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Bourses end lower on Tuesday amid spike in retail inflation
Oct-15-2024

Indian equity benchmarks went through sluggish trade during the day with Nifty and Sensex settling below the psychological 25,100 and 81,850 levels respectively. Volatility occurred during the day amid a private report stating that the hotter-than-expected CPI print for September will push RBI to defer its rate cut plans. After making positive start, soon indices witnessed sell off to turn into red as sentiments turned pessimistic with the government data showed that soaring vegetable prices pushed the retail inflation rate to a nine-month high of 5.49 per cent in September 2024. The consumer price index (CPI)-based retail inflation rate was 3.65 per cent in August and 5.02 per in September 2023. 

Traders overlooked report that John Chambers Chairman, US-India Strategic Partnership Forum said that Indian administration has set the stage for growth, not for the next five years but for the next twenty-five years. He added being the fastest-growing economy in the world by the end of the century India will become much bigger than China in terms of GDP.  Market participants paid no heed to US-India Strategic Partnership Forum President and CEO Mukesh Aghi’s statement that exports are going to be a major job creator for India as the country moves towards becoming a $5 trillion economy. Aghi also stressed that India and the US should continue to strengthen their economic engagements and increase the bilateral trade to $500 billion going forward.

In afternoon session, markets continued their sluggish trade, as traders avoided to take a risk ahead of India’s trade deficit data going to be out later in a day. Besides, investors were continuously tracing corporate Q2FY25 earnings. In last leg of trade, indices remained below neutral lines as traders were cautious about future RBI rate cut. 

On the global front, European markets were trading mostly in red after two days of gains. A slew of mixed regional data and Middle East concerns weighed on sentiment, heading into Thursday's ECB meeting. Besides, Germany's wholesale prices fell at the steepest pace in five months in September, while investor confidence in the country improved for the first time in four months. Asian markets finished mostly higher on Tuesday after major U.S. indexes rallied to new records overnight on relief that interest rates are finally heading back down and that the economy is on a solid footing. 

Back home, sector wise, airline industry stocks remained in focus as credit rating agency ICRA in its latest report has said that the overall cargo volumes are expected to see a healthy year-on-year growth of 9-11 per cent to 3.6-3.7 million tonnes this fiscal year (FY25) on the back of estimated higher domestic and international cargo volumes while the outlook on airport infrastructure is stable. 

Finally, the BSE Sensex declined 152.93 points or 0.19% to 81820.12, and the CNX Nifty was down by 70.60 points or 0.28% to 25057.35. 

The BSE Sensex touched high and low of 82,300.44 and 81,635.57 respectively. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.25%, while Small cap index was up by 1.05%.

The top gaining sectoral indices on the BSE were Realty up by 2.07%, Industrials up by 0.69%, FMCG up by 0.42%, Consumer Durables up by 0.41% and Capital Goods was up by 0.41%, while Metal down by 1.56%, Auto down by 0.67%, Energy down by 0.39%, Basic Materials down by 0.23% and  IT was down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 1.90%, Bharti Airtel up by 1.26%, Asian Paints up by 1.01%, Ultratech Cement up by 0.83% and HCL Tech up by 0.76%. On the flip side, Bajaj Finance down by 2.73%, Reliance Industries down by 2.09%, Tata Steel down by 1.67%, JSW Steel down by 1.19% and Tata Motors down by 1.14% were the top losers.

Meanwhile, after remaining within the Reserve Bank of India's median target of 4 per cent during July and August, India’s Consumer Price Index (CPI)-based -- retail inflation jumped to a nine-month high of 5.49 per cent in September 2024 from 3.65 per cent in August 2024, with soaring vegetable prices. The CPI was 5.02 per cent in September 2023. The previous high inflation rate was witnessed in December 2023 at 5.69 per cent. The inflation rate in the food basket rose to 9.24 per cent in September compared to 5.66 per cent in August and 6.62 per cent in the year-ago month. The National Statistical Office (NSO) said it is likely that the increase in inflation rate for the month of September 2024 is due to high base effect and weather conditions. The Reserve Bank of India (RBI), which kept the key short-term lending rate unchanged earlier this month, has been asked by the government to ensure the CPI inflation rate remains at 4 per cent with a margin of 2 per cent on either side.

The NSO, Ministry of Statistics and Programme Implementation (MoSPI) in its data has showed that Rural CPI (General) in September 2024 stood at 5.87 per cent over 4.16 per cent in August 2024. The Urban CPI (General) stood at 5.05 per cent in September as against 3.14 per cent in August. The index value for Rural, Urban and Combined CPI (General) stood at 196.7, 191.4 and 194.2 respectively, in September 2024. The price data is collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster. During the month of September 2024, NSO collected prices from 99.7% villages and 98.6% urban markets while the market-wise prices reported therein were 88.2% for rural and 92.2% for urban. 

The surge in food and beverages inflation in September 2024 vis-a-vis August 2024 was largely led by vegetable inflation, which surged to a 14-month high of 35.99 per cent from 10.71 per cent in the previous month. Food and beverages, which accounts for 45.86 per cent of the total weight of Consumer Price Index (Combined), registered an inflation rate of 8.36 per cent in September, up from 5.30 per cent in August. Inflation rate for fruits rose to 7.65 per cent and from 6.45 per cent. For milk and milk products, the inflation rate was 3.03 per cent as against 2.98 per cent in August. The inflation rate for meat and fish, egg segments came down at 2.66 per cent and 6.31 per cent from 4.30 per cent and 7.14 per cent, respectively. The Fuel and light inflation rate for September stood at (-) 1.39 per cent as against (-) 5.31 per cent in August. For clothing & footwear and housing sectors, the inflation rates were 2.71 per cent and 2.78 per cent, respectively.

The CNX Nifty traded in a range of 25212.05 and 25008.15. There were 19 stocks advancing against 31 stocks declining on the index. 

The top gainers on Nifty were BPCL up by 2.35%, ICICI Bank up by 1.93%, Britannia up by 1.52%, Bharti Airtel up by 1.28% and Bharat Electronics up by 1.10%. On the flip side, HDFC Life Insurance down by 3.56%, Bajaj Auto down by 3.17%, Wipro down by 3.02%, Bajaj Finance down by 2.66% and Hindalco down by 2.16% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 49.69 points or 0.6% to 8,242.97 and France’s CAC was down by 57.54 points or 0.76% to 7,544.52. On the flip side, Germany’s DAX was up by 56.65 points or 0.29% to 19,564.94. 

Asian markets finished mostly higher on Tuesday on account of the weakness in crude oil rates, strong corporate earnings report, and rally in technological sector stocks. Japan's Nikkei advanced to the highest level in over three months after PM Shigeru Ishiba announced plans to compile supplementary budget for the current fiscal in excess to last year's 13.1 trillion yen. Strong economic growth outlook and weaker local currency yen kindled the investor sentiments.

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,201.29

-83.03

-2.59

Hang Seng

20,318.79

-774.08

-3.81

Jakarta Composite

7,626.95

67.29

0.88

KLSE Composite

1,641.97

5.43

0.33

Nikkei 225

39,910.55

304.75

0.76

Straits Times

3,595.47

-0.44

-0.01

KOSPI Composite

2,633.45

10.16

0.39

Taiwan Weighted

23,292.04

316.75

1.36
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