Selling pressure continues to hit Indian markets

A selling pressure continued to hit Indian equity markets in early afternoon deals, with both Sensex and Nifty tumbling around 3% each, following the sell-off in the global markets as traders reacted to weak U.S. monthly jobs data and recent weak data on US manufacturing activity that stocked fears the world's largest economy could slip into a recession after the US Fed seems to have waited too long to cut interest rates. All sectors were witnessing heavy sell-off, with Metal sector falling the most among others, followed by Realty and PSU.

Domestic sentiments also got cautious as India’s services sector growth eased during the month of July as higher wage and material costs continued to push up business expenses, with the overall rate of inflation quickening from June. According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index eased to 60.3 in July from 60.5 in June. Further, the HSBC India Composite PMI Output Index -- which measures both manufacturing and services -- also fell to 60.7 in July as against 60.9 in June.

On the global front, Asian markets were trading lower, even as China's service sector growth accelerated in July on faster growth in new business inflows. The data published by S&P Global showed that the Caixin services Purchasing Managers' Index rose to 52.1 in July from 51.2 in June. The score was expected to rise to 51.4. The score has remained above the neutral 50.0 mark since July 2023 but the pace of growth remained below the year-to-date average.

The BSE Sensex is currently trading at 78631.79, down by 2350.16 points or 2.90% after trading in a range of 78295.86 and 79780.61. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index plunged by 3.70%, while Small cap index was down by 4.02%.

The top losing sectoral indices on the BSE were Metal down by 4.66%, Realty down by 4.64%, PSU down by 4.34%, Oil & Gas down by 4.28% and Energy down by 4.15%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.00%, Nestle up by 0.22%, Sun Pharma up by 0.05% and Asian Paints up by 0.02%. On the flip side, Tata Motors down by 5.55%, Adani Ports & SEZ down by 5.12%, Tata Steel down by 4.71%, SBI down by 4.64% and Infosys down by 4.30% were the top losers.

Meanwhile, Minister of State for Commerce and Industry Jitin Prasada has said that the free trade agreement (FTA) signed between India and the four European nation bloc EFTA in March is under the ratification process in those countries. He said there is no fixed time frame for the ratification, as the process is different in each of the EFTA (European Free Trade Association) countries.

Under the pact, India will receive the investment in 15 years from the grouping while allowing several products such as Swiss watches, chocolates and cut and polished diamonds at lower or zero duties. The EFTA members are Iceland, Liechtenstein, Norway and Switzerland. The TEPA agreement is under the ratification process in the national parliament or legislature of each EFTA country. In India, such trade pacts are approved by the Union Cabinet.

According to the data provided by the minister, the two-way trade rose to $24 billion in 2023-24 from $18.66 billion in 2022-23. It was $27.23 billion in 2021-22 and $20.5 billion in 2019-20. EFTA countries are not part of the European Union (EU). It is an inter-governmental organisation for the promotion and intensification of free trade. It was founded as an alternative for states that did not wish to join the European community. India's exports to EFTA countries during 2023-24 were only $1.94 billion as against $1.92 billion in 2022-23 and $1.74 billion in 2021-22. Imports aggregated at $22 billion in 2030-24, $16.74 billion in 2022-23 and $25.5 billion in 2021-22. The trade gap is in favour of EFTA.

The CNX Nifty is currently trading at 24013.45, down by 704.25 points or 2.85% after trading in a range of 23893.70 and 24350.05. There were 5 stocks advancing against 44 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Hindustan Unilever up by 1.04%, Britannia up by 0.33%, Tata Consumer Products up by 0.32%, Nestle up by 0.28% and Sun Pharma up by 0.12%. On the flip side, ONGC down by 6.42%, Tata Motors down by 5.68%, Adani Ports & SEZ down by 5.16%, Tata Steel down by 4.90% and Hindalco down by 4.79% were the top losers.

All Asian markets were trading lower; Hang Seng declined 342.83 points or 2.02% to 16,602.68, Jakarta Composite plunged 256.71 points or 3.51% to 7,051.41, Shanghai Composite weakened 35.86 points or 1.23% to 2,869.48, Straits Times fell 159.91 points or 4.73% to 3,221.54, KOSPI dropped 234.64 points or 9.61% to 2,441.55, Nikkei 225 slipped 4451.28 points or 14.15% to 31,458.42 and Taiwan Weighted lost 1807.21 points or 9.11% to 19,830.88.