Key indices erase early gains to end flat on Thursday

Extending the losing streak to seventh day in a row, Indian equity benchmarks erased all of their early gains and ended flat with negative bias on Thursday as concerns over the escalating trade war, earnings slowdowns, and persistent foreign portfolio outflows weighed on market sentiment. 

Some of the important factors in today’s trade:

FIIs continued to maintain their sell stand: Foreign institutional investors (FIIs) offloaded equities worth Rs 4,969.30 crore on net basis on Wednesday, according to exchange data. 

India's industrial output slowed to 3.2% in December: India's industrial production growth slowed to 3.2 per cent in December 2024, mainly due to poor performance of mining and manufacturing sectors.

Retail inflation slowed to 4.31% in January: Retail inflation slowed to 4.31 per cent in January mainly due to lower food prices. The Consumer Price Index (CPI)-based retail inflation was 5.22 per cent in December, and 5.1 per cent in January 2024.

Fall in crude prices: Oil prices fell slightly as a potential peace deal between Russia and Ukraine continued to exert downward pressure, along with rising crude inventories in the United States.

Global front: European markets were trading mostly in green as the Office for National Statistics said the U.K. economy expanded unexpectedly in the fourth quarter, underpinned by services and construction output. Asian markets settled mixed as data showing a bigger than expected increase in U.S. consumer price inflation raised speculation the US Fed will leave interest rates on hold for a prolonged period. 

Finally, the BSE Sensex fell 32.11 points or 0.04% to 76,138.97, and the CNX Nifty was down by 13.85 points or 0.06% to 23,031.40.      

The BSE Sensex touched high and low of 76,764.53 and 76,013.43 respectively. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.07%, while Small cap index was down by 0.43%.

The top gaining sectoral indices on the BSE were Metal up by 1.26%, Realty up by 0.72%, Healthcare up by 0.50%, Telecom up by 0.25% and Power up by 0.22%, while IT down by 0.93%, FMCG down by 0.66%, TECK down by 0.64%, Consumer Durables down by 0.44% and Oil & Gas down by 0.34% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.12%, Tata Steel up by 2.99%, Bajaj Finserv up by 2.97%, Bajaj Finance up by 2.27% and Kotak Mahindra Bank up by 1.46%. On the flip side, Adani Ports & SEZ down by 1.77%, Infosys down by 1.10%, TCS down by 1.04%, SBI down by 0.81% and Titan Company down by 0.71% were the top losers. 

Meanwhile, Former Deputy Chairman of the Planning Commission of India Montek Singh Ahluwalia has said that large states can be split so that new cities can emerge, giving impetus to urbanisation. According to him, if India is going to grow at 8 per cent, then the urban population is going to grow more rapidly than cities' infrastructure. Ahluwalia said 'We should seriously consider cutting down many of the largest states into two or three.’ He stated ‘Gandhiji said India lives in its villages, and many people still regard that as a sort of romantic vision. But I don't think he said India will continue to do so 100 years later.’

He said picking up some tier-2 towns and developing them into near-metros is the solution for over-saturated cities like Bengaluru, for instance. He said even though there ought to be spilling over into other cities, this does not happen organically. He added ‘The only known cases in India where this happens is when a new state is carved out and a capital has to be created.’

Ahluwalia recalled former UP Chief Minister and BSP leader Mayawati had suggested splitting her state into three. Moreover, he said ‘Had this been done, there would have been a political willingness instantly to create three new good cities.’ He also pointed out that people have said this could be done in many other states. Besides, he said In Maharashtra, for example, there are people who said the Vidarbha region should be made a separate state with Nagpur as its capital. While stating that tough decisions such as this are not politically easy, he said change happens only with interesting reforms.

The CNX Nifty traded in a range of 23,235.50 and 22,992.20. There were 23 stocks advancing against 27 stocks declining on the index.  

The top gainers on Nifty were Tata Steel up by 3.12%, Sun Pharma up by 3.02%, Bajaj Finserv up by 3.00%, Bajaj Finance up by 2.28% and Cipla up by 1.77%. On the flip side, Adani Enterprises down by 4.93%, Adani Ports & SEZ down by 1.86%, Hero MotoCorp down by 1.59%, Infosys down by 1.21% and Larsen & Toubro down by 1.05% were the top losers.

European markets were trading mostly in green; France’s CAC rose 87.85 points or 1.09% to 8,130.04 and Germany’s DAX gained 277.28 points or 1.25% to 22,425.31, while UK’s FTSE 100 decreased 75.98 points or 0.86% to 8,731.46.

Asian markets settled mixed on Thursday after US President Donald Trump said that he had a lengthy and highly productive phone call with Russian President Vladimir V. Putin and that Ukraine's NATO membership is not practical, raising expectations for an end to the war in Ukraine. Trump expects to meet Putin in Saudi Arabia for Ukraine peace talks, sparking concerns about Ukraine's exclusion. And also tracking mixed closing of Wall Street overnight after the latest US CPI data reinforced market expectations that the US Federal Reserve will maintain its aggressive monetary policy. Seoul shares gained, led by technology and auto shares with growing expectations for an exemption from US tariffs. Japanese shares rose on the back of a weaker yen.