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Markets snap 4-day losing run amid easing inflation
Jan-14-2025

Indian equity benchmarks rebounded after four days of sharp decline and ended higher on Tuesday amid value buying at lower levels and a largely firm European markets. Indian equities started the session on a positive note and consolidated during the day as traders took support with government data showing that the net direct tax collection grew 15.88 per cent to about Rs 16.90 lakh crore so far this fiscal (between April 1, 2024, and January 12, 2025). Besides, reports of phased US tariffs, easing concerns over inflation, and a stronger rupee supported the markets.  

Some of the important factors for the markets:

Cooling retail inflation brought some respite: Retail inflation declined to a four-month low of 5.22 per cent in December 2024 amid easing of prices in the food basket, giving headroom to the Reserve Bank of India (RBI) to reduce the key interest rate in upcoming monetary policy reviews. 

WPI rose to 2.37% in December 2024: Wholesale price inflation (WPI) rose to 2.37 per cent in December 2024, led by spike in manufactured products even though prices of food items eased.

Rupee recovered from record low: Indian rupee rebounded from its lowest-ever level and rose 12 paise higher at 86.62 (provisional) against the US dollar as the American currency retreated from record high.

Q3 earnings remained in watch: Traders remained on sidelines ahead of the December quarter earnings. IT company HCL Technologies has reported 5.58% rise in consolidated net profit at Rs 4,594 crore for Q3FY25 as compared to Rs 4,351 crore for the same quarter in the previous year. 

Treasury yields slipped & crude oil prices stabilized: Treasury yields pulled back after the 10-year yield hit a fresh 14-month high on in the previous session ahead of key inflation reports. Global oil benchmark Brent crude dipped 0.33 per cent to $80.74 a barrel.

Global risk sentiment improved: European markets were trading higher as markets in the region cheered news that President-elect Donald Trump's economic team is discussing a cautious and slow approach in implementing tariff hikes to avoid an inflation spike. Asian markets settled mixed amidst interest rate worries, rising bond yields and anxiety ahead of Wednesday's CPI update. 

Finally, the BSE Sensex rose 169.62 points or 0.22% to 76,499.63, and the CNX Nifty was up by 90.10 points or 0.39% to 23,176.05.    

The BSE Sensex touched high and low of 76,835.61 and 76,335.75 respectively. There were 19 stocks advancing against 11 stocks declining on the index.           

The broader indices ended in green; the BSE Mid cap index rose 2.13%, while Small cap index was up by 1.69%.

The top gaining sectoral indices on the BSE were Utilities up by 5.21%, Power up by 4.50%, Metal up by 3.51%, PSU up by 3.39% and Telecom up by 2.54%, while IT down by 1.70%, TECK down by 1.22% and FMCG down by 1.01% were the some losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 4.77%, NTPC up by 4.22%, Tata Steel up by 3.29%, Zomato up by 2.93% and Tata Motors up by 2.64%. On the flip side, HCL Technologies down by 8.63%, Hindustan Unilever down by 3.48%, Titan Company down by 1.37%, TCS down by 1.35% and Ultratech Cement down by 1.25% were the top losers.

Meanwhile, Fitch Ratings in its January update of the 'India Corporates Credit Trends' report has said that India's steady GDP growth outlook, improved banking sector's financial health and expected interest-rate cuts in 2025 will support credit access for corporates in FY26. The credit metrics of rated Indian corporates is expected to improve in FY26 (April 2025-March 2026) driven by wider EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins, despite high capex intensity. However, it stated downside risks could materialise if energy prices rise significantly given ongoing geopolitical risks, a sustained downward pressure on the Indian rupee or adverse trade protectionist measures dampening exports.

Further, it said there is a widespread expectation that the Reserve Bank of India would cut interest rates in 2025 after it eased liquidity by lowering the cash reserve ratio (CRR) by 50 basis points in its policy review meeting last month. Fitch expects aggregate sales growth for Fitch-rated corporates to remain limited to 1-2 per cent in FY26 (FY25 forecast: 1.5 per cent), mainly reflecting the impact of lower prices on oil and gas upstream, and refining and marketing companies, while other sectors will see varying growth.

It stated ‘We expect India's GDP growth of 6.5 per cent and robust infrastructure spending to underpin healthy demand for cement, electricity, petroleum products, steel, and engineering and construction (E&C) companies during FY26.’ Moreover, it said sales will decline in low-single digits for the oil and gas production and oil marketing companies (OMCs) as lower prices counterbalance a low-to-mid single-digit volume growth. Fitch expects only mid-single-digit sales growth for IT service companies, as customers in key overseas markets limit discretionary spending in light of slow economic growth prospects.

It also said Auto suppliers' sales growth will moderate to mid-single digits amid slower volume growth in the domestic market and lower exports. Demand recovery in the travel and tourism industry will continue, albeit at a moderate pace. Global oversupply will continue to weigh on prices for chemical companies. It added revenue growth for telecom companies will be supported by tariff increases while that for the pharmaceutical sector will remain aided by its non-discretionary nature and favourable sector trends.

The CNX Nifty traded in a range of 23,264.95 and 23,134.15. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 7.05%, Adani Ports & SEZ up by 5.25%, Shriram Finance up by 4.92%, NTPC up by 4.73% and Hindalco up by 4.72%. On the flip side, HCL Technologies down by 8.52%, Hindustan Unilever down by 3.35%, Apollo Hospital down by 1.81%, Titan Company down by 1.41% and Infosys down by 1.23% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 16.85 points or 0.2% to 8,241.04, France’s CAC rose 79.39 points or 1.07% to 7,488.03 and Germany’s DAX gained 161.8 points or 0.8% to 20,294.65.

Asian markets settled mixed on Tuesday tracking Wall Street’s mixed cues overnight, even after news that US President-elect Donald Trump's economic team is discussing a cautious and slow approach in implementing tariff hikes to avoid an inflation spike. Investors were focusing now on the release of US inflation data this week. Chinese and Hong Kong shares gained as China's securities regulator said it was looking at ways to provide more stability to markets after another run of poor performances sparked by worries over the world's number two economy and Trump's threatened tariffs.

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,240.94

80.18

2.47

Hang Seng

19,219.78

345.64

1.80

Jakarta Composite

6,956.66

-60.22

-0.86

KLSE Composite

1,576.46

-9.13

-0.58

Nikkei 225

38,474.30

-716.10

-1.86

Straits Times

3,788.77

-2.93

-0.08

KOSPI Composite

2,497.40

7.84

0.31

Taiwan Weighted

22,797.52

309.19

1.36
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