Post Session: Quick Review

Indian equity markets ended flat with negative bias, paring initial losses as traders bought beaten down but fundamentally strong stocks in later part of the trade. On the last trading day of 2024, markets went through volatility amid weak prospects of a substantial rate cut by the US Fed in 2025. As for broader indices, the BSE Mid cap index and Small cap index ended in green. Sector wise, IT sectors stocks witnessed heavy selling pressure.

Markets made gap-down opening and remained lower amid weak global cues, as several international markets were closed on New Year's Eve, making for thin trading around the world. Traders were concerned as the data released by the Finance Ministry showed that India's external debt rose to $711.8 billion as of September this year, up 4.3 per cent over June 2024. Traders overlooked RBI report stated that the Indian economy is exhibiting resilience and stability, and the gross domestic product (GDP) is projected to grow at 6.6 per cent in 2024-25, aided by a revival in rural consumption, a pickup in government consumption and investment, and strong services exports. In afternoon session, markets trimmed some of their losses but continued to trade in red even after a report by CRISIL stated that India's current account deficit (CAD) is to remain in a safe zone at around 1 per cent of GDP for fiscal 2025, up from 0.7 per cent in the previous year. In late afternoon session, markets turned volatile and ended flat with negative bias.

On the global front, European markets were trading in green ahead of the New Year holiday. Asian markets ended mixed in thin holiday trade on Tuesday. Volumes were light amid holidays in Japan and South Korea. Back home, Reserve Bank of India has said that asset quality of banks improved further and their gross non-performing assets (NPAs) or bad loans ratio declined to a 12-year low of 2.6 per cent in September 2024 on the back of falling slippages and steady credit demand.

The BSE Sensex ended at 78,139.01, down by 109.12 points or 0.14% after trading in a range of 77,560.79 and 78,305.34. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional) 

The broader indices ended in green; the BSE Mid cap index gained 0.13%, while Small cap index was up by 0.71%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.31%, Industrials up by 1.14%, PSU up by 1.06%, Oil & Gas up by 1.04% and Energy was up by 1.00%, while IT down by 1.29%, TECK down by 1.02% and Realty was down by 0.36% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Kotak Mahindra Bank up by 2.58%, ITC up by 1.37%, Ultratech Cement up by 1.10%, Tata Motors up by 0.95% and Tata Steel up by 0.88%. On the flip side, Tech Mahindra down by 2.38%, Zomato down by 1.73%, TCS down by 1.48%, Infosys down by 1.31% and ICICI Bank down by 0.87% were the top losers. (Provisional)

Meanwhile, facing criticism from the government over the central bank prioritising inflation over growth, the new Reserve Bank of India (RBI) Governor Sanjay Malhotra has said that prospects of the Indian economy are expected to improve on the back of high consumer and business confidence in 2025. Malhotra in foreword to the Financial Stability Report said ‘As we strive to preserve financial stability to support a higher growth path for the Indian economy, our focus remains steadfast on maintaining stability of financial institutions and, more broadly, systemic stability’. He further said that despite the global uncertainties Indian economy is expected to pick up pace in the second half of the current financial year. Notwithstanding the uncertainties shrouding the global macro-financial ethos as it unfolds, prospects for the Indian economy are expected to improve after the slowdown in the pace of economic activity in the first half of 2024-25.

He said ‘Consumer and business confidence for the year ahead remain high and the investment scenario is brighter as corporations step into 2025 with robust balance sheets and high profitability’. He further said that financial sector regulators in India too are intensifying reforms and sharpening their surveillance against the backdrop of the soundness of the financial system bolstered by robust earnings, low levels of impaired assets and strong capital buffers, as this report highlights. He said stress test results reveal that capital levels of the banking system as well as of the Non-banking Financial Companies (NBFCs) sector will remain well above the regulatory minimum even under adverse stress scenarios. He said ‘We continue to secure and anchor public trust and confidence to support India's aspirational goals. We remain committed to developing a modern financial system that is customer-centric, technologically leveraged and financially inclusive’.

Referring to the global economy, he said it exhibits resilience in the face of formidable headwinds from political and economic policy uncertainty, persisting conflicts and an environment of fragmenting international trade and tariffs. Brightening the global prospects is the likelihood that the decline in inflation will continue and align with targets during the year ahead, allowing purchasing power to recover. He said as monetary policy gains headroom to further support economic activity, financial conditions can be expected to remain easy and contribute to an improvement in the trajectory of global GDP from a prolonged phase of low growth, and added that robust labour market and sound financial system too provide congenial conditions for this turnaround.

However, he said the medium-term outlook remains challenging, with downside risks from possible intensification of geopolitical conflicts, sporadic financial market turmoil, extreme climate events and rising indebtedness. He added stretched asset valuations, fragilities in the less regulated non-bank financial intermediaries, and threats from new and emerging technologies also add to the evolving uncertain outlook.

The CNX Nifty ended at 23,644.80, down by 0.10 points after trading in a range of 23,460.45 and 23,689.85. There were 26 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharat Electronics up by 2.90%, ONGC up by 2.84%, Kotak Mahindra Bank up by 2.61%, Trent up by 2.43% and Coal India up by 1.65%. On the flip side, Adani Enterprises down by 2.46%, Tech Mahindra down by 1.99%, TCS down by 1.54%, Infosys down by 1.36% and Shriram Finance down by 1.02% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 21.75 points or 0.27% to 8,142.76 and France’s CAC was up by 23.57 points or 0.32% to 7,337.13.

Asian markets settled mixed in thin holiday trade on Tuesday, tracking overnight fall in Wall Street. Markets in South Korea and Japanese markets were closed on New Year holidays. Chinese shares fell after data showed China's factory activity expanded at a slower pace in December. China's manufacturing PMI dropped to 50.1 in December from 50.3 in the previous month. Meantime, the non-manufacturing PMI advanced more than expected to 52.2 from 50.0 a month ago. The focus also shifted to US-China relations after the US Treasury Department said that a China state-sponsored actor was responsible for a recent cyber breach that accessed some of its workstations.