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Sensex, Nifty end flat amid volatility
May-08-2024

Indian equity benchmarks exhibited a neutral performance with high volatility throughout the day and finally ended on a flat note due to lack of fresh positive triggers. Markets made negative start amid foreign fund outflows. According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,668.84 crore on May 7. Some cautiousness also came 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.  Besides, the Ministry of Statistics and Programme Implementation (MoSPI) it its National Account Statistics 2024 stated that net household savings declined sharply by Rs 9 lakh crore to Rs 14.16 lakh crore in three years to 2022-23. The net household savings peaked at Rs 23.29 lakh crore in 2020-21. These have been on the decline since then. 

However, markets erased initial losses and managed to keep their heads above water in afternoon deals, as traders took some support with Chief Economic Adviser in the Ministry of Rural Development Kuntal Sensarma’s statement that robust capital expenditure by the government and improvement in business confidence will push the country's economic growth in 2024-25. He said that the focus areas in 2024-25 should be infrastructure growth, inclusive development and harnessing demographic dividend, among others. Market participants also got support with government's chief economic adviser -- V. Anantha Nageswaran’s statement that India does not see any nasty upside to inflation at the moment, and expects its economy to expand by more than 7 per cent in the current fiscal year. However, markets failed to hold gains and ended flat as uncertainty around election outcome and subdued corporate earnings also kept investors on the sidelines. 

On the global front, European markets were trading higher as investors continued to assess the prospects for interest- rate cuts following last week's weaker-than-expected U.S. jobs report. Asian markets ended mostly down on Wednesday 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. 

Finally, the BSE Sensex fell 45.46 points or 0.06% to 73,466.39, while the CNX Nifty remained unchanged at 22,302.50.  

The BSE Sensex touched high and low of 73,684.93 and 73,073.92 respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.78%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.13%, PSU up by 2.01%, Industrials up by 1.79%, Oil & Gas up by 1.79% and Energy up by 1.67%, while IT down by 0.57%, Bankex down by 0.38%, TECK down by 0.29%, Consumer Durables down by 0.11% and Healthcare down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.43%, Power Grid Corporation up by 2.25%, NTPC up by 1.89%, Larsen & Toubro up by 1.53% and Maruti Suzuki up by 1.41%. On the flip side, Asian Paints down by 2.31%, Ultratech Cement down by 1.76%, Hindustan Unilever down by 1.65%, HDFC Bank down by 1.61% and HCL Technologies down by 1.25% 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 traded in a range of 22,368.65 and 22,185.20. There were 25 stocks advancing against 24 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were BPCL up by 2.78%, Hero MotoCorp up by 2.49%, Tata Motors up by 2.48%, Hindalco up by 2.21% and Coal India up by 2.09%. On the flip side, Dr. Reddy's Lab down by 3.27%, Asian Paints down by 2.21%, Grasim Industries down by 2.07%, Ultratech Cement down by 1.78% and HDFC Bank down by 1.50% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 33.11 points or 0.4% to 8,346.78, France’s CAC rose 75.94 points or 0.94% to 8,151.62 and Germany’s DAX gained 75.17 points or 0.41% to 18,505.22.

Asian markets ended mostly down on Wednesday as investors awaited more clarity on when the US Federal Reserve may start cutting interest rates. Meanwhile, Minneapolis Fed President Neel Kashkari cautioned that US interest rates are likely to remain on hold for an extended period. Japanese shares led regional losses, slipping from multi-week highs hit in the previous session. Chinese shares declined on profit taking after rallying to over six-month highs on optimism over improving economic conditions in China and hopes on potential stimulus measures to revive the country's struggling property market.

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,128.48

-19.26

-0.62

Hang Seng

18,313.86

-165.51

-0.90

Jakarta Composite

7,088.80

-34.81

-0.49

KLSE Composite

1,604.75

-0.93

-0.06

Nikkei 225

38,202.37

-632.73

-1.66

Straits Times

3,264.53

-35.51

-1.09

KOSPI Composite

2,745.05

10.69

0.39

Taiwan Weighted

20,700.51

46.98

0.23
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