Markets struggle for direction in early deals ahead of Budget announcements

Indian equity benchmarks made optimistic start on Tuesday tracking gains in global markets. But, soon markets turned volatile and are trading flat in early deals as investors eye key proposals by Finance Minister Nirmala Sitharaman for Union Budget 2024-25. The Narendra Modi-led Bharatiya Janata Party (BJP) is all set to present its first Budget under its third term with analysts expecting a mix of populist and reform-oriented announcements. The Union Finance Minister, Nirmala Sitharaman, will present her seventh straight budget for the full year of financial year 2024-25 in the Lok Sabha today at 11 AM. Foreign fund inflows aided domestic sentiments. The foreign institutional investors (FIIs) bought equities worth Rs 3,444 crore on July 22. Traders take note of Chief Economic Advisor V Anantha Nageswaran’s statement that a 7 per cent GDP growth rate, the upper end of the projection made in the Economic Survey, is doable depending on monsoon and global financial risks. 

On the global front, most of the Asian markets are trading higher, following the broadly positive cues from global markets overnight, as traders seemed to pick up stocks at a bargain, particularly technology stocks, after the recent slump in the markets. They also remain reluctant to make significant moves ahead of key US inflation data later in the week. The inflation data could have a significant impact on the outlook for interest rates, with the US Fed currently widely expected to lower interest rates by a quarter point in September. China's central bank also unexpectedly lowered its one-year benchmark loan prime rate to bolster a slowing economy.

Back home, financial company’s stocks are in focus after Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao said financial companies using digital outsourcing and their “third-party dependencies” have benefits but involve risks. In stock specific developments, Gensol Engineering touched roof after it secured a Rs 600 crore contract as the successful bidder for 116-megawatt solar projects in Gujarat. Suzlon Energy jumped after Q1 net profit surged 200 percent.

The BSE Sensex is currently trading at 80516.10, up by 14.02 points or 0.02% after trading in a range of 80386.77 and 80766.41. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.30%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were Power up by 0.77%, Utilities up by 0.70%, Capital Goods up by 0.34%, Realty up by 0.31% and FMCG up by 0.25%, while Metal down by 1.21%, Consumer Durables down by 0.57%, Basic Materials down by 0.47%, Energy down by 0.41% and Oil & Gas down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.46%, ITC up by 0.92%, Ultratech Cement up by 0.86%, Larsen & Toubro up by 0.78% and Hindustan Unilever up by 0.60%. On the flip side, JSW Steel down by 0.93%, Power Grid down by 0.83%, Tata Steel down by 0.78%, HCL Technologies down by 0.68% and HDFC Bank down by 0.58% were the top losers.

Meanwhile, expressing optimism over India’s growth prospects, Chief Economic Advisor V Anantha Nageswaran has said a 7 per cent Gross Domestic Product (GDP) growth rate, the upper end of the projection made in the Economic Survey, is doable depending on monsoon and global financial risks. The Economic Survey projected India’s GDP to grow between 6.5 per cent and 7 per cent in 2024-25, down from a high of 8.2 per cent in the preceding financial year. He said ‘We are not pessimistic. We actually are optimistic about growth. We are also mindful of the challenges with regard to progress of monsoon’.

He said ‘We want to be prudent in projecting growth rate, that is why we have projected the country’s economic growth at 6.5 per cent to 7 per cent in FY24’. He also said ‘While 7 per cent is eminently doable, there are some risk factors given the way the monsoon has shaped up and financial market risks are rising in the developed world with the spillover effects on India, and also the global geopolitics environment’. According to him, there is momentum in the economy and private capital expenditure has picked up. He added India’s external debt ratio is much lower compared to other emerging economies.

Nageswaran also said inflationary pressure is under control, and core inflation is running well below 4 per cent. He also noted that India needs to create 80 lakh jobs per annum. He said the production-linked incentive (PLI) scheme is beginning to deliver very handsomely in key areas. PLIs have been able to attract investment of Rs 1.28 lakh crore and generated 80 lakh jobs. Despite securing a good rating on its green bond framework, he said, Indian sovereign green bonds have hardly received any ‘greenium’ from private investors. He said ‘It is more a ‘wall of capital’ than a ‘flood of capital’ that is waiting to fund energy transition in emerging market and developing economies (EMDEs). It just isn’t mobile. All of these together have severely hampered the flow of finance for green transition projects.’

The CNX Nifty is currently trading at 24494.25, down by 15.00 points or 0.06% after trading in a range of 24467.45 and 24582.55. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 1.64%, NTPC up by 1.47%, ITC up by 1.05%, Grasim Industries up by 0.99% and Apollo Hospital up by 0.90%. On the flip side, Shriram Finance down by 2.53%, Hindalco down by 1.31%, BPCL down by 1.04%, ONGC down by 0.97% and JSW Steel down by 0.95% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted jumped 507.52 points or 2.28% to 22,764.51, Nikkei 225 surged 38.01 points or 0.1% to 39,637.01, Straits Times rose 16.75 points or 0.49% to 3,454.01, KOSPI increased 13.56 points or 0.49% to 2,777.07 and Jakarta Composite was up by 3.86 points or 0.05% to 7,325.84. On the other hand, Shanghai Composite weakened 17.59 points or 0.6% to 2,946.63 and Hang Seng was down by 15.72 points or 0.09% to 17,620.16.