Benchmarks extend losses in morning deals

Indian equity benchmarks extended losses in morning deals, as investors remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out on July 12. Investors’ focus also shifted to the corporate earnings with TCS kick-in the Q1 result season on Thursday. Traders remained cautious with a private report stating that India consumer price inflation probably edged up in June, snapping five months of declines, largely because of a jump in vegetable prices caused by the damage to crops wrought by extreme weather. Traders paid no heed towards global rating agency, Moody’s report in which it kept India’s 2024 growth forecast unchanged at 6.8 percent from its March forecast. The rating firm predicted Indian economy to grow 6.4 percent in 2025. It said increasing domestic and overseas demand is supporting GDP growth in emerging markets (EMs), with wide variation by country. On the sectoral front, Aviation industry stocks remained in limelight as Icra stated that the momentum in air passenger traffic is expected to continue and airlines' net loss is projected to be Rs 3,000-4,000 crore in the year ending March 2025, both trends similar to the previous financial year. On the global front, Asian markets are trading mostly in green even as Federal Reserve Chair Jerome Powell offered little hints on the timing of possible interest-rate cuts. Traders also look ahead to the report on US consumer price inflation in the month of June on Thursday for further clues on interest rates.

The BSE Sensex is currently trading at 79780.15, down by 571.49 points or 0.71% after trading in a range of 79776.74 and 80481.36. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 1.29%, while Small cap index was down by 1.55%.

The top losing sectoral indices on the BSE were Metal down by 1.87%, Basic Materials down by 1.68%, Oil & Gas down by 1.51%, Industrials down by 1.43% and Energy down by 1.41%, while there were no gaining sectoral indices on the BSE. 

The top gainers on the Sensex were Maruti Suzuki up by 2.72%, Asian Paints up by 0.27%, Hindustan Unilever up by 0.22%, Bharti Airtel up by 0.14% and Bajaj Finance up by 0.03%. On the flip side, Mahindra & Mahindra down by 5.79%, SBI down by 1.81%, Tata Steel down by 1.63%, HCL Technologies down by 1.54% and Ultratech Cement down by 1.21% were the top losers.

Meanwhile, rating agency Icra in its latest report has said that the momentum in air passenger traffic is expected to continue and airlines' net loss is projected to be Rs 3,000-4,000 crore in the year ending March 2025 (FY25), both trends similar to the previous financial year. In June, the domestic air passenger traffic was estimated at 132.8 lakh, around 3.7 per cent lower than seen in May but about 6.3 per cent higher compared to the year-ago period.

It said the outlook for the country's aviation industry is stable amid the continued recovery in domestic and international air passenger traffic, with a relatively stable cost environment and expectations of the trend continuing in FY2025. It noted ‘The momentum in air passenger traffic witnessed in FY2024 is expected to continue into FY2025, though further expansion in yields from the current levels may be limited.’

According to its report, the pace of recovery in industry earnings is likely to be gradual owing to the high fixed-cost nature of the business and the net loss is expected to be Rs 3,000-4,000 crore this fiscal as seen in the previous financial year. While mentioning about supply chain issues, Icra said it is estimated that 24-26 per cent of the total fleet of Indian airlines in operations was grounded by March 31, 2024.

It stated considering the bulk recall of the engines globally by P&W and other existing issues with the original equipment manufacturer's (OEM's) engines, the testing by P&W is likely to take longer, around 250-300 days. This will result in increased operating expenses towards the cost of grounding, increased lease rentals due to additional aircraft being taken on lease to offset the grounded capacity, rising lease rates and lower fuel efficiency (due to replacement by older aircraft taken on spot lease), which will adversely impact an airline's cost structure. 

The CNX Nifty is currently trading at 24252.10, down by 181.10 points or 0.74% after trading in a range of 24250.25 and 24461.05. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 2.77%, Britannia Industries up by 1.59%, Eicher Motors up by 1.00%, Apollo Hospital up by 0.38% and Divi's Lab up by 0.38%. On the flip side, Mahindra & Mahindra down by 6.09%, Shriram Finance down by 2.26%, ONGC down by 1.87%, SBI down by 1.86% and Hindalco down by 1.82% were the top losers. 

Asian markets are trading mostly in green; Hang Seng advanced 47.47 points or 0.27% to 17,570.70, Jakarta Composite gained 25.04 points or 0.34% to 7,294.84, Straits Times rose 21.26 points or 0.62% to 3,447.35, KOSPI increased 2.31 points or 0.08% to 2,869.69, Nikkei 225 surged 91.33 points or 0.22% to 41,671.50 and Taiwan Weighted added 27.33 points or 0.11% to 23,927.41.

On the flip side, Shanghai Composite weakened 9.71 points or 0.33% to 2,949.66.