Sensex, Nifty fall sharply in early afternoon deals

Indian equity benchmarks witnessed a sharp fall in early afternoon deals, amid mixed cues from other Asian markets along with selling at IT and Consumer Durables counters. Traders were cautious as Middle East tensions intensified following significant strikes by Israeli forces against targets inside Lebanon. The street overlooked reports that India surpassed Japan to become the third-largest power in the Asia Power Index, reflecting its increasing geopolitical stature. This achievement is driven by India's dynamic growth, youthful population, and expanding economy, solidifying its position as a leading force in the region. 

On the global front, Asian markets were trading mixed, after producer prices in Japan were up 2.7 percent on year in August, unchanged from the July reading following an upward revision from 2.6 percent. On a monthly basis, producer prices rose 0.1 percent, easing from 0.3 percent in the previous month. Excluding international transportation, producer prices were also up 0.1 percent on month and 2.7 percent on year.

The BSE Sensex is currently trading at 84781.83, down by 132.21 points or 0.16% after trading in a range of 84743.04 and 84996.85. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 0.74%, while Small cap index was down by 0.54%.

The few gaining sectoral indices on the BSE were Utilities up by 0.45%, Power up by 0.23%, Metal up by 0.12% and Bankex up by 0.08%, while IT down by 1.14%, Consumer Durables down by 0.95%, TECK down by 0.94%, FMCG down by 0.93% and Consumer discretionary down by 0.79% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.88%, Axis Bank up by 1.39%, NTPC up by 1.14%, HDFC Bank up by 0.70% and Bajaj Finance up by 0.64%. On the flip side, Tech Mahindra down by 2.60%, Tata Motors down by 1.69%, JSW Steel down by 1.40%, Titan down by 1.35% and Adani Ports & SEZ down by 1.15% were the top losers.

Meanwhile, the Asian Development Bank (ADB) has retained India's Gross domestic product (GDP) growth forecast for the current fiscal (FY25) at 7 per cent and said that the economy is expected to accelerate in the coming quarters on improved farm output, and higher Government spending. It said exports in the current fiscal will be higher than earlier projected, led by larger services exports. However, merchandise export growth will be relatively muted through the next fiscal. The Indian economy grew 8.2 per cent in the last fiscal (2023-24). The RBI projects growth to be 7.2 per cent in the current fiscal.

ADB said while GDP growth slowed to 6.7 per cent in the first quarter (April-June) of FY2024, it is expected to accelerate in the coming quarters with improvement in agriculture and a largely robust outlook for industry and services. Private consumption is expected to improve, driven by rural consumption fuelled by stronger agriculture and by already robust urban consumption. The outlook for private investment is upbeat, but growth in public capital expenditure, heretofore high, will moderate in FY2025. Efforts toward fiscal consolidation are expected to drive down the fiscal deficit to a level last seen before COVID-19, reflecting robust revenue collection and restrained current expenditure. A recent policy announcement offering workers and firms employment-linked incentives could boost labour demand and bolster job creation starting in FY2025.

It further said the Budget 2024-25 has announced three employment-linked incentive schemes and said the government would allocate Rs 2 lakh crore to implement them. Growth slowed year-on-year (yoy) in the first quarter (Q1) of FY2024 but is expected to rise in the coming months on improved agricultural performance and higher government spending. Industry and services are expected to continue performing robustly. The current account deficit will remain moderate, helped by strong service exports and remittances. Elevated food prices will likely mean higher inflation in the current fiscal than previously forecast, but inflation should moderate in the next fiscal. 

The CNX Nifty is currently trading at 25883.90, down by 56.50 points or 0.22% after trading in a range of 25871.35 and 25954.15. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 2.80%, Axis Bank up by 1.37%, NTPC up by 1.10%, Divi's Lab up by 1.01% and Grasim Industries up by 0.93%. On the flip side, LTIMindtree down by 3.33%, Tech Mahindra down by 2.66%, Tata Consumer Products down by 1.94%, Tata Motors down by 1.71% and JSW Steel down by 1.45% were the top losers.

Asian markets were trading mixed; Jakarta Composite plunged 94.92 points or 1.24% to 7,683.57, Straits Times fell 35.74 points or 1% to 3,587.00, KOSPI dropped 35.36 points or 1.36% to 2,596.32 and Nikkei 225 slipped 70.33 points or 0.19% to 37,870.26, while Taiwan Weighted added 329.82 points or 1.45% to 22,761.60, Hang Seng advanced 159.33 points or 0.83% to 19,159.89 and Shanghai Composite strengthened 32.16 points or 1.11% to 2,895.29.