Key gauges end higher amid easing inflation

Indian equity benchmarks staged a sharp recovery from the day's lows and ended higher on Friday led by gains in Telecom, TECK and Consumer Durables stocks and encouraging domestic inflation data. Markets made a negative start and extended losses amid foreign fund outflows. Foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 3,560 crore on December 12. Traders overlooked the finance ministry’s statement that gross non-performing assets (NPAs) of public sector banks (PSBs) have declined to a decade low of 3.12 per cent at the end of September 2024 from a peak of 14.98 per cent in March 2018 on the back of measures like the 4Rs -- recognition, recapitalisation, resolution, and reform -- taken by the government.

However, key gauges staged a remarkable comeback in the second half of the trading session and ended with strong gains, as moderating inflation and uptick in IIP growth numbers enthused investors to resort to value buying. The government data showed India’s retail inflation has declined to 5.48 per cent in November as compared to 6.21 per cent in October. This decline is primarily attributed to a drop in food prices, particularly vegetables which have helped reduce the overall inflation rate. This cooling of prices provides some relief to consumers who have been facing higher costs in recent months. Besides, India's industrial output, measures by the Index of Industrial Production (IIP) rose 3.5 per cent in October 2024, up from 3.1 per cent the previous month. Some solace also came as Ministry of Commerce & Industry in its latest release showed that India has achieved a remarkable milestone in its economic journey, with gross foreign direct investment (FDI) inflows reaching an impressive $1 trillion since April 2000, bolstered by a nearly 26% rise in FDI to $42.1 billion during the first half of the current fiscal year (H1 FY25) as against $33.5 billion in H1 FY24. In late afternoon session, markets continued to trade higher as investors continued to hunt for fundamentally strong stocks.

On the global front, European markets were trading higher even as data out of U.K. showed Britain's economy shrank for a second month in October, in a blow to the Labour government's economic agenda. Asian markets ended mostly down on Friday as investors looked ahead to next week's Federal Reserve meeting, with economists expecting a 25-bps rate cut. 

Back home, on the sectoral front, stocks related to airline sector were in watch as ratings agency CRISIL said the cumulative capex (capital expenditure) of Indian airports is expected to grow 12 per cent at Rs 60,000 crore in the three years through FY27 from Rs 53,000 crore during 2022-2024, to add required infrastructure for about 65 million passengers per annum. Auto component industry’s stocks also were in focus as Automotive Component Manufacturers Association of India (ACMA) stated that the automotive components industry grew 11 per cent year-on-year to Rs 3.32 lakh crore in the first half of the current fiscal (H1FY25). The turnover of the automotive component industry in the April-September period of last fiscal stood at Rs 2.98 lakh crore.  

Finally, the BSE Sensex rose 843.16 points or 1.04% to 82,133.12, and the CNX Nifty was up by 219.60 points or 0.89% to 24,768.30.        

The BSE Sensex touched high and low of 82,213.92 and 80,082.82 respectively. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.08%, while Small cap index was down by 0.29%.

The top gaining sectoral indices on the BSE were Telecom up by 2.13%, TECK up by 1.32%, Consumer Durables up by 1.14%, FMCG up by 1.07% and Bankex up by 0.81%, while Metal down by 0.76%, Realty down by 0.40%, Healthcare down by 0.29%, Basic Materials down by 0.09% and Industrials down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.39%, ITC up by 2.07%, Kotak Mahindra Bank up by 2.06%, Hindustan Unilever up by 1.92% and Ultratech Cement up by 1.87%. On the flip side, Tata Steel down by 1.26%, Indusind Bank down by 1.09%, JSW Steel down by 0.53% and Bajaj Finserv down by 0.15% were the top losers.

Meanwhile, Commerce and Industry Minister Piyush Goyal has expressed confidence that India's economic growth by end of this fiscal will be back on track despite global uncertainties. He said that this year also India will be the world's fastest growing economy.

He stated ‘We had an election in the first quarter and during the election, obviously policy making and decisions on next steps of growth or infrastructure spending does slow down and there is a lag effect. But from what the initial numbers for this quarter, the third quarter show, the festive spending, the rebound in rural growth, the way banks are now seeing traction back again, the way infrastructure spending has come back on track, I think by the time we close the year in March, we will be back on track.’

Besides, he said India's engagement with modern technologies and innovation will define the country's growth story. He added that the negative and false narratives of the opposition parties are not going to hold back the country's economic growth.

The latest government data showed India's economic growth slowed to near two-year low of 5.4 per cent in the July-September quarter of this fiscal due to poor performance of manufacturing and mining sectors, but the country continued to remain the fastest-growing large economy. The gross domestic product (GDP) had expanded by 8.1 per cent in the July-September quarter of the preceding fiscal.

The CNX Nifty traded in a range of 24,792.30 and 24,180.80. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 4.44%, ITC up by 2.26%, Kotak Mahindra Bank up by 2.05%, Hindustan Unilever up by 1.97% and Ultratech Cement up by 1.90%. On the flip side, Shriram Finance down by 2.44%, Tata Steel down by 1.31%, Indusind Bank down by 1.05%, JSW Steel down by 0.86% and Hindalco down by 0.55% and were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 1.76 points or 0.02% to 8,313.52, France’s CAC rose 14.04 points or 0.19% to 7,434.98 and Germany’s DAX gained 43.08 points or 0.21% to 20,469.35. 

Asian markets ended mostly down on Friday tracking Wall Streets’ overnight fall after data showed producer prices increased by the most in five months in November and weekly jobless claims unexpectedly rose last week, that fuelled concerns about how quickly the Fed will cut interest rates early next year. Meanwhile, investors also looked ahead to next week's Federal Reserve meeting. Japanese shares fell even after data showed sentiment among large Japanese manufacturers improved slightly in the final quarter of the year, adding more evidence of economic recovery just a week before a closely-watched meeting at the Bank of Japan. Moreover, Chinese and Hong Kong shares dropped on disappointment after the China Central Economic Work Conference did not offer details on new stimulus measures. However, Seoul shares gained ahead of a second impeachment motion against President Yoon Suk Yeol in parliament this weekend.