Indices trade near their intraday low points during early afternoon deals

Extending their losses, Indian equity benchmarks were trading near their intraday low points during early afternoon deals, with both Sensex and Nifty holding notable losses, on the back of negative cues from other Asian markets along with heavy selling at Metal and Realty counters. Sentiments remained negative as the Reserve Bank of India (RBI) in its monthly bulletin said that despite the overall positive trajectory, inflation remains a key concern for the Indian economy as the uptick in June 2024 has derailed its disinflation path. Traders overlooked the think tank Global Trade Research Initiative’s (GTRI) latest report stating that the steps such as increasing exports, making local currency trading workable and a free trade agreement with the Eurasian Economic Union will help boost trade between India and Russia.

On the global front, Asian markets were trading mostly in red, as Japan's core inflation rose for the second straight month in June, keeping alive hopes of another interest rate hike. The Ministry of Internal Affairs and Communications said that core inflation that excludes fresh food edged up to 2.6 percent in June from 2.5 percent in May. 

The BSE Sensex is currently trading at 80906.24, down by 437.22 points or 0.54% after trading in a range of 80862.75 and 81587.76. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 1.99%, while Small cap index was down by 1.87%.

The only gaining sectoral indices on the BSE were IT up by 0.71% and TECK up by 0.27%, while Metal down by 3.27%, Realty down by 2.57%, Basic Materials down by 2.33%, Energy down by 2.21% and Oil & Gas down by 2.10% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 3.37%, ITC up by 1.13%, HCL Tech. up by 0.45%, Titan up by 0.15% and TCS up by 0.14%. On the flip side, Tata Steel down by 3.97%, JSW Steel down by 3.14%, Tech Mahindra down by 2.46%, Tata Motors down by 2.21% and Bharti Airtel down by 2.00% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI) July Bulletin released that the second quarter of 2024-25 (Q2 FY25) has begun with signs of quickening momentum in the economy though inflation in the food basket remains a concern. An article on ‘State of the Economy’ in the monthly Bulletin also said the improvement in the outlook for agriculture and the revival of rural spending have turned out to be the bright spots in the evolution of demand conditions.

The article authored by a team led by RBI deputy governor Michael Debabrata Patra said consumer price inflation ticked up in June 2024 after three consecutive months of moderation as a broad flare-up in vegetable prices halted the overall disinflation that had been underway.  It said the argument that food price shocks are transitory does not seem to be borne out by the actual experience over the past one year – too long a period for a shock to be termed as transitory.  Superimposed on this ‘persistent’ component are sporadic spikes in prices of a range of vegetables that overlap across constituents to give the broader category of vegetable inflation an enduring character.

The article said food prices are clearly dominating the behaviour of headline inflation and households’ inflation expectations, undermining the gains of lowering core and fuel inflation through a combination of monetary policy and supply management. Given the high uncertainty shrouding the inflation outlook, it is prudent to eschew the temptation of time inconsistency and stay the course on the straight and narrow path of aligning inflation with the target of 4 per cent. This does not imply that inflation should reach 4 per cent and stay there before monetary policy considers a change in stance; instead, based on a careful evaluation of the balance of risks, an enduring movement towards the target should provide signals to forward-looking monetary policy to respond. 

The CNX Nifty is currently trading at 24631.25, down by 169.60 points or 0.68% after trading in a range of 24611.65 and 24854.80. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.41%, ITC up by 1.13%, HCL Tech. up by 0.52%, LTIMindtree up by 0.49% and TCS up by 0.22%. On the flip side, Tata Steel down by 3.97%, Hindalco down by 3.85%, JSW Steel down by 3.42%, Coal India down by 2.77% and BPCL down by 2.75% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 322.99 points or 1.85% to 17,455.42, Jakarta Composite plunged 50.28 points or 0.69% to 7,270.79, Straits Times fell 28.38 points or 0.82% to 3,442.78, KOSPI dropped 28.89 points or 1.03% to 2,795.46, Nikkei 225 slipped 62.56 points or 0.16% to 40,063.79 and Taiwan Weighted lost 529.21 points or 2.31% to 22,869.26, while Shanghai Composite strengthened 2.1 points or 0.07% to 2,979.23.