Markets falls below neutral lines after positive start ahead of Manufacturing PMI data

Indian equity benchmarks made a positive start on Monday as investors picked up stocks at reduced levels following recent sell-off. Some optimism also came as the Indian economy recovered in the December quarter to grow at 6.2 percent after sinking to a seven-quarter low of 5.6 percent in the July-September period, despite the uncertainty around US President Donald Trump's plan to impose tariffs on Canada, Mexico, and China this week. Soon, markets slipped below neutral lines and are trading lower in early deals ahead of February manufacturing purchasing managers' index data to be out later in the day. Some cautiousness came as fiscal deficit till January widens of revised target. The central government's fiscal deficit up to January this financial year hit 74.5% of the revised annual target, compared with 63.6% a year before. 

On the global front, most of the Asian markets are trading higher following the broadly positive cues from Wall Street on Friday, amid prospects of the US Fed cutting interest rates earlier as it is feared that the U.S. trade war may hurt global growth, worsen inflation and possibly spark recessions in some countries. South Korea is closed on account of Independence Day.

Back home, stocks of hospitals are in focus as the Crisil Ratings said private hospitals in India are set to expand their capacity by over 4,000 beds in the next financial year, with an investment of Rs 11,500 crore, followed by an addition of approximately 6,000 beds in FY25. Also, auto stocks are reacting to their monthly sales numbers. In stock specific development, Voltas climbed after selling its 92 percent stake in Saudi Ensas Co to Universal MEP Projects, Singapore, for Rs 61.84 crore.

The BSE Sensex is currently trading at 73050.20, down by 147.90 points or 0.20% after trading in a range of 73047.06 and 73649.72. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.94%, while Small cap index was down by 1.69%.

The top gaining sectoral indices on the BSE were TECK up by 0.64%, IT up by 0.62%, Auto up by 0.37% and Capital Goods up by 0.05%, while Energy down by 1.98%, Oil & Gas down by 1.46%, PSU down by 0.83%, Metal down by 0.68% and Utilities down by 0.67% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.34%, Mahindra & Mahindra up by 1.75%, Tech Mahindra up by 1.55%, Infosys up by 1.28% and HCL Technologies up by 1.15%. On the flip side, Indusind Bank down by 3.29%, Reliance Industries down by 2.67%, Axis Bank down by 1.77%, Bajaj Finserv down by 1.60% and Zomato down by 1.40% were the top losers.

Meanwhile, The World Bank in its India Country Memorandum titled ‘Becoming a High-Income Economy in a generation’ has said that India will need to accelerate reforms to achieve an average annual growth rate of 7.8 per cent for becoming a high-income economy by 2047. In order to achieve this goal India would require reforms in financial sector as well as in land and labour market. Recognizing India’s fast pace of growth averaging 6.3 per cent between 2000 and 2024, the report notes that India’s past achievements provide the foundation for its future ambitions. In recent years, India has introduced a host of structural reforms to transform the country into a global manufacturing hub, to boost infrastructure, improve human capital, and leverage digitization, while at the same time bolstering macroeconomic stability. 

World Bank India country director Auguste Tano Kouame said lessons from countries like Chile, Korea and Poland show how they have successfully made the transition from middle to high-income countries by deepening their integration into the global economy. The report said that over the past decades, India has developed at a scale and pace that few would have thought possible. From 2000 to today, in real terms, the economy has grown nearly four-fold, and GDP per capita has almost tripled. Because India grew faster than the rest of the world, its share in the global economy has doubled from 1.6 per cent in 2000 to 3.4 per cent in 2023. India has become the world’s fifth largest economy. This remarkable development story also includes a steep decline in extreme poverty, and massive expansion of service delivery and essential infrastructure. Building on these achievements, India has set the ambitious goal of becoming a high-income country by 2047.

For India to become a high-income economy by 2047, its GNI per capita would have to increase by nearly 8 times over the current levels; growth would have to accelerate further and to remain high over the next two decades, a feat that few countries have achieved. The report recommended incentivising the private sector to invest in job-rich sectors like agro-processing manufacturing, hospitality, transportation, and care economy to harness the full potential of India’s demographic dividend. It said strengthening infrastructure, adopting modern technology, streamlining labour market regulations and lowering the compliance burden on firms will further drive productivity and competitiveness, and added that these steps will help India catch up to peers like Thailand, Vietnam and China in Global Value Chain (GVC) participation rates.

With regard to boosting investment, the report said strengthening financial sector regulations, removing constraints to formal credit for micro, small, and medium enterprises (MSMEs), and simplifying foreign direct investment (FDI) policies will be critical. The Centre can facilitate this growth process through more incentive-driven federal programmes such as the recently announced urban challenge fund to support better performance in lagging districts and states. More incentives and capacity building will help low-income states improve efficiency of public expenditure and enable them to catch up with the leaders.

The CNX Nifty is currently trading at 22053.65, down by 71.05 points or 0.32% after trading in a range of 22052.50 and 22261.55. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 2.48%, Grasim Industries up by 1.83%, Eicher Motors up by 1.77%, Wipro up by 1.76% and Mahindra & Mahindra up by 1.62%. On the flip side, Coal India down by 3.44%, Indusind Bank down by 3.25%, Reliance Industries down by 3.11%, ONGC down by 2.69% and Axis Bank down by 1.95% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 593.28 points or 1.6% to 37,748.78, Hang Seng advanced 277.64 points or 1.2% to 23,218.96, Jakarta Composite rose 226.44 points or 3.61% to 6,497.04, Straits Times gained 16.02 points or 0.41% to 3,911.72 and Shanghai Composite was up by 11.37 points or 0.34% to 3,332.27, while Taiwan Weighted was down by 340.86 points or 1.48% to 22,712.32.