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Volatility continues to hit Indian markets amid slower services sector growth
Feb-05-2025

Volatility continued to hit Indian equity benchmarks during early afternoon session, with both Sensex and Nifty now trading marginally lower, amid mixed cues from other Asian markets along with selling at Realty and FMCG counters. Traders remained cautious as India’s services sector activity expanded at slowest pace in the month of January, as new business intakes rose at the slowest pace since November 2023, curbing the upturn in business activity. According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index eased to 56.5 in January from 59.3 in December. Further, the HSBC India Composite PMI Output Index -- which measures both manufacturing and services -- also fell to 57.7 in January as against 59.2 in December. 

However, downside remained capped as Moody's Ratings said that reductions in personal income-tax rates proposed in the Union Budget 2025-26 will enhance middle-class purchasing power and consumption, which will be credit positive for corporates and financial sectors. On the global front, Asian markets were trading mixed, as the private sector in Singapore fell into contraction territory in January, with a PMI score of 49.9. That's down from 51.5 in December, and it falls beneath the boom-or-bust line of 50 that separates expansion from contraction.

The BSE Sensex is currently trading at 78444.39, down by 139.42 points or 0.18% after trading in a range of 78328.04 and 78735.41. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 1.12%, while Small cap index was up by 1.56%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.85%, Metal up by 1.67%, Energy up by 1.40%, PSU up by 1.27% and Healthcare up by 1.15%, while Realty down by 0.84%, FMCG down by 0.69%, Consumer Durables down by 0.50% and Auto down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.63%, Tata Motors up by 1.42%, Tata Steel up by 1.16%, Adani Ports & SEZ up by 0.81% and Infosys up by 0.58%. On the flip side, Titan down by 2.65%, Asian Paints down by 2.56%, Nestle down by 2.54%, Bajaj Finserv down by 1.49% and Sun Pharma down by 1.36% were the top losers.

Meanwhile, Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Amardeep Singh Bhatia has said that the newly announced Rs 10,000-crore Fund of Funds Scheme (FFS) for startups, unveiled in the Budget, will focus on manufacturing and high-technology sectors, which require longer-term funding. He said this new scheme would be an entirely different fund that will address the needs of startups that lie between those dealing with high-end technology and the ones focussed on improving public service delivery.

Bhatia said the first series of FFS has helped in building the AIF (alternate investment fund) ecosystem in the country, which provided much-needed capital to startups. For the second series, announced in the Budget, he said ‘we already had consultations with AIFs, with SIDBI...We expect that this should help in covering the large spectrum of startups which need longer duration of funds, which need different types of funding beyond the equity infusion’.

He stated that the new scheme would not be topping up the already functional FFS. Through the first FFS launched in 2016 investment of more than Rs 21,700 crore has already been catalysed by AIFs in more than 1,180 startups. These AIFs are mobilising a corpus of around Rs 91,000 crore by raising funds from other investors.

The CNX Nifty is currently trading at 23736.95, down by 2.30 points or 0.01% after trading in a range of 23713.55 and 23807.30. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.62%, Apollo Hospital up by 2.32%, Hindalco up by 2.15%, Bharat Electronics up by 2.11% and ONGC up by 1.91%. On the flip side, Asian Paints down by 2.82%, Titan down by 2.61%, Nestle down by 2.59%, Bajaj Finserv down by 1.47% and SBI down by 1.46% were the top losers.

Asian markets were trading mixed; Hang Seng declined 211.04 points or 1.02% to 20,578.92, Jakarta Composite plunged 48.96 points or 0.69% to 7,024.50, Shanghai Composite weakened 20.61 points or 0.63% to 3,229.99 and Straits Times fell 16.22 points or 0.42% to 3,806.79, while KOSPI increased 27.58 points or 1.1% to 2,509.27, Nikkei 225 surged 33.11 points or 0.09% to 38,831.48 and Taiwan Weighted added 367.62 points or 1.59% to 23,161.58.
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