Sensex, Nifty trade in red after slightly positive start

Indian equity benchmarks made flat-to-positive start on Thursday, following overnight gains on Wall Street as well as broadly positive cues from Asian counterparts, as markets are becoming gradually de-sensitized to the tariff war as traders believe countries would arrive at a trade deal with the US sooner or later ahead of the August 1 deadline. Overnight fall in crude oil prices also aided domestic sentiments. Sensex and Nifty soon slipped below neutral lines and are trading lower in early deals led by selling in IT stocks as investors preferred to avoid risky asses after Tech Mahindra Q1 earnings and await updates from Axis Bank, Wipro, Jio Financial Services. Tech Mahindra Q1 profit up 34% YoY to Rs 1,141 crore, but missed Street estimates.

However, downside remained capped amid rising optimism over India-US trade deal after US President Donald Trump hinted an Indonesia-style trade pact with India. Besides, the Union Cabinet has approved Prime Minister Dhan-Dhaanya Krishi Yojana with an annual outlay of Rs 24,000 crore for six years to boost crop yields in 100 districts, benefiting about 1.7 crore farmers. On the sectoral front, thermal power sector stocks are in focus as Crisil Ratings indicated that the thermal power segment is expected to attract Rs 2.3 trillion worth of investments over the next three fiscals, on account of renewed focus to help meet India's growing energy demand.

The BSE Sensex is currently trading at 82541.52, down by 92.96 points or 0.11% after trading in a range of 82532.32 and 82757.09. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.03%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Realty up by 0.49%, Capital Goods up by 0.29%, FMCG up by 0.26%, Healthcare up by 0.23% and Metal up by 0.21%, while IT down by 0.39%, TECK down by 0.29%, Oil & Gas down by 0.12%, Telecom down by 0.08% and Utilities down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 0.49%, Sun Pharma up by 0.45%, Ultratech Cement up by 0.44%, Bharat Electronics up by 0.41% and SBI up by 0.39%. On the flip side, Eternal down by 1.22%, Tech Mahindra down by 1.04%, ICICI Bank down by 0.80%, Asian Paints down by 0.49% and Bajaj Finserv down by 0.48% were the top losers.

Meanwhile, Fitch Ratings has said the Reserve Bank of India’s (RBI’s) substantial liquidity infusions into the banking system since early 2025 and its commitment to keep sufficient liquidity in the system will facilitate transmission of 100 basis points rate cut in 2025. The RBI has injected about Rs 5.6 lakh crore (2 per cent of system assets) of durable funding in 2025 through government securities purchases, resulting in surplus system liquidity since March. It said the central bank’s decision to cut the cash-reserve ratio (CRR) by 100 bps will further release about Rs 2.7 lakh crore in liquidity in a phased manner.

The agency said ‘This is evident in rising liquidity surpluses and falling deposit costs. We expect funding conditions to stay accommodating and facilitate transmission of 100 bp in rate cuts in 2025. This is also supported by a reversal in the rise in the sector's loan/deposit ratio amid slower loan growth, which should ease pressure on banks to compete for deposits’. The RBI has cut policy interest rates by a total of 100 basis points in 2025, starting with a quarter-point reduction in February -- the first cut since May 2020 -- and another similar-sized cut in April. In June, it cut rates by a higher-than-expected 50 basis points.

It said these measures signal a significant shift in the RBI's liquidity stance since its October 2024 report, as it aims to spur loan growth without intensifying funding cost pressures. It also said ‘Surplus liquidity conditions will likely accelerate the decline in the cost of fresh deposits. Nevertheless, we expect a 30 bp contraction in margins in the financial year ending March 2026 (FY26). However, margin pressures should moderate as deposit costs fall in FY27, helped by lower CRR requirements’.

The RBI in its monetary policy review in June announced a steep 1 per cent cut in CRR to bring it down to 3 per cent in four equal tranches. This reduction will be carried out in four equal tranches of 25 bps each with effect from the fortnights beginning September 6, October 4, November 1, and November 29, 2025. A CRR cut means that the commercial banks would have to maintain a lower level of 3 per cent in liquid cash form with the RBI, allowing them to have higher funds for lending.

The CNX Nifty is currently trading at 25183.90, down by 28.15 points or 0.11% after trading in a range of 25177.50 and 25238.35. There were 23 stocks advancing against 26 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Hindalco up by 0.70%, Apollo Hospital up by 0.59%, Ultratech Cement up by 0.46%, Sun Pharma up by 0.42% and Bharat Electronics up by 0.41%. On the flip side, Eternal down by 1.32%, SBI Life Insurance down by 1.20%, Tech Mahindra down by 0.99%, ICICI Bank down by 0.90% and Indusind Bank down by 0.89% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 88.43 points or 0.22% to 39,751.83, Jakarta Composite gained 84.73 points or 1.18% to 7,276.75, Hang Seng advanced 17.08 points or 0.07% to 24,534.84, Straits Times rose 16.34 points or 0.4% to 4,148.59 and Shanghai Composite was up by 3.16 points or 0.09% to 3,506.94. On the other hand, Taiwan Weighted lost 11.72 points or 0.05% to 23,031.18 and KOSPI was down by 2.60 points or 0.08% to 3,183.78.