Post Session: Quick Review

Local equity markets witnessed high volatility in a day and ended with losses on last trading day of week amid Reserve Bank of India (RBI) kept key interest rates unchanged due to ‘high inflation’. Though, downside remained limited after the RBI cut Cash Reserve Ratio (CRR) by 50 bps to 4%.  Traders preferred to play safe ahead of key macro-economic data next week. As for broader indices, the BSE Mid cap index and Small cap index ended in green. 

Markets made positive start amid foreign fund inflows. Foreign institutional investors (FIIs) bought equities of Rs 8,539.91 crore on December 5. However, soon indices turned volatile after Reserve Bank of India (RBI) kept key interest rates unchanged due to ‘high inflation’. The central bank has maintained the key policy repo rate at 6.5 per cent. This is for the 11th consecutive time that the RBI has kept the repo rate unchanged. The RBI has maintained the repo rate at 6.5 per cent since February 2023. Besides, the RBI has cut real Gross Domestic Product (GDP) growth forecast for FY25 to 6.6% from 7.2% earlier. Also, it has revised the CPI inflation forecast for FY25 to 4.8% from 4.5% earlier. Though, losses remained limited as RBI slashed CRR by 50 bps to 4 per cent from existing 4.5 per cent, in a bid to make available more money with banks for lending so as to boost economic activity. This would lead to release of Rs 1.16 lakh crore to banks and improve their lending capacity. The CRR is the percentage of a bank’s total deposits that it is required to maintain in liquid cash with the RBI. Some cautiousness remained among the markets as India Ratings and Research’s report stated that the current account deficit (CAD) for the September quarter is set to widen to 1.6 per cent, the most in the last seven quarters. In late afternoon session, markets added some losses despite finance minister Nirmala Sitharaman said the sharp decline in the growth of gross domestic product (GDP) in the September quarter is ‘not systemic’ and revealed that she expects it to pick up in the third quarter. 

On the global front, European markets were trading mostly in green as investors continued to monitor the latest political developments in France and South Korea. Asian markets settled mostly down on Friday ahead of a U.S. jobs report due later in the day that might shift expectations for Federal Reserve rate cuts. Back home, Credit rating agency ICRA in its latest report has highlighted a significant slowdown in microfinance growth in FY25 amidst mounting asset quality concerns.

The BSE Sensex ended at 81,709.12, down by 56.74 points or 0.07% after trading in a range of 81,506.19 and 81,925.91. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.36%, while Small cap index was up by 0.60%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.17%, Consumer Durables up by 1.16%, Auto up by 0.92%, Consumer Disc up by 0.63% and Telecom was up by 0.55%, while TECK down by 0.33%, Healthcare down by 0.08%, IT down by 0.07% and Energy was down by 0.02% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 3.05%, Axis Bank up by 1.61%, Maruti Suzuki up by 1.23%, ITC up by 0.99% and Larsen & Toubro up by 0.93%. On the flip side, Adani Ports down by 1.20%, Bharti Airtel down by 1.01%, Asian Paints down by 0.93%, Indusind Bank down by 0.73% and Bajaj Finserv down by 0.71% were the top losers. (Provisional)

Meanwhile, India Ratings and Research in the report said that the current account deficit (CAD) for the September quarter is set to widen to 1.6 per cent of GDP - the most in the last seven quarters. In absolute terms the July-September CAD will be $15 billion, or 1.6 per cent, as against $9.8 billion, or 1.1 per cent, in the June quarter.

The CAD in the second quarter will be the highest since Q3 FY23, where the crucial gap representing the country's external position was $16.8 billion, or 2 per cent of the GDP. The agency said merchandise exports shrank 3.9 per cent during the period while goods exports were down to a 12-quarter low of $103 billion.

It added goods exports declined after three quarters due to subdued demand from major exporting partners such as China, Singapore, Bangladesh, and Australia. It further said the CAD is moderate to about 1.3 per cent of the GDP in December quarter.

The CNX Nifty ended at 24,677.80, down by 30.60 points or 0.12% after trading in a range of 24,620.50 and 24,751.05. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 3.06%, Bajaj Auto up by 2.34%, Axis Bank up by 1.56%, Maruti Suzuki up by 1.21% and SBI Life up by 1.17%. On the flip side, Adani Ports down by 1.41%, Cipla down by 1.39%, Bharti Airtel down by 1.08%, HDFC Life Insurance down by 1.03% and Asian Paints down by 0.92% were the top losers. (Provisional)

European markets were trading mostly in green; France’s CAC rose 85.13 points or 1.15% to 7,415.67 and Germany’s DAX was up by 48.27 points or 0.24% to 20,407.07. On the flip side, UK’s FTSE 100 was down by 8.5 points or 0.1% to 8,340.88.

Asian markets settled mostly down on Friday, tracking Wall Streets’ fall overnight and ahead of a US jobs report due later in the day that could give more insights into the future trajectory of interest rate cuts. Meanwhile, investors were also awaiting China’s Central Economic Work Conference next Wednesday, where top leaders will set economic growth targets and plan the agenda for next year. Japanese shares declined after data showed Japan's local wages grew at the fastest pace in 32 years in October, sparking expectations for BOJ interest rate hike. Moreover, Seoul shares fell as the leader of President Yoon Suk Yeol's own party backed impeachment, on which the National Assembly is set to vote on Saturday.