Market Commentary - Mid-Session
Benchmarks trade with modest gains; financial services shares rally for 4th day As on : 04-Dec-24  11:36

The key equity indices traded with decent gains in mid-morning trade. The Nifty traded above the 24,500 level. Financial services shares extended gains for the fourth consecutive trading session.

At 11:27 IST, the barometer index, the S&P BSE Sensex rose 346.98 points or 0.43% to 81,190.01. The Nifty 50 index added 84.70 points or 0.35% to 24,541.85.

The broader market outperformed the frontline indices. The S&P BSE Mid-Cap index rallied 0.67% and the S&P BSE Small-Cap index rose 0.59%.

The market breadth was strong. On the BSE, 2,403 shares rose and 1,351 shares fell. A total of 157 shares were unchanged.

The three-day meeting of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) begins today, 4 December 2024 and will conclude on 6 December 2024. The outcome of the meeting will be announced by RBI Governor Shaktikanta Das on 6 December 2024.

Economy:

India posted a strong 58.4 services PMI in November 2024, down only a fraction from the prior month's 58.5. During November, services sector employment notably grew at the fastest pace ever recorded since this survey began in 2005. The hiring surge reflected the sector's improving business confidence, growing new orders, and vigorous international demand. At the same time, high food and labour costs drove up input and output prices to their fastest rates in 15 months and nearly 12 years respectively.

Finally, service providers were more confident regarding the year-ahead outlook for business activity. Confidence reached its highest level since May, boosted by predictions of continued demand strength and expectations that marketing efforts will drive new business.

Meanwhile, the HSBC India Composite Output Index posted 58.6 in November, down only marginally from 59.1 in October and therefore indicating a sharp rate of expansion. The goods producing sector recorded the larger slowdown in growth but still posted a faster increase than that see in the service economy. The same trend was evident for new orders.

Service providers signaled sharper cost pressures than manufacturers and subsequently recorded the steeper increase in selling prices.

Buzzing Index:

The Nifty Financial Services index gained 1% to 24,540.70. The index rallied 2.59% in four consecutive trading sessions.

HDFC Bank (up 2.03%), HDFC Asset Management Company (up 1.82%), ICICI Lombard General Insurance Company (up 1.82%), HDFC Life Insurance Company (up 1.79%), SBI Life Insurance Company (up 1.29%), Power Finance Corporation (up 1.12%), REC (up 1.01%), Bajaj Finserv (up 0.9%), Cholamandalam Investment & Finance Company (up 0.87%) and Kotak Mahindra Bank (up 0.83%) advanced.

On the other hand, Multi Commodity Exchange of India (down 0.51%), ICICI Prudential Life Insurance Company (down 0.30%) and Muthoot Finance (down 0.23%) edged lower.

Stocks in Spotlight:

Rail Vikas Nigam added 1.15% after the company announced that it has received a letter of acceptance (LoA) worth Rs 186.76 crore from East Central Railway.

Quess Corp shed 0.88%. The company's board approved to acquire food catering and facility management services business of Archer Integrated Services and Astrin Traders and Supplies as a going concern on a slump sale basis for a lump sum cash consideration of Rs 11 crore.

Global Markets:

The Dow Jones index futures were up 142 points, signaling a positive opening for U.S. stocks today.

Most of the Asian stocks traded higher on Wednesday, except for South Korea, following a surprising decision by President Yoon Suk Yeol to impose martial law. The decision was reversed just hours later, but it still unsettled global markets.

The benchmark Kospi Index dropped as much as 2% in early Wednesday trading, reflecting the sharp decline in South Korea-related assets during overnight sessions.

Yoon Suk Yeol's attempt to impose martial law on Wednesday was short-lived and met with significant resistance. Lawmakers defied security forces and voted against the declaration, while thousands of protesters took to the streets, expressing opposition to the unprecedented move.

In the US, indices reached record highs on Tuesday, driven by gains in major technology stocks, though the pace of the rally appeared to be slowing due to growing uncertainty about the economic outlook. The S&P 500 edged up 0.1% to close at 6,049.88, while the NASDAQ Composite rose 0.4% to finish at 19,478.89. In contrast, the Dow Jones Industrial Average dipped 0.2% to 44,705.53.

Technology stocks continued to benefit from optimism surrounding artificial intelligence, a sector expected to maintain robust momentum in the months ahead. Additionally, the prospect of lower interest rates provided further support for the tech-heavy market.

Meanwhile, investors are eyeing this week's critical jobs data and Federal Reserve Chair Jerome Powell's upcoming remarks for potential signals on whether the Fed will consider cutting rates in December.

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