Bears hold grip over Dalal Street

Bears continued to hold their tight grip over the Dalal Street in early afternoon session, with both Sensex and Nifty falling around a percent, amid weak cues from Asian markets along with heavy selling at almost all sectors except Healthcare. A fresh dose of weak economic data from the U.S. and Europe also reignited recession fears. Traders failed to take any sense of relief from Union Minister of Commerce & Industry, Piyush Goyal’s statement that a stable economy will push India to be among the top 3 world economies. He also noted that the Centre will ensure a better quality of life to the last man at the bottom of the pyramid in the next five years, adding that the government is also focused on efforts to replace the oil economy with electric mobility and making quality the fulcrum in manufacturing. 

On the global front, Asian markets were trading lower, after consumer prices in South Korea were up 2.6 percent on year in July, above forecasts for 2.5 percent and up from 2.4 percent in June. On a seasonally adjusted monthly basis, consumer prices rose 0.3 percent - in line with expectations following the 0.2 percent contraction in the previous month. Food and non-food products rose 3.4 percent and 2.7 percent on year, respectively.

The BSE Sensex is currently trading at 81101.53, down by 766.02 points or 0.94% after trading in a range of 80995.70 and 81345.60. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined by 0.85%, while Small cap index was down by 0.39%.

The only gaining sectoral index on the BSE was Healthcare up by 0.22%, while Realty down by 2.79%, Metal down by 2.46%, Auto down by 2.46%, IT down by 1.43% and PSU down by 1.43% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 1.41%, Nestle up by 0.68%, Kotak Mahindra Bank up by 0.61%, Asian Paints up by 0.48% and Sun Pharma up by 0.34%. On the flip side, Maruti Suzuki down by 4.35%, Tata Motors down by 3.34%, Tata Steel down by 2.97%, JSW Steel down by 2.79% and Mahindra & Mahindra down by 2.46% were the top losers.

Meanwhile, the Global Trade Research Initiative (GTRI) has said that strategic reforms are needed to enhance India's appeal to global investors as despite having huge potential, foreign direct investment (FDI) data shows that the country has not fully capitalised on its opportunities. Suggesting a four-step plan, the GTRI said that measures which can help India position itself as a leading choice for foreign investors include reducing cost disadvantages for companies relocating to India, improving the Ease of Doing Business throughout the business lifecycle, and establishing a framework for evaluating investment proposals. India attracted $44.4 billion in FDI in FY2024, which is only 1.1 per cent of its GDP.

GTRI said the country lagged significantly behind countries like China ($189.1 billion), Brazil ($86.1 billion) , Australia ($61.6 billion), and Canada ($52.6 billion) as noted in the World Development Report 2023. It suggested that India must offer a more competitive cost structure to attract businesses shifting from China or considering alternative production locations. For this, India needs to address the four cost-related components - labour, rate material, energy and financial costs. In India, raw material costs are higher for non-traditional productions due to import dependence and high tariffs. China benefits from lower costs due to large-scale local production and efficient supply chains, while Vietnam offers competitive costs with low or zero tariffs on imports.

To further improve the ease of doing business, the GTRI suggested the identification of priority sectors, particularly those where India's manufacturing and export capabilities are currently weak, such as electronics, computers, telecom, precision equipment, and factory machinery. Secondly, invite top global firms as anchor manufacturers. These firms can drive technological innovation and improve productivity across sectors. Additionally, it said there is a need to ensure quick factory-to-ship movement. Improving logistics through dedicated freight corridors and strategically locating industrial zones near ports will streamline port and customs processes, facilitating faster shipments. Recommending to create a framework for evaluating investment proposals, it said investments involving technology transfer must be assessed for their potential to enhance local technological capabilities, especially in high-tech areas where India aims to close gaps.

The CNX Nifty is currently trading at 24761.80, down by 249.10 points or 1.00% after trading in a range of 24723.70 and 24851.90. There were 9 stocks advancing against 40 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were HDFC Bank up by 1.33%, Nestle up by 0.71%, Kotak Mahindra Bank up by 0.64%, Sun Pharma up by 0.63% and Divi's Lab up by 0.53%. On the flip side, Maruti Suzuki down by 4.44%, Eicher Motors down by 4.00%, Tata Motors down by 3.31%, Tata Steel down by 3.01% and JSW Steel down by 2.89% were the top losers.

All Asian markets were trading lower; Hang Seng declined 382.82 points or 2.21% to 16,922.14,Jakarta Composite plunged 14.58 points or 0.2% to 7,311.41,Shanghai Composite weakened 23.67 points or 0.81% to 2,908.72,Straits Times fell 39.68 points or 1.16% to 3,380.16,KOSPI dropped 101.49 points or 3.79% to 2,676.19, Nikkei 225 slipped 2216.63 points or 6.17% to 35,909.70 and Taiwan Weighted lost 1004.01 points or 4.64% to 21,638.09.