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Sensex, Nifty trade lower in early deals
May-08-2024

Indian equity benchmarks made negative start on Wednesday tracking weakness in Asian counterparts, following the mixed cues from Wall Street overnight, as traders largely refrained from making significant moves after hawkish comments from a few US Fed officials again raised concerns about the outlook for interest rates. Sensex and Nifty are trading lower with cut of over 0.30% each in early deals amid foreign fund outflows. FIIs sold shares worth Rs 3,668.84 crore on May 7. There was some cautiousness as an industry wise analysis of the National Accounts Statistics 2024 data showed gross capital formation (GCF) - or investment - in manufacturing, construction, and mining sectors contracted in FY23 primarily due to a fall in export demand and low private consumption during the year. 

On the sectoral front, aviation industry stocks are in focus with a private report that the average daily domestic air traffic experienced a month-on-month increase of 1.6 per cent, reaching 442,783, fueled by sustained demand during the summer season. In stock specific development, Dr Reddy's Laboratories tumbled despite Q4 profit climbing 36 percent year-on-year. However, Delta Corp jumped after reporting a 41 percent rise in Q4 net profit.

The BSE Sensex is currently trading at 73231.59, down by 280.26 points or 0.38% after trading in a range of 73148.76 and 73418.14. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were PSU up by 1.56%, Oil & Gas up by 1.48%, Energy up by 1.29%, Metal up by 1.18% and Power up by 0.70%, while IT down by 0.56%, TECK down by 0.48%, Healthcare down by 0.39%, Consumer Durables down by 0.39% and Auto down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.28%, NTPC up by 1.19%, SBI up by 0.86%, JSW Steel up by 0.83% and Power Grid up by 0.78%. On the flip side, Hindustan Unilever down by 1.36%, Larsen & Toubro down by 1.23%, Asian Paints down by 1.15%, HDFC Bank down by 1.14% and HCL Technologies down by 1.03% were the top losers.

Meanwhile, ICRA in its latest report has forecasted that the incremental credit flow in the Indian economy from the domestic sources to moderate to Rs 24.5 trillion in FY2025, from the all-time high achieved in FY2024. It expects the non-food bank credit (NFBC) to moderate slightly in FY2025 from the record-high seen in FY2024. However, bond issuances are expected to increase further in FY2025. As the interest rates are likely to remain elevated in developed markets, the domestic debt capital market would remain an attractive source of borrowings for large corporates.

Competitive funding conditions in domestic markets compared to developed markets meant that large corporates tapped more domestic funding sources over the last two years. Strong demand for loans from retail borrowers and non-bank finance companies (NBFCs) drove a significant portion of the incremental flow of credit from banks. This resulted in the highest ever NFBC expansion of Rs. 22.3 trillion in FY2024 far outpacing the incremental NFBC expansion of Rs. 18.2 trillion recorded in FY2023.

The incremental credit flow was also supported by the all-time high corporate bond issuances of Rs 10.2 trillion in FY2024, resulting in the stock of corporate bonds outstanding rising to an estimated Rs 46.0 trillion as on March 31, 2024, from Rs 43.1 trillion as on March 31, 2023. Besides, the stock of commercial papers (CPs) outstanding also rose by Rs 0.4 trillion in FY2024 to Rs 3.9 trillion as on March 31, 2024. Cumulatively, these three sources accounted for Rs 25.4 trillion of incremental credit flow in the domestic market, an all-time high.

The recent regulatory actions on unsecured retail loans, bank funding for NBFCs and tight liquidity in the banking system may constrain the incremental credit growth of banks. However, the yield on Indian Government Bonds (IGBs) is likely to remain range-bound, driven by demand from foreign portfolio flows upon inclusion of IGBs in global indices. This shall improve the competitiveness of funding from debt capital markets vis a vis bank borrowing and would drive up corporate bond issuances.

The CNX Nifty is currently trading at 22230.65, down by 71.85 points or 0.32% after trading in a range of 22185.60 and 22282.65. There were 19 stocks advancing against 30 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were BPCL up by 2.18%, Coal India up by 1.80%, ONGC up by 1.13%, Adani Enterprises up by 1.08% and NTPC up by 1.03%. On the flip side, Dr. Reddy's Lab down by 3.76%, Mahindra & Mahindra down by 1.35%, Hindustan Unilever down by 1.30%, Larsen & Toubro down by 1.28% and Hero MotoCorp down by 1.22% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 565.37 points or 1.46% to 38,269.73, Hang Seng declined 69.17 points or 0.37% to 18,410.20, Jakarta Composite plunged 37.89 points or 0.53% to 7,085.72, Straits Times fell 30.44 points or 0.92% to 3,269.60, Shanghai Composite weakened 12.99 points or 0.41% to 3,134.75 and KOSPI was down by 0.66 points or 0.02% to 2,733.70, while Taiwan Weighted was up by 22.28 points or 0.11% to 20,675.81.
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