Markets end flat on Thursday

In a largely lackluster trading session, Indian equity benchmarks recouped most of their losses and ended flat on Thursday on selective profit-taking despite optimism in global equities. Markets eyed the earnings season and the eagerly anticipated 2024 Union Budget on July 23. Markets made a positive start as traders took support with labour ministry stating that retail inflation for industrial workers eased to 3.86 per cent in May compared to 4.42 per cent in the same month a year ago. Some optimism came with a State Bank of India (SBI) report showing that between FY14 and FY23, India generated 125 million jobs, which is 4.3 times more than the preceding decadal period of FY04-FY14.  However, key indices soon erased initial gains and slipped into red in morning deals, as traders 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. Some concern also came as Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has flagged concerns over quality of disclosures made by some NBFCs and urged the auditing community to ensure that entities provide appropriate qualitative information to depositors as well as other stakeholders.

However, key gauges managed to trim initial losses towards end and ended flat, as traders got some relief with credit rating agency, India Ratings and Research (Ind-Ra) report stating that India is likely to see a surge in private consumption in the current fiscal year (FY25), amid rural demand recovery owing to normal monsoon and moderating inflation. Some support came as Commerce and Industry Minister Piyush Goyal expressed optimism over India and the UK free trade agreement (FTA) and said both the countries are committed to the proposed FTA. He said that the initial comments made by the new UK government are ‘very’ encouraging. Britain's newly-elected Prime Minister Keir Starmer said he stood ready to conclude an FTA that worked for both sides.

On the global front, European markets were trading higher with underlying sentiment supported by encouraging economic data from Germany and U.K. as well as expectations of a Federal Reserve rate cut in September. Asian markets settled higher on Thursday after Federal Reserve Chair Jerome Powell said the U.S. central bank will make interest rate decisions 'when and as' they are needed, regardless of political factors. Amid rising hopes for a September rate cut, investors awaited the release of U.S. CPI report later in the day for further direction. 

Back home, on the sectoral front, banking stocks were in focus after the Reserve Bank of India permitted banks to use ratings by Brickwork Ratings India for loans of up to Rs 250 crore. The RBI, in October 2022, asked banks and other regulated entities not to obtain any fresh ratings from Brickwork Ratings India. Besides, auto stocks were in watch, as CareEdge Ratings' report stated that commercial vehicle sales volume is expected to decline 3-6 per cent in the current fiscal (FY25) due to a slump in demand. It noted that the drop in sales volume is due to a slowdown in demand in both the medium and heavy commercial and light commercial vehicle segments, as well as on account of high inventory levels with dealers.  

Finally, the BSE Sensex fell 27.43 points or 0.03% to 79,897.34, and the CNX Nifty was down by 8.50 points or 0.03% points to 24,315.95. 

The BSE Sensex touched high and low of 80,170.09 and 79,464.38 respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.34%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.68%, Energy up by 1.20%, PSU up by 1.17%, Consumer Durables up by 0.78% and FMCG up by 0.39%, while Realty down by 1.41%, Auto down by 0.43%, Power down by 0.39%, Healthcare down by 0.35% and Utilities down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.64%, Tata Motors up by 1.52%, Asian Paints up by 0.93%, SBI up by 0.88% and Titan Company up by 0.84%. On the flip side, Bajaj Finance down by 1.48%, Mahindra & Mahindra down by 1.24%, NTPC down by 1.14%, Nestle down by 1.05% and Power Grid Corporation down by 0.95% were the top losers.

Meanwhile, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that India is likely to see a surge in private consumption in the current fiscal year (FY25), amid rural demand recovery owing to normal monsoon and moderating inflation. 

It further said that the rise in private consumption would lead to more balanced growth, reducing the disparity between premium and value segments. The rating agency also expects urban demand to also continue to grow but at a slower pace, noting that there has been a constant rise in rural consumption demand in recent years.

Besides, Ind-Ra said that rural - urban inflation distribution is concerning, given that rural wage growth is perennially facing higher inflationary pressure versus urban (owing to higher food CPI), amplifying a negative impact on consumption. However, it believes the positive real wage growth in the past few months along with the expectation of a normal monsoon may support rural demand in FY25.

The CNX Nifty traded in a range of 24,402.65 and 24,193.75. There were 28 stocks advancing against 21 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were ONGC up by 2.40%, Coal India up by 2.20%, BPCL up by 2.13%, ITC up by 1.58% and Tata Motors up by 1.56%. On the flip side, Tata Consumer Product down by 1.79%, Bajaj Finance down by 1.36%, Divi's Lab down by 1.19%, Mahindra & Mahindra down by 1.17%, and Sun Pharma down by 0.85% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 19.84 points or 0.24% to 8,213.35, France’s CAC rose 24.31 points or 0.32% to 7,597.86 and Germany’s DAX gained 28.84 points or 0.16% to 18,436.06.

Asian markets settled higher on Thursday as investors are awaiting the release of US CPI report later in the day to gauge on Federal Reserve interest rate cut timeline. Meanwhile, US Federal Reserve Chair Jerome Powell said that the Fed will make interest rate decisions ‘when and as’ they are needed, pushing back on a suggestion that a September rate cut could be seen as a political act ahead of the fall presidential election. Chinese shares gained ahead of upcoming Chinese Communist Party's Third Plenum where economic policies and reforms are expected to be discussed, and the release of key economic indicators by the National Bureau of Statistics. Also, China's securities regulator announced more curbs on short-selling and pledged tighter scrutiny of computer-driven program trading in its latest effort to bolster a flagging stock market. Seoul shares rose as the Bank of Korea kept its benchmark interest rate steady at 3.5% for 12th straight time and signaled a dovish shift in its policy stance.