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Bourses extend losses in late afternoon session
Oct-17-2024

Indian equity markets extended their losses in late afternoon session amid broader market concerns. The broader indices, the BSE Mid cap index and Small cap index traded with cut over a percent. Traders took note of report that Credit rating agency ICRA has projected the combined capital spending of a sample of 13 major state governments to expand by 13% to Rs 6.5 trillion in FY25. However, this entails a miss, relative to the FY25 Budget Estimate (BE) of Rs 7.2 trillion, following a dull start to the capex in the initial months of this fiscal as well as the anticipated undershooting in states’ revenues. On the global front, Asian markets were trading mixed with Chinese and Hong Kong markets giving up early gains to end sharply lower after China announced supportive measures to prop up the country's troubled property sector, albeit on a small scale. European markets were trading higher as investors digested a slew of earnings and awaited an interest rate cut by the European Central Bank later in the day. 

The BSE Sensex is currently trading at 80953.90, down by 547.46 points or 0.67% after trading in a range of 80939.75 and 81781.40. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.53%, while Small cap index was down by 1.23%.

The only gaining sectoral indices on the BSE were IT up by 0.93% and TECK was up by 0.39%, while Realty down by 3.57%, Auto down by 3.34%, Consumer Disc down by 2.15%, Basic Materials down by 1.82% and Telecom was down by 1.79% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.00%, Tech Mahindra up by 1.99%, Power Grid up by 1.28%, Larsen & Toubro up by 1.07% and SBI up by 0.50%. On the flip side, Mahindra & Mahindra down by 3.31%, Nestle down by 3.26%, Ultratech Cement down by 2.60%, Bajaj Finserv down by 2.25% and Maruti Suzuki down by 2.06% were the top losers.

Meanwhile, credit rating agency ICRA has projected the combined capital spending of a sample of 13 major state governments to expand by 13% to Rs 6.5 trillion in FY25. However, this entails a miss, relative to the FY25 Budget Estimate (BE) of Rs 7.2 trillion, following a dull start to the capex in the initial months of this fiscal as well as the anticipated undershooting in states’ revenues. 

The rating agency foresees a modest slippage in the combined revenue and fiscal deficits of the 13 states in FY25 to Rs 2.2 trillion and Rs 8.8 trillion, respectively, from Rs 1.9 trillion and Rs 8.5 trillion, respectively, in the BE. Moreover, ICRA expects the combined leverage (debt+ guarantees) level of the sample set to inch up to 30% of GSDP in FY25 from 29.2% of GSDP in FY24, with continuing variation across the states. Although the Government of India (GoI) had enhanced the allocation for the Scheme for Special Assistance to States for Capital Investments to Rs 1.5 trillion in July 2024 from Rs 1.1 trillion in Feb 2024, its utilisation to the full extent in FY2025 appears somewhat unlikely, following its sluggish offtake in the early months.

ICRA estimates the state GST, excise duty and S&R collections to expand by 11-13% in FY25. However, sales tax collections are projected to grow by a modest 5.5% in FY25, after a modest performance in FY24. Additionally, ICRA expects the tax devolution in FY25 to be in line with the amount indicated by the GoI in its Union Budget published in July 2024. After the double tranche of tax devolution extended recently, the amount of funds remaining to be released relative to the FY25 BE for tax devolution entails a 13% YoY contraction in the balance part of this fiscal, which the states should take into consideration while planning their borrowings for the rest of the year.

The CNX Nifty is currently trading at 24739.90, down by 231.40 points or 0.93% after trading in a range of 24736.65 and 25029.50. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.98%, Tech Mahindra up by 1.91%, Power Grid up by 1.25%, Larsen & Toubro up by 1.05% and SBI up by 0.56%. On the flip side, Bajaj Auto down by 12.08%, Shriram Finance down by 4.04%, Hero MotoCorp down by 3.47%, Mahindra & Mahindra down by 3.42% and Nestle down by 3.31% were the top losers.

Asian markets were trading mixed; Nikkei 225 slipped 269.11 points or 0.69% to 38,911.19, Hang Seng declined 207.75 points or 1.03% to 20,079.10, Shanghai Composite weakened 33.57 points or 1.06% to 3,169.38 and KOSPI was down by 1.06 points or 0.04% to 2,609.30. On the flip side, Straits Times rose 33.28 points or 0.93% to 3,623.90, Taiwan Weighted added 42.86 points or 0.19% to 23,053.84 and Jakarta Composite was up by 93.31 points or 1.22% to 7,742.25.

European markets were trading higher; UK’s FTSE 100 increased 17.49 points or 0.21% to 8,346.56, France’s CAC rose 88.2 points or 1.18% to 7,580.20 and Germany’s DAX was up by 159.61 points or 0.82% to 19,592.42.
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