Key gauges end flat with negative bias

Indian equity benchmarks erased most of their losses and ended flat with negative bias on Tuesday driven by gains in Utilities, Oil & Gas and Power stocks. After a muted start, the indices experienced a sharp decline in first half as caution persisted over weak earnings, foreign outflows, and global trade concerns. But, from mid-session onwards, markets started to recover from the lower levels and ended with a marginal losses.   

Some of the important factors in today’s trade: 

India's economy to grow 6.4% in Q3: Traders got some respite as ICRA projected India's GDP to grow 6.4 per cent in the December quarter on account of enhanced government spending amid uneven consumption.  

India will continue to review import duties, aim to be investor friendly: Finance minister Nirmala Sitharaman said reciprocal import duty cuts are a continuous thing and India will periodically review custom duties and anti-dumping duties as its in line with the country's ambition to be an investor friendly country. 

Foreign fund outflows: The weakness in the markets persisted as exchange data showed Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,937.83 crore in the capital markets on net basis on Monday.

US Treasury yields ticked higher: U.S. Treasury yields were higher after a day’s holiday, as investors looked toward the FOMC meeting minutes later this week and digested a bond selloff in Europe. 

Global front: European markets were trading lower as investors continued to monitory the developments on the geopolitical front. Asian markets ended mostly in green as markets reacted positively to easing geopolitical tensions after US President Donald Trump's decision to open talks with Russia on ending the war with Ukraine without a European presence.  

Finally, the BSE Sensex fell 29.47 points or 0.04% to 75,967.39, and the CNX Nifty was down by 14.20 points or 0.06% to 22,945.30.       

The BSE Sensex touched high and low of 76,091.69 and 75,531.01 respectively. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.19%, while Small cap index was down by 1.71%.

The top gaining sectoral indices on the BSE were Utilities up by 1.03%, Oil & Gas up by 0.70%, Power up by 0.59%, IT up by 0.55% and Energy up by 0.38%, while Industrials down by 1.51%, Consumer Durables down by 1.19%, Telecom down by 1.06%, Capital Goods down by 0.91% and FMCG down by 0.80% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.94%, Tech Mahindra up by 2.38%, Zomato up by 2.15%, Power Grid Corporation up by 1.37% and Kotak Mahindra Bank up by 0.98%. On the flip side, Indusind Bank down by 2.38%, Ultratech Cement down by 1.60%, Mahindra & Mahindra down by 1.48%, Hindustan Unilever down by 1.27% and TCS down by 0.87% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has clarified that the massive income tax relief given in Budget 2025 doesn't mean that the government has shifted focus to consumption from capital expenditure. Keeping people earning up to Rs 12 lakh annually out of the income tax ambit has triggered a debate that the government has shifted focus to boosting consumption after the two consecutive quarter GDP figures showed tepid growth.

Sitharaman said there is no reason for people to think that the emphasis has shifted from capital expenditure to consumption, as he spelt out the consistent rise in capital spending provisions over the past few years. She supplemented that the broad picture is that the government's emphasis since COVID remains on public expenditure for building capital assets. This time, the capex provisioned in the Budget 2025 is over 10.2 per cent higher at about Rs 16 lakh crore, including the PSUs capex spending. The government itself has Budgeted Rs 11.21 lakh capex for 2025-26.

The effective capital expenditure is projected at 15.48 lakh crore as against 13.18 lakh crore in the revised estimates of 2024-25. Effective capital expenditure includes core capital outlays and the grants in aid to states for creation of capital assets. Though the grants in aid for creation of capital assets is accounted in Budget as revenue expenditure, they go for creating capital assets in the states. She said ‘And therefore, I would think the emphasis, or any reason for people to think that the emphasis has shifted from capital expenditure towards consumption, is not right’.

She added that the government has enhanced the capital expenditure budget and simultaneously given some concessions through a reduction in tax, particularly personal income tax, for people who would want to spend or save or invest. In Union Budget for 2025-26 income tax exemption limit has been extended from Rs 7 lakh to Rs 12 lakh, providing significant relief to taxpayers, especially the middle class. An estimated one crore middle-income Indian taxpayers will be out of the tax net. As a result of these tax relief proposals, the government will forego revenue of about Rs 1 lakh crore in direct taxes and Rs 2600 crore in indirect taxes.

The CNX Nifty traded in a range of 22,992.50 and 22,801.50. There were 18 stocks advancing against 32 stocks declining on the index. 

The top gainers on Nifty were NTPC up by 3.19%, Tech Mahindra up by 2.17%, Wipro up by 2.01%, ONGC up by 1.01% and Apollo Hospitals Enterprise up by 0.92%. On the flip side, Indusind Bank down by 2.49%, Trent down by 2.17%, Bharat Electronics down by 1.89%, Ultratech Cement down by 1.80% and Mahindra & Mahindra down by 1.80% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 0.88 points or 0.01% to 8,767.13, France’s CAC fell 9.06 points or 0.11% to 8,180.07 and Germany’s DAX lost 57.31 points or 0.25% to 22,740.78.

Asian markets settled mostly higher on Tuesday, with risk appetite in the market buoyed by the rally in technological sector amidst growing optimism over AI followed by the news on a meeting between China's President Xi Jinping and business leaders. Japan's Nikkei finished green after the local currency yen softened bolstering foreign investments and on upbeat economic data for the quarter 4. Japan's economy grew by 0.7% quarter-on-quarter in the fourth quarter, up from 0.4% growth in the previous quarter and exceeding expectations of 0.3%. On an annualized basis, Japan's GDP expanded by 2.8% in Q4, in line with forecasts and accelerating from a 1.7% increase in Q3.