Sharp correction witnesses over Dalal Street

A sharp correction witnessed over the Dalal Street in early afternoon deals, with both Sensex and Nifty trading slightly higher. Traders got cautious, after credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has predicted that the recent surge in container freight rates by 4x (YoY basis), if sustained, could affect the business operations, EBITDA margins and working capital of exporters during FY25. Besides, an internal presentation of the Ministry of Electronics and Information Technology (MeitY) has said that the government is worried about the impact of Big Tech and the increase in data usage in making people vulnerable by revealing patterns, trends and associations. However, heavy buying at Capital Goods, Realty and Industrials counters helped indices to remain in green. 

On the global front, Asian markets were trading higher, even after Singapore's producer price inflation accelerated further in June amid an increase in both the oil and the non-oil index. The data from the Department of Statistics showed that the manufacturing producer price index climbed 4.4 percent year-on-year in June, faster than May's 3.5 percent rise. Prices have been rising since December last year. The non-oil index rose 7.3 percent annually in April, and the oil index showed an increase of 3.9 percent.

The BSE Sensex is currently trading at 81410.46, up by 77.74 points or 0.10% after trading in a range of 81162.90 and 81908.43. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.57%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.20%, Realty up by 2.00%, Industrials up by 1.82%, PSU up by 1.30% and Oil & Gas up by 1.05%, while Telecom down by 0.65%, TECK down by 0.53%, Consumer Durables down by 0.48%, IT down by 0.34% and FMCG down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.61%, SBI up by 1.52%, Indusind Bank up by 1.35%, Bajaj Finserv up by 1.21% and Ultratech Cement up by 1.09%. On the flip side, Titan down by 2.01%, Bharti Airtel down by 1.73%, Tech Mahindra down by 1.63%, Kotak Mahindra Bank down by 1.45% and Power Grid down by 1.32% were the top losers.

Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT) is working on a proposal to further tighten the foreign direct investment (FDI) norms in the tobacco sector to check promotional activities and curb smuggling in the segment as firms are trying to circumvent norms. At present, FDI is prohibited in the manufacturing of cigars, cheroots, cigarillos and cigarettes of tobacco or its substitutes. 

However, it is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector. FDI in tobacco is prohibited, and there is a need to control the sectors' promotional activities also. By doing promotion of those products, some companies try to create a system where smuggling increases. 

The DPIIT has circulated a draft note seeking the views of different ministries on the issue. The promotional activities include proxy advertising, brand promotion through various ways, and creating brand awareness. FDI in the tobacco sector is prohibited, and its promotional activities should also be prohibited as the companies are trying to circumvent norms.

The CNX Nifty is currently trading at 24883.25, up by 48.40 points or 0.19% after trading in a range of 24790.45 and 24999.75. There were 28 stocks advancing against 21 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.71%, BPCL up by 2.49%, Divi's Lab up by 2.30%, SBI up by 1.80% and Indusind Bank up by 1.51%. On the flip side, Cipla down by 1.94%, Tata Consumer Products down by 1.91%, Titan down by 1.90%, Bharti Airtel down by 1.81% and Tech Mahindra down by 1.55% were the top losers.

All Asian markets were trading higher; Hang Seng advanced 261.16 points or 1.51% to 17,282.47, Jakarta Composite gained 11.18 points or 0.15% to 7,299.35, Shanghai Composite strengthened 1.59 points or 0.05% to 2,892.49, Straits Times rose 23.37 points or 0.68% to 3,449.84, KOSPI increased 33.63 points or 1.22% to 2,765.53, Nikkei 225 surged 801.22 points or 2.08% to 38,468.63 and Taiwan Weighted added 45.28 points or 0.2% to 22,164.49.