Domestic indices magnify losses in late morning deals

Domestic equity indices magnified their losses in late morning deals as market participants indulged in reducing their positions. Selling in Tata Steel, Tech Mahindra, JSW Steel, Ultratech Cement and Tata Motors companies' stocks dragged the markets lower. Meanwhile, broader indices largely underperformed their large peers with BSE Mid cap and Small cap index dropping in the range of 2.00-2.15%. Markets fell as profit-taking across various sectors overshadowed gains made by Infosys following its surpassing of quarterly earnings expectations and upward revision of its annual revenue forecast. Further, weak cues from global markets also weighed on the domestic sentiments.  On the BSE sectoral front, traders were seen pilling up positions only in IT and TECK, while selling was witnessed in Metal, Realty, Basic Materials, Oil & Gas and Energy. 

On the global front, Asian markets were trading in red following negative cues from the US markets overnight. Meanwhile, investors assessed Japan’s inflation numbers for June for clues on the Bank of Japan’s potential moves at its monetary policy meeting on July 30 and 31. Japan’s inflation came in at 2.8% for June unchanged from May, while core inflation, which strips out prices of fresh food, accelerated to 2.6%, from 2.5%. Back home, in the stock specific development, Persistent Systems plunged after Q1 profit missed estimates.

The BSE Sensex is currently trading at 81022.09, down by 321.37 points or 0.40% after trading in a range of 80976.50 and 81587.76. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.13%, while Small cap index down by 2.01%.

The few gaining sectoral indices on the BSE were IT up by 0.36% and TECK up by 0.10%, while Metal down by 3.14%, Realty down by 2.89%, Basic Materials down by 2.34%, Oil & Gas down by 2.29% and Energy down by 2.29% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.80%, ITC up by 1.56%, Asian Paints up by 1.01%, HCL up by 0.68% and Titan up by 0.05%. On the flip side, Tata Steel down by 3.67%, Tech Mahindra down by 2.71%, JSW Steel down by 2.62%, Ultratech Cement down by 1.82% and Tata Motors down by 1.79% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has said that the revenues of integrated sugar mills are likely to expand by 10% in FY2025, supported by an expected increase in sales volumes along with firm domestic sugar prices and higher distillery volumes after the operationalisation of new capacities. Further, the operating profit margins of the sugar mills are projected to remain comfortable in FY2025, in line with FY2024, because of firm sugar realisations and higher cane prices for sugar year 2025 (October 2024-September 2025). ICRA’s outlook for the sugar sector is Stable, backed by the anticipated improvement in revenues, stable profitability, and comfortable debt coverage metrics along with the Government’s policy support, including the ethanol blending programme (EBP).

ICRA projects the net sugar production to decline to 30.0 million metric ton (MMT) in sugar year 2025 (SY2025) from 32.0 MMT in SY2024 based on the expectation that higher diversion will be allowed towards ethanol production amid the high sugar stock level. Even if the diversion towards ethanol is increased to 4 MMT in SY2025, the closing sugar stock level is likely to remain moderately high. Therefore, clarity on the policy for allowing diversion beyond the cap of 1.7 MMT and the exports remain the key monitorables for the sector. Further, domestic sugar prices, which are currently in the range of Rs 38-39/kg, are expected to remain firm till the start of the next season, thereby supporting the profitability of the mills.   

ICRA expects the closing sugar stock to be around 9.1 MMT as on September 30, 2024, appreciably higher than the sugar stock of 5.6 MMT as on September 30, 2023. This would be equivalent to 3.8 months of consumption. The closing stock is expected to further increase to over four months as on September 30, 2025.   

The CNX Nifty is currently trading at 24659.65, down by 141.20 points or 0.57% after trading in a range of 24640.40 and 24854.80. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.90%, ITC up by 1.41%, Asian Paints up by 0.94%, HCL up by 0.64% and Britannia up by 0.42%. On the flip side, BPCL down by 3.88%, Tata Steel down by 3.74%, Hindalco down by 3.55%, Coal India down by 3.12% and JSW Steel down by 2.76% were the top losers.

All Asian markets were trading lower; Hang Seng declined 367.53 points or 2.11% to 17,410.88, Jakarta Composite plunged 50.28 points or 0.69% to 7,270.79, Shanghai Composite weakened 3.17 points or 0.11% to 2,973.96, Straits Times fell 28.38 points or 0.82% to 3,442.78, KOSPI dropped 36.46 points or 1.31% to 2,787.89, Nikkei 225 slipped 70.15 points or 0.18% to 40,056.20 and Taiwan Weighted lost 521.16 points or 2.28% to 22,877.31.