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Key gauges end flat with negative bias on Wednesday
Jan-08-2025

Indian equity benchmarks staged a late-hour recovery to end flat with negative bias on Wednesday led by gains in Oil & Gas, Energy and TECK stocks. Markets made a slightly positive start but failed to build the gains and traded lower for most part of the session as traders were concerned as the First Advance Estimates released by the National Statistics Office (NSO) estimated that Indian economy to slow to a four-year low of 6.4 per cent in FY25, falling short of the Reserve Bank of India’s (RBI’s) projection of 6.6 per cent. In FY24, gross domestic product (GDP) had grown at 8.2 per cent. Separately, driven by a slowdown in government capital expenditure and sluggish private investments, growth in infrastructure investment is expected to moderate in the current financial year (FY25) compared to FY24. Besides, unabated foreign fund outflows weighed on sentiments. Foreign institutional investors (FIIs) remained net sellers, offloading equities worth Rs 1,491.46 crore on January 7. The total FII outflow for 2024 has now crossed Rs 3,06,000 crore.

Markets extended losses in afternoon deals, as the State Bank of India (SBI) sees India's GDP growth in FY25 to be 6.3 per cent with a ‘downward bias’ due to several challenges affecting economic growth. The projection is also below the National Statistical Office's (NSO) latest estimate of 6.4 per cent growth seen in this fiscal year, which is a four-year low. Some pessimism also came amid a private report stating that exporters and freight agencies raised the issue of high terminal handling charges at ports and low usage of dry ports or inland container depots, which add to the overall logistics costs. However, a sharp rebound in late afternoon deals helped the Indian benchmark indices to erase most of the intraday losses to end nearly flat, owing to an accumulation of beaten-down blue-chip stocks and in expectation of government reforms in the upcoming budget to lift the tepid economy. 

On the global front, European markets were trading higher despite worries about inflation and the outlook for interest rates. Asian markets ended mostly lower on Wednesday as focus shifted to Friday's U.S. payrolls data that could influence the Fed's rate trajectory. Back home, on the sectoral front, auto stocks were in focus as data shared by the Federation of Automobile Dealers Associations (FADA) stated that all categories except tractors witnessed degrowth, with sales of two wheelers dipping by 18 per cent, passenger vehicles by 2 per cent, commercial vehicles (CV) by 5.2 per cent and three wheelers by 4.5 per cent.

Finally, the BSE Sensex fell 50.62 points or 0.06% to 78,148.49, and the CNX Nifty was down by 18.95 points or 0.08% to 23,688.95.             

The BSE Sensex touched high and low of 78,319.45 and 77,486.79 respectively. There were 14 stocks advancing against 16 stocks declining on the index.  

The broader indices ended in red; the BSE Mid cap index fell 1.09%, while Small cap index was down by 1.12%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.58%, Energy up by 1.33%, TECK up by 0.38%, Realty up by 0.38% and FMCG up by 0.33%, while Consumer Durables down by 1.86%, Industrials down by 1.44%, Capital Goods down by 1.34%, Power down by 1.17% and Utilities down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.97%, Reliance Industries up by 1.92%, ITC up by 1.90%, Asian Paints up by 1.80% and HCL Technologies up by 0.83%. On the flip side, Adani Ports &SEZ down by 1.89%, Ultratech Cement down by 1.75%, Larsen & Toubro down by 1.26%, Sun Pharma down by 1.19% and HDFC Bank down by 1.16% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that Indian banks’ profitability is expected to moderate further in FY26 with an expectation of rising slippages and higher credit costs over the FY24 levels which was at decadal lows. It said a bulk of the asset quality stress will emanate from the unsecured retail exposure. It stressed that the same is ‘manageable’ and will not have any systemic ramifications.

The agency said the under Rs 50,000 retail unsecured portion accounts for around 0.4 per cent of the banking credit, while only 3.6 per cent of the advances are the ones having a lending rate of over 11 per cent. It said that credit growth has lost steam, and sharply revised down its FY25 system credit growth estimate to 13-13.5 per cent as against 15 per cent earlier, and also added that the core interest income is likely to be hit in the next fiscal.

According to the report, banks' net interest margin (NIM) will narrow by 0.10 per cent in the new fiscal due to a transmission of past hikes, higher slippages and a change in accounting policies. The gap between credit and deposit growth, which has moderated lately, is likely to narrow in FY26, the agency believes. It noted that other challenges for the sector include the introduction of new norms on project finance which may require higher provisioning, liquidity coverage ratio under which lower proportion of liabilities may be available for lending and a transition to expected credit loss framework.

The agency has maintained its rating and outlook on banks, non-bank finance companies and housing finance companies, but tweaked the outlooks on certain asset segments due to the heightened stress possibilities. On microfinance, it said the issues are cyclical in nature and pegged the assets under management (AUM) growth to come at 5 per cent in FY25 and improve to 12 per cent in FY26.

The CNX Nifty traded in a range of 23,751.85 and 23,496.15. There were 22 stocks advancing against 28 stocks declining on the index. 

The top gainers on Nifty were up by ONGC up by 3.04%, ITC up by 1.94%, Asian Paint up by 1.91%, Dr. Reddy's up by 1.74% and TCS up by 1.66%. On the flip side, Apollo Hospitals down by 4.06%, Trent down by 2.75%, UltraTech Cement down by 2.14%, Shriram Finance down by 1.98% and Bajaj Auto down by 1.89% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 18.48 points or 0.22% to 8,263.76, France’s CAC rose 2.39 points or 0.03% to 7,491.74 and Germany’s DAX gained 103.02 points or 0.51% to 20,443.59.

Asian markets ended mostly lower on Wednesday tracking Wall Streets’ falls overnight and as upbeat US economic data led investors to scale back Fed interest rate cut bets. Investors are awaiting the release of minutes of the US Federal Reserve's December policy meeting and ADP employment data. Japanese shares declined, while Japanese yen sagged close to levels that drew intervention last year undermined by the Bank of Japan interest rate hike uncertainty. Hong Kong shares declined as the yuan fell to its lowest level since September 2023 despite renewed efforts by the country's central bank to support the currency. However, Chinese shares gained as regulators announced plans to broaden the scope of home appliance trade-ins that qualify for subsidies.

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,230.17

0.53

0.02

Hang Seng

19,279.84

-167.74

-0.87

Jakarta Composite

7,080.35

-2.93

-0.04

KLSE Composite

1,614.83

-14.96

-0.92

Nikkei 225

39,981.06

-102.24

-0.26

Straits Times

3,886.98

58.81

1.51

KOSPI Composite

2,521.05

28.95

1.15

Taiwan Weighted

23,407.33

-243.94

-1.04
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