Markets trade flat with negative bias in late morning deals

Indian equity markets traded flat with negative bias in late morning deals on persistent foreign funds outflows. Foreign institutional investors (FIIs) offloaded equities worth Rs 5,684.63 crore on October 23, according to exchange data. Selling in Hindustan Unilever, Nestle, ITC, Maruti Suzuki and Reliance Industries’ stocks weighed on the markets. Weak cues from the global markets also weighed on the domestic sentiments. However, losses remained capped after India's private sector economy picked up slightly in October after softening last month as manufacturing reported stronger demand. HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 58.6 this month from September's final reading of 58.3, which was a 10-month low. On the BSE sectoral front, traders were seen pilling up positions in PSU, Utilities, Power, Bankex and Consumer Durables, while selling was witnessed in FMCG, Telecom, Realty , TECK  and IT.  

On the global front, Asian markets were trading mostly in red, following negative cues from the US markets overnight. South Korea’s benchmark Kospi fell after the GDP data announcement. South Korea narrowly avoided a technical recession with its third-quarter GDP growing 0.1% quarter on quarter, following a 0.2% contraction in the second quarter. It, however, missed street estimates of 0.5% growth. On a year-on-year basis, South Korea’s economy grew 1.5%, also slower than the 2% increase expected by street. Back home, Birlasoft dropped on the back of weak operational performance in the September quarter of FY25 (Q2FY25). 

The BSE Sensex is currently trading at 80050.73, down by 31.25 points or 0.04% after trading in a range of 79813.02 and 80259.82. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.11%, while Small cap index down by 0.13%.

The top gaining sectoral indices on the BSE were PSU up by 1.04%, Utilities up by 0.69%, Power up by 0.66%, Bankex up by 0.62% and Consumer Durables up by 0.48%, while FMCG down by 2.16%, Telecom down by 0.53%, Realty down by 0.49%, TECK down by 0.46% and IT down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.03%, HDFC Bank up by 1.60%, Tata Motors up by 1.32%, Mahindra & Mahindra up by 1.23% and SBI up by 0.99%. On the flip side, Hindustan Unilever down by 6.27%, Nestle down by 2.11%, ITC down by 1.38%, Maruti Suzuki down by 1.26% and Reliance Industries down by 0.88% were the top losers.

Meanwhile, rating agency ICRA highlighted that the domestic market, which accounts for around 64% of the Indian ceramic tiles industry’s revenues, continues to witness resilient real estate demand, auguring well for the sector. However, the export market has started showing signs of a slowdown. The demand slowdown from the USA is visible in the current fiscal, post the commencement of the USA Department of Commerce’s investigations, in May 2024, on ceramic tile imports from India. Further, a sharp increase in freight cost amid the Red Sea crisis as well as slow moving residential markets in the USA and Europe has further derailed the export momentum from Q4 FY2024.

According to the report, India’s ceramic tiles export revenue is likely to decline in FY2025, primarily on account of the anticipated imposition of significant anti-dumping duties (ADD, 328-489%) by the US, resulting in an annual contraction in tile exports in FY25. The US had accounted for 9% of Indian tiles exports in FY24. Demand from the domestic market remains resilient in the backdrop of a favourable outlook for the real estate sector. Consequently, the overall revenue growth of the sector is estimated at 7-9% for FY25, primarily supported by domestic demand, whereas exports are likely to remain a drag in the near term. The share of domestic revenues is relatively higher for larger entities compared to small/mid-sized ones, as large entities enjoy pricing flexibility owing to their strong market position.

ICRA stated that several large tile players have a relatively lean cash conversion cycle, low leverage, and comfortable credit metrics. However, small and mid-size players have limited pricing flexibility and relatively high exposure to exports; hence the headwinds in the export market could have a bearing on their cash conversion cycle and coverage metrics. Moreover, a slowdown in exports will result in a supply overhang in the domestic market, which will curtail pricing flexibility and constrain margins.

The CNX Nifty is currently trading at 24406.15, down by 29.35 points or 0.12% after trading in a range of 24341.20 and 24480.65. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 2.14%, Grasim Industries up by 2.04%, HDFC Bank up by 1.67%, Bharat Electronics up by 1.45% and Tata Motors up by 1.10%. On the flip side, Hindustan Unilever down by 6.53%, SBI Life down by 4.93%, Hindalco down by 3.87%, Bajaj Auto down by 3.04% and Nestle down by 2.10% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 280.63 points or 1.35% to 20,479.52, Jakarta Composite plunged 30.7 points or 0.4% to 7,756.87, Shanghai Composite weakened 31.35 points or 0.95% to 3,271.45, KOSPI dropped 16.81 points or 0.65% to 2,582.81 and Taiwan Weighted lost 118.17 points or 0.51% to 23,216.59, while Straits Times rose 12.94 points or 0.36% to 3,613.72 and Nikkei 225 surged 86.31 points or 0.23% to 38,191.17.