Key gauges end mixed amid geopolitical uncertainty

Indian equity benchmarks ended mixed on Thursday as investors remained cautious amid persistent geopolitical tensions in the Middle East, elevated crude oil prices and volatility ahead of the weekly F&O expiry. Also, some concern came as Foreign institutional investors (FIIs) ended a three-session buying streak by selling Indian equities worth Rs 1,002.50 crore on Wednesday

The BSE Sensex ended marginally above the neutral line, supported by gains in select heavyweight stocks from sectors such Realty and Telecom. Easing concerns over US interest rates and strong corporate earnings also provided some support.

In contrast, the Nifty 50 closed marginally lower amid broad-based selling in heavyweight stocks. Among the Nifty constituents, Tata Consumer Products and Tata Motors Passenger Vehicles emerged as the top gainers, while Hindalco Industries and ICICI Bank were the major laggards. 

Some of the important factors in trade:

India, SACU sign ToR for negotiations towards preferential trade agreement: Marking a significant step towards strengthening trade and economic engagement between India and the Southern African states, India and the Southern African Customs Union (SACU) have signed the Terms of Reference (ToR) for negotiations towards a Preferential Trade Agreement (PTA). 

EAC-PM recommends targeted support measures for innovative firms: The Economic Advisory Council to the Prime Minister (EAC-PM) has recommended the intensification of targeted support measures for innovative firms to speed up investment decisions, alongside increased public investment to encourage private investment.

Whole world seeking to increase trade relations with India: Union Minister of Commerce and Industry Piyush Goyal has called for a responsible approach to global trade, urging Indian businesses and citizens to adopt fair trading practices, promote recycling and reuse, and encourage a circular economy while taking Indian products and services to global markets. 

RBI issues draft rules on harmonised interest rate determination for Banks, NBFCs: In order to align the policies between Banks and non-banking finance companies (NBFCs), the Reserve Bank of India (RBI) has issued draft rules on harmonised interest rate determination. 

Global front: European markets were trading mostly in green as inflation data from the U.S. has raised hopes the Fed will not hike interest rates for now. Asian markets ended mixed even as technology shares extended gains on renewed optimism over artificial-intelligence spending. 

Finally, the BSE Sensex rose 113.61 points or 0.15% to 78,079.96 and the CNX Nifty was down by 40.10 points or 0.16% to 24,395.85. 

The BSE Sensex touched high and low of 78,119.39 and 77,665.89, respectively. There were 19 stocks advancing against 11 stocks declining on the index.

The top gaining sectoral indices on the BSE were Realty up by 1.46%, Telecom up by 1.01%, FMCG up by 0.97%, Industrials up by 0.83% and IT up by 0.49%, while Metal down by 0.97%, Basic Materials down by 0.51%, Energy down by 0.23%, Bankex down by 0.11% and Oil & Gas down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Interglobe Aviation up by 2.10%, Eternal up by 1.68%, Larsen & Toubro up by 1.50%, Hindustan Unilever up by 1.32% and NTPC up by 1.30%. On the flip side, Titan Company down by 1.25%, Ultratech Cement down by 1.18%, ICICI Bank down by 1.18%, Tata Steel down by 0.94% and Reliance Industries down by 0.93% were the top losers.

Meanwhile, the Economic Advisory Council to the Prime Minister (EAC-PM), in its working paper ‘An Investigation Into Corporate Profits and Investment’, has recommended the intensification of targeted support measures for innovative firms to speed up investment decisions, alongside increased public investment to encourage private investment. It said the data shows that corporate investment was increasing till FY20 before falling sharply during the pandemic. it said ‘Existing policy support measures need to be intensified. These include production-linked incentive schemes and public investment aimed at crowding in private investment.’

It noted that the global economy has shown a rise in corporate profits and profitability, accompanied by subdued investment sentiment since the global financial crisis, with the problem worsening after the pandemic. It also recommended 'intensification of targeted support measures for innovative firms' and increased industry-academia linkage, as well as policy measures to increase the efficiency of contract enforcement and commercial dispute redressal.

It pointed out that post-pandemic, recovery of aggregate profits before interest and taxes (PBIT) and firm-level profitability has been sustained, with a growth rate of 21.4 per cent in FY24. Corporate investment has also recovered, but the recovery has been slower and less sustained. The growth of gross fixed assets (GFA) was 6.1 per cent in FY24. The slower recovery was particularly relevant for foreign-owned firms and Indian private firms.

According to it, cross-sectional analysis shows that the high investment levels recorded in FY20 were driven by a spike in high investment intensity among certain large asset-rich companies. It said ‘Such a high intensity spike disappeared during the pandemic and was not observed in the post-pandemic recovery period, partly explaining the decline and slower recovery of investment levels.’ It added that there is also evidence of downward pressure on firm-level investment driven by a decline in marginal profitability.

CNX Nifty touched high and low of 24,431.60 and 24,311.40, respectively. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Tata Consumer Products up by 2.69%, Tata Motors Passenger up by 1.92%, Hindustan Unilever up by 1.41%, NTPC up by 1.41% and Shriram Finance up by 1.35%. On the flip side, Hindalco Industries down by 2.99%, ICICI Bank down by 1.74%, Ultratech Cement down by 1.56%, Grasim Industries down by 1.54% and SBI Life Insurance Company down by 0.98% were the top losers.

European markets were trading mostly in green; France’s CAC rose 19.96 points or 0.23% to 8,694.90 and Germany’s DAX gained 159.23 points or 0.6% to 26,490.30, while UK’s FTSE 100 decreased 20.91 points or 0.19% to 10,812.24. 

Asian markets ended mixed on Thursday as US consumer inflation data suggested a cooling trend and reduced the likelihood of a Federal Reserve rate hike, while investors remained cautious ahead of the release of US producer price index later today and readings on retail sales and consumer sentiment due on Friday. Besides, traders kept close eye on crude oil price movements and developments in the Iran conflict after talks between Washington and Tehran to end the war hit an impasse. South Korea’s Kospi surged as major chipmakers rallied following an overnight rise in US technology stocks, while the South Korean government also plans to ease regulations for semiconductor and AI megaprojects that expected to generate 4.2 trillion South Korean won in investment.