Market Commentary - Mid-Session
Indices turn rangebound; metal shares slide; VIX rises 3.93% As on : 04-Sep-24  12:36

The frontline indices traded in a narrow range with modest losses in early afternoon trade. The Nifty hovered below the 25,150 mark. Metal shares witnessed selling pressure for the third consecutive trading session.

At 12:30 IST, the barometer index, the S&P BSE Sensex, dropped 397.54 points or 0.49% to 82,157.90. The Nifty 50 index slipped 142 points or 0.56% to 25,137.85.

In the broader market, the S&P BSE Mid-Cap index declined 0.38% and the S&P BSE Small-Cap index rose 0.20%.

The market breadth was negative. On the BSE, 1,753 shares rose and 2,069 shares fell. A total of 128 shares were unchanged.

Economy :

Indian service providers signaled that the strong start to the second fiscal quarter continued into August, with business activity expanding to the greatest extent since March as growth of incoming new business ticked higher. Moreover, payroll numbers rose solidly as companies remained upbeat regarding the economic outlook.

Another positive development included a slowdown in output charge inflation, which was helped by cost pressures retreating to their lowest in four years.

At 60.9 in August, the seasonally adjusted HSBC India Services Business Activity Index was inside expansion territory for the thirty-seventh straight month. Moreover, rising from 60.3 in July, the headline figure indicated the strongest rate of expansion since March and one that was well above its long-run average.

According to panel members, growth was underpinned by productivity gains and positive demand trends. The current run of new order growth was also stretched to 37 months in August. The rate of increase quickened marginally from July and was the strongest since April, as more than one-quarter of panelists reported an improvement and only 5% indicated deterioration.

August data showed another substantial increase in Indian private sector output. At 60.7, the HSBC India Composite Output Index matched July's reading and therefore remained comfortably above its long-run average of 54.6.

Service providers signalled the strongest increase in business activity since March, while goods producers posted the weakest rise in production for seven months.

A similar trend was seen for new orders, with the service sector posting a quicker increase as manufacturing saw a slowdown. At the composite level, sales rose substantially during August, though at the weakest pace since May.

Trends for input prices were consistent at manufacturing companies and their services counterparts, as both saw cost pressures receded in August. The aggregate rate of inflation retreated to a six-month low.

August survey data showed that prices charged for Indian goods and services rose to a lesser extent than in July. Manufacturers continued to note the quicker increase.

Derivatives:

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, rallied 3.93% to 14.39. The Nifty 26 September 2024 futures were trading at 25,209.85, at a premium of 72 points as compared with the spot at 25,137.85.

The Nifty option chain for the 26 September 2024 expiry showed maximum Call OI of 45.4 lakh contracts at the 25,000 strike price. Maximum Put OI of 76.7 lakh contracts were seen at 25,000 strike price.

Buzzing Index:

The Nifty Metal index slipped 0.95% to 9,165.25. The index fell 2.55% in three consecutive trading sessions.

Hindalco Industries (down 2.08%), National Aluminium Company (down 1.86%), Hindustan Zinc (down 1.72%), Vedanta (down 1.4%), NMDC (down 1.24%), Hindustan Copper (down 1.05%), Steel Authority of India (down 0.92%), Jindal Stainless (down 0.85%), Adani Enterprises (down 0.69%) and Tata Steel (down 0.69%) declined.

Stocks in Spotlight:

Natco Pharma shed 0.01%. The pharma major said that its wholly owned Canadian subsidiary, Natco Pharma (Canada) made an investment of $8 million in biotechnology company, eGenesis for developing safe and effective human-compatible organs for transplant.

eGenesis is engaged in using its multiplex gene editing and genome engineering platform to transform solid organ and therapeutic cell transplantation for the treatment of serious diseases.

G R Infraprojects slipped 0.47%. The company announced that it has entered into share purchase agreement with REC Power Development and Consultancy (RECPDCL) for acquisition of Tumkur-II REZ Power Transmission (TRPTL).

MOIL advanced 1.07% after the company achieved its best ever August production of 1.24 lakh tonnes of manganese ore in August, 2024.

Route Mobile declined 0.17%. The company informed that it has received a GST demand notice amounting to Rs 5.34 crore from the Office of Assistant Commissioner of State Tax Maharashtra.

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