Markets rebound after three-day fall on value-buying across sectors

Indian equity benchmarks bounced back sharply on Wednesday after three straight days of slump following a rally in global peers and value-buying in Oil & Gas, Metal and Energy shares at lower levels. Markets made an optimistic start and stayed in green for whole day as traders took encouragement with a Labour Ministry report showing that retail inflation for industrial workers slipped to 3.67 per cent in June from 3.86 per cent in the previous month this year mainly due to lower prices of certain food items. It said year-on-year inflation for the month of June 2024 moderated to 3.67 per cent as compared to 5.57 per cent in June 2023. Traders took support with S&P Global Ratings’ report stating that India is a well diversified exporter and a blip in its exports to Bangladesh is unlikely to have any meaningful impact on India's overall trade position for the full year.

Markets continued to trade higher in late afternoon session, taking support from a private report stating that India's central bank could cut interest rates by 100 basis points in a monetary easing cycle that is likely to start in December as inflation eases towards its 4% target. Some optimism also came as the government has approved the continuation of interest subvention scheme for short-term loans of up to Rs 3 lakh for agriculture and allied activities availed through Kisan Credit Card (KCC) during the current financial year. Under the scheme, farmers get loan at a concessional interest rate of 7 per cent. An additional interest subvention of 3 per cent per annum is provided to farmers who repay loans in time. Meanwhile, Reserve Bank's rate-setting panel started its three-day deliberations for the next set of bi-monthly monetary policy amid expectations of no change in benchmark interest rate in view of concerns on inflation and economic growth remaining steady. The decision of the RBI Governor Shaktikanta Das-headed six-member Monetary Policy Committee (MPC) will be announced on Thursday.

On the global front, European markets were trading higher as data from Destatis showed German industrial output grew 1.4 percent on month in June. Production was expected to climb 1.0 percent after declining by revised 3.1 percent in May. Asian markets settled higher on Wednesday after Bank of Japan Deputy Governor Uchida Shinichi said the central bank won't raise interest rates when financial markets are volatile. 

Back home, on the sectoral front, banking stocks were in watch with Minister of State for Finance Pankaj Chaudhary stating that banks have written off loans worth Rs 9.90 trillion in the last five financial years. During 2023-24, banks loan write off was at Rs 1.70 trillion, as against Rs 2.08 trillion in the previous fiscal. Write-off was highest at Rs 2.34 trillion during 2019-20, which came down to Rs 2.02 trillion in the following year and to Rs 1.74 trillion in 2021-22. Besides, electric vehicle industry stocks were in focus as the monthly sales data from Federation of Automobile Dealers' Association (FADA) showed that electric vehicle sales registered a 55.2 per cent on-year growth at 179,038 units in July driven by a massive 96 per cent jump in e-two-wheeler sales. 

Finally, the BSE Sensex rose 874.94 points or 1.11% to 79,468.01, and the CNX Nifty was up by 304.95 points or 1.27% points to 24,297.50.  

The BSE Sensex touched high and low of 79,639.20 and 79,106.20 respectively. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 2.63%, while Small cap index was up by 2.39%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 3.75%, Metal up by 3.44%, Energy up by 3.32%, PSU up by 3.30% and Capital Goods up by 2.89%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 3.42%, Power Grid Corporation up by 3.29%, JSW Steel up by 2.61%, Tata Steel up by 2.40% and Infosys up by 2.36%. On the flip side, Indusind Bank down by 2.54%, Titan Company down by 0.32%, Tech Mahindra down by 0.27%, Hindustan Unilever down by 0.24% and Bharti Airtel down by 0.13% were the top losers.

Meanwhile, the Labour Ministry has said that retail inflation for industrial workers slipped to 3.67 per cent in June 2024 from 3.86 per cent in the previous month this year mainly due to lower prices of certain food items. It said ‘Year-on-year inflation for the month of June 2024 moderated to 3.67 per cent as compared to 5.57 per cent in June 2023.’

It stated the All-India Consumer Price Index for Industrial Workers CPI-IW for June 2024 was at 141.4 points against 139.9 points in May 2024. Food and Beverages Group under the CPI-IW was at 148.7 points in June 2024 against 145.2 points in May this year.

The Labour Bureau, an attached office of the Ministry of Labour & Employment, has been compiling Consumer Price Index for Industrial Workers every month on the basis of retail prices collected from 317 markets spread over 88 industrially important centres in the country.

The CNX Nifty traded in a range of 24,337.70 and 24,184.90. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were ONGC up by 7.45%, Coal India up by 6.24%, Adani Enterprises up by 3.70%, Adani Ports & SEZ up by 3.35% and Power Grid Corporation up by 3.20%. On the flip side, Indusind Bank down by 2.45%, Tech Mahindra down by 0.63%, Britannia Industries down by 0.32%, Hindustan Unilever down by 0.26% and Titan Company down by 0.15% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 85.26 points or 1.06% to 8,111.95, France’s CAC rose 118.13 points or 1.66% to 7,248.17 and Germany’s DAX gained 224.82 points or 1.3% to 17,579.14.

Asian markets settled higher on Wednesday tracking Wall Street gains overnight after key companies like Caterpillar and Uber Technologies reported solid earnings and Federal Reserve officials reassured markets that the US is not headed for a recession. Japanese shares gained after Bank of Japan Deputy Governor Shinichi Uchida sent a strong dovish signal in the wake of historic financial market volatility in Japan by pledging to refrain from hiking interest rates when the markets are unstable, while the yen depreciated to the 147-yen level after earlier trading in a 144-yen band. Moreover, Chinese shares marginally rose despite mixed trade data. Data showed that Chinese imports in July grew faster-than-expected, while exports missed forecasts. Meanwhile investors are eyeing on China's inflation figures later this week.