Sensex, Nifty trade in red after slightly positive start; IndusInd Bank leads losers

Indian equity benchmarks made flat-to-positive start on Friday tracking overnight gains on Wall Street as well as mostly positive cues from Asian counterparts, as strong corporate results allayed worries over upcoming U.S. elections and interest rate cuts. Also, investors awaiting Japan’s general election over the weekend. Sensex and Nifty soon turned volatile and are trading in red terrain with marginal cut in early deals amid selling pressure ahead of weekend holiday as well as festival season. Traders were concerned as rating agency CRISIL said the revenue growth of Indian companies for the July-September quarter is estimated to be 5-7 per cent year-on-year (Y-o-Y), marking the slowest growth in 16 quarters. Some cautiousness also came after Union Finance Minister Nirmala Sitharaman has stressed that job creation is the most critical issue worldwide, particularly given the persistent economic challenges and rapid technological advancements that are reshaping the labor market. 

On the sectoral front, banking stocks are in focus as rating agency ICRA said the slew of regulatory actions, including a ban on fresh lending by some regulated entities and tighter funding conditions, may lead to a steady slowdown in the credit growth of banks and non-bank financial companies (NBFCs). In stock specific development, ITC traded with traction after it reported standalone net profit of Rs 5078.3 crore for Q2 FY25, registering a growth of 3.1 percent from Rs 4,927 crore in the same quarter of the previous financial year. However, IndusInd Bank leading losers on the indices as its consolidated net profit for Q2 FY25 fell 40 percent on-year to Rs 1,331 crore, widely missing Street expectations, mainly hit by near doubling of loan loss provisions during the quarter.

The BSE Sensex is currently trading at 79920.83, down by 144.33 points or 0.18% after trading in a range of 79844.83 and 80253.19. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.95%, while Small cap index was down by 1.47%.

The few gaining sectoral indices on the BSE were FMCG up by 1.28%, Healthcare up by 0.22% and IT up by 0.19%, while Metal down by 1.81%, Consumer Durables down by 1.80%, Utilities down by 1.76%, Power down by 1.56% and Industrials down by 1.52% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 3.85%, Axis Bank up by 1.28%, HCL Technologies up by 1.18%, Asian Paints up by 0.71% and Nestle up by 0.66%. On the flip side, Indusind Bank down by 15.00%, NTPC down by 2.87%, Mahindra & Mahindra down by 2.23%, Larsen & Toubro down by 1.96% and Tata Steel down by 1.68% were the top losers.

Meanwhile, the rating agency Crisil in its latest report has said that India Inc is likely to have clocked a slower revenue growth of 5-7% on-year for the three months ended September, marking the slowest pace in the past 16 quarters, because of stagnant performance in the construction vertical, which accounts for a fifth of India Inc's revenue, besides a decline in the industrial commodities vertical and subdued growth in investment-linked sectors. The report is based on its analysis of 435 companies that account for almost half of the listed market capitalisation. These companies posted 8.3% growth in the April-June quarter.

The cement sector’s revenue growth also slipped 2-3% on a high base of the corresponding quarter last year and lower realisations due to weak prices. Additionally, sluggish government spending after elections slowed construction activity, which, along with above-normal monsoon, limited cement volume growth. The monsoon also impacted the petrochemicals sector, which reported flat on-year revenue growth in the second quarter. The agriculture sector, including fertilisers (2% of the sample set's revenue), saw a 20-22% drop in revenue due to fall in raw material prices.

On a positive note, the exports segment (around 22% of the sample set) grew around 5%. In this space, the pharmaceutical sector maintained its momentum with 11% revenue growth, driven by strong demand in regulated markets and easing of pricing pressure in the US. IT services (around 70% of the segment's revenue) experienced a more modest growth of 3-4%, as clients in the banking and financial services sectors in North America and Europe deferred non-essential projects.

Consumer discretionary, staple products and services (around 36% of the sample set's revenue) recorded 15% revenue growth. In the consumer discretionary products sector, two-wheeler players saw 15-16% revenue growth, driven by higher volumes due to rural recovery and price rise. The textiles sector saw volume-driven growth, with stable prices. In the consumer discretionary services vertical, telecom services’ revenue rose 12-13%, fuelled by tariff hikes across technologies, premium charges for 5G services and subscriber migration to plans with higher average revenue per user.

The ‘others’ vertical (2% of the sample set), clocked 4% on-year growth. Aluminium (80% of revenue contribution in this category) posted on-year growth of 3-4%, driven by higher global aluminium prices due to lower production in China. India Inc’s profitability is estimated to have improved 70-90 basis points (bps) on-year during the quarter. The overall earnings before interest, tax, depreciation, and amortisation (Ebitda) for around 435 companies grew around 10% on-year.

The CNX Nifty is currently trading at 24333.45, down by 65.95 points or 0.27% after trading in a range of 24312.40 and 24440.25. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were ITC up by 3.88%, Axis Bank up by 1.54%, HCL Technologies up by 1.19%, Britannia Industries up by 1.11% and Nestle up by 0.90%. On the flip side, Indusind Bank down by 15.00%, NTPC down by 2.66%, Mahindra & Mahindra down by 2.18%, Hero MotoCorp down by 1.96% and Larsen & Toubro down by 1.84% were the top losers.

Asian markets are trading mostly in green; Hang Seng jumped 228.1 points or 1.11% to 20,717.72, Taiwan Weighted rose 70.79 points or 0.31% to 23,263.31, Shanghai Composite strengthened 26.88 points or 0.81% to 3,307.14, KOSPI increased 8.46 points or 0.33% to 2,589.49 and Jakarta Composite gained 3.57 points or 0.05% to 7,720.12. On the other hand, Nikkei 225 slipped 396.09 points or 1.04% to 37,747.20 and Straits Times was down by 17.99 points or 0.5% to 3,586.96.