lowest in the past 11 months. Retail inflation in India, though, is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario. Food price inflation was at 8.70 per cent in April, way above the headline figure. It noted ‘Further easing of food prices strongly hinges on the upcoming monsoon season, which so far is projected to be normal but remains a significant risk’.

Overall, S&P Global Market Intelligence projects private consumption to improve gradually to grow 6.9 per cent in the current financial year 2024-25. Private investment should also continue to recover, supported by stronger capacity utilization and overall demand. S&P Global Market Intelligence expects India's real GDP growth to slow to 6.7 per cent in 2024-25. Separately, S&P Global Ratings last week revised its rating outlook on India to positive from stable, and added that it expects continuity in economic reforms and fiscal policies regardless of the Lok Sabha election outcome. It attributed robust economic growth, pronounced improvement in the quality of government spending, and political commitment to fiscal consolidation to the rating upgrade.

The CNX Nifty is currently trading at 22724.65, down by 539.25 points or 2.32% after trading in a range of 22389.85 and 23179.50. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 1.98%, Britannia Industries up by 1.78%, Nestle up by 0.99%, Sun Pharma up by 0.97% and Apollo Hospital up by 0.68%. On the flip side, Adani Enterprises down by 8.18%, Adani Ports & SEZ down by 7.01%, Coal India down by 5.85%, Power Grid down by 5.76% and SBI down by 5.54% were the top losers.

Asian markets are trading mostly in red; Taiwan Weighted lost 147.18 points or 0.68% to 21,389.58, Nikkei 225 slipped 60.37 points or 0.16% to 38,862.66, KOSPI dropped 11.26 points or 0.42% to 2,671.26, Straits Times fell 5.79 points or 0.17% to 3,343.08 and Shanghai Composite weakened 0.6 points or 0.02% to 3,077.89. On the other hand, Jakarta Composite rose 97.56 points or 1.39% to 7,133.75 and Hang Seng was up by 41.5 points or 0.23% to 18,444.54.