Market Commentary - Mid-Session
Barometers trade with modest losses; European mkt slides As on : 04-Sep-24  13:33

The domestic equity benchmarks trimmed some losses but traded with modest cuts in afternoon trade. The Nifty traded below the 25,200 level. PSU bank, IT and metal shares declined while media, pharma and FMCG stocks advanced.

At 13:27 IST, the barometer index, the S&P BSE Sensex, slipped 277.84 points or 0.34% to 82,277.60. The Nifty 50 index declined 105.15 points or 0.42% to 25,174.70.

In the broader market, the S&P BSE Mid-Cap index declined 0.35% and the S&P BSE Small-Cap index rose 0.34%.

The market breadth was negative. On the BSE, 1,808 shares rose and 2,065 shares fell. A total of 121 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 signaled 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.

Gainers & Losers:

Asian Paints (up 2.83%), Hindustan Unilever (up 1.42%), Grasim Industries (up 1.41%), Sun Pharmaceutical Industries (up 0.63%) and UltraTech Cement (up 0.55%) were major Nifty gainers.

Wipro (down 2.86%), Coal India (down 2.78%), Oil & Natural Gas Corporation (down 2.68%), Hindalco Industries (down 1.81%) and Mahindra & Mahindra (down 1.78%) were major Nifty losers.

Stocks in Spotlight:

Adani Enterprises shed 0.72%. The company announced that its step-down subsidiary, Adani Global Pte (AGPTE), Singapore has incorporated a wholly owned subsidiary named, Adani Energy Resources (Shanghai) Co. (AERCL), domiciled in Shanghai, China on 2 September 2024.

Natco Pharma rose 0.28%. 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.

Rama Steel Tubes soared 12.24% after the company announced a strategic collaboration with Onix Renewable for provide steel structures for latter's solar projects.

G R Infraprojects fell 0.37%. 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 rose 0.90%. The company achieved its best ever August production of 1.24 lakh tonnes of manganese ore in August, 2024.

Route Mobile slipped 0.43%. 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.

Global Markets:

European and Asian market tumbled on Wednesday, following a sharp tech selloff on Wall Street, coupled with resurgent concerns about U.S. growth, drove investors away from riskier assets.

Recent data from China revealed that its economy is still struggling to gain traction, leading to renewed calls for more stimulus from Beijing. The sluggish Chinese outlook, the world's largest oil importer, further exacerbated the decline in oil prices due to expectations of weakening demand.

September has historically been a challenging month for stocks, but analysts attributed the current rout to a confluence of factors, including tepid U.S. manufacturing data.

U.S. stocks closed sharply lower overnight after the holiday, with AI leader NVIDIA tumbling nearly 10% as investors tempered their enthusiasm about artificial intelligence. The return from the Labor Day holiday saw a widespread air of portfolio de-risking across capital markets. Growth concerns were the dominant theme, leading to a sell-off in cyclical-sensitive assets and aggressive hedging.

The Dow Jones Industrial Average fell 1.51%, the S&P 500 slid 2.12% and the Nasdaq Composite dropped 3.26%. All three indexes notched their worst days since the global sell-off on Aug. 5.

US manufacturing contracted at a moderate pace in August. The Institute for Supply Management (ISM) said its manufacturing PMI rose to 47.2 last month from 46.8 in July, which was the lowest reading since November. The PMI remained below the 50 threshold for the fifth straight month.

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