Sensex, Nifty trade tad higher in volatile session

Indian equity benchmarks made cautious start and soon turned volatile on Wednesday, following a lacklustre trade on Wall Street overnight as well as mixed cues from Asian counterparts. Overnight rise in crude oil prices also dented sentiments in the markets. Oil prices rose for the second consecutive session, as traders downplayed hopes of a Middle East ceasefire and focused on a tightening global supply and demand balance. Sensex and Nifty are trading tad higher in cautious trade in early deals. Some support came as Michael Debabrata Patra, deputy governor, Reserve Bank of India (RBI) said India is likely to recover to its long-term growth trend of 8 per cent. However, traders were cautious after the International Monetary Fund (IMF) kept its growth forecasts for India unchanged at 7 per cent and 6.5 per cent for FY25 and FY26, respectively. It held that pent up demand accumulated during the pandemic has been exhausted as the economy “reconnects” with its potential growth. 

On the global front, Asian markets are trading mixed, following the mixed cues from Wall Street overnight, as traders react to the Biden administration's renewed efforts to secure a cease-fire in the Middle East. The recent surge by bond yields and waning optimism about the outlook for interest rates is weighing on the markets.

Back home, textile and garment industry stocks are in focus with report that India's cotton production in 2024/25 is likely to fall by 7.4 per cent from a year ago to 30.2 million bales because of lower area and as excessive rainfall damaged the crop. In stock specific development, Adani Enterprises traded higher as it sets up subsidiary to design and develop airport cargo infra.

The BSE Sensex is currently trading at 80372.16, up by 151.44 points or 0.19% after trading in a range of 79891.68 and 80416.12. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.01%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were IT up by 0.70%, TECK up by 0.50%, Bankex up by 0.34%, FMCG up by 0.22% and Consumer Durables up by 0.22%, while Utilities down by 1.37%, Power down by 1.29%, Realty down by 1.15%, PSU down by 1.14% and Oil & Gas down by 0.91% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.57%, Bajaj Finserv up by 2.08%, HDFC Bank up by 1.66%, Kotak Mahindra Bank up by 1.28% and Nestle up by 0.92%. On the flip side, NTPC down by 2.30%, Power Grid down by 1.95%, Mahindra & Mahindra down by 1.20%, Tata Motors down by 0.97% and SBI down by 0.68% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in the World Economic Outlook has said that India's Gross Domestic Product (GDP) growth is likely to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025 because the pent-up demand accumulated during Covid has exhausted, as the economy reconnects with its potential. About the global economy, the IMF said the battle against inflation has largely been won, even though price pressures persist in some countries. It said after peaking at 9.4 per cent year over year in the third quarter of 2022, headline inflation rates are now projected to reach 3.5 per cent by the end of 2025, below the average level of 3.6 per cent between 2000 and 2019.

It has projected global economic growth to stay steady at 3.2 per cent in 2024 and 2025, even though a few countries, especially low-income developing countries, have seen sizable downside growth revisions. According to Pierre-Olivier Gourinchas, a French economist and IMF Chief Economist, the global economy remained unusually resilient throughout the disinflationary process. He said ‘Growth is projected to hold steady at 3.2 per cent in 2024 and 2025, but some low-income and developing economies have seen sizable downside growth revisions, often tied to intensifying conflicts’.

In advanced economies, growth in the United States is strong, at 2.8 per cent this year, but will revert toward its potential in 2025. For advanced European economies, a modest growth rebound is expected next year, with output approaching potential. The growth outlook is very stable in emerging markets and developing economies, around 4.2 per cent this year and next, with continued robust performance from emerging Asia. Despite the good news on inflation, downside risks are increasing and now dominate the outlook. An escalation in regional conflicts, especially in the Middle East, could pose serious risks for commodity markets.

The CNX Nifty is currently trading at 24507.80, up by 35.70 points or 0.15% after trading in a range of 24378.10 and 24529.55. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 4.76%, Bajaj Finserv up by 1.96%, HDFC Bank up by 1.71%, Bajaj Auto up by 1.37% and Adani Enterprises up by 1.27%. On the flip side, NTPC down by 2.21%, Power Grid down by 1.66%, Mahindra & Mahindra down by 1.44%, Eicher Motors down by 1.40% and ONGC down by 1.09% were the top losers.

Asian markets are trading mixed; Hang Seng surged 342.78 points or 1.67% to 20,841.73, KOSPI increased 30.10 points or 1.17% to 2,600.80, Shanghai Composite strengthened 26 points or 0.79% to 3,311.87 and Straits Times was up by 16.14 points or 0.45% to 3,603.55. On the other hand, Nikkei 225 slipped 298.48 points or 0.78% to 38,113.48, Taiwan Weighted lost 166.95 points or 0.71% to 23,368.48 and Jakarta Composite was down by 15.88 points or 0.2% to 7,773.10.