Sensex down 200 pts at 79,000; India Dec Svcs PMI Final at 59.3, from 58.4 before

Benchmark Indian equity indices BSE Sensex and Nifty 50 were trading on a muted note on Monday, amid mixed global cues.

At 10 AM, the BSE Sensex was higher by 103.46 points, or 0.13 per cent, at 79,326.57, while the Nifty50 was at 24,009.15, ahead by 4.40 points, or 0.02 per cent.

After the opening bell, more than half the stocks on the 30-stock BSE Sensex were trading lower. Gains were led by Titan (up 1.74 per cent), followed by Bajaj Finance, Bajaj Finserv, Infosys and Mahindra & Mahindra, while losses were capped by Kotak Mahindra Bank (down 1.45 per cent), followed by Tata Steel, IndusInd Bank, Power Grid Corp., and NTPC.

On the Nifty 50, 31 stocks were trading higher, while the rest declined. Gains were led by Titan (up 2.10 per cent), followed by Bajaj Finance, Bajaj Finserv, Mahindra & Mahindra, Bajaj Auto, while losses were capped by Kotak Mahindra Bank (down 1.25 per cent), followed by Tata Steel, BPCL, Power Grid Corp., and IndusInd Bank.

Acorss sectors, the Nifty IT and Consumer Durables indices were the top gainers, climbing 1.05 per cent and 1 per cent,

respectively. Other sectoral indices trading with gains included the Auto, Financial Services, and Realty indices, while among the laggards, the PSU Bank index was the top drag, falling 1.5 per cent. Other laggards included Bank Nifty, FMCG, Media, Metal, Pharma, Private Bank, Healthcare, and Oil & Gas.

In the broader markets, meanwhile, the Nifty Midcap 100 was lower by 0.10 per cent and the Nifty Smallcap 100 was behind by 0.29 per cent.

India’s risk gauge, the India VIX, had climbed 5.28 per cent to 14.26.

Investors in India are likely to tread cautiously in the face of continued selling by foreign institutional investors (FIIs) on any rise in the markets, as they make a beeline for the US markets that rebounded from a 5-day selling streak on Friday, ahead of President-elect Donald Trump’s inaugaration and the US Federal Reserve’s rate-setting meeting later in the month.

FIIs net sold Indian equities worth Rs 4,227.25 crore on Friday, while domestic institutional investors had net bought Indian equities worth Rs 820.60 crore in the previous trading session.

Moreover, crucial India Services and Composite Purchasing Manager’s Index (PMI) readings (along with the US and the UK) for December on tap today is expecte to give markets important indications about the strength of the economy here.

In other news, three weeks before the Union Budget for FY26, the National Statistics Office will release the first advance estimates of gross domestic product (GDP) for FY25 on January 7 amid a moderation in growth expectations. Experts, however, say resilience in rural demand, along with sustained agricultural and services-sector output, will keep India on a growth path towards achieving 6.4-6.8 per cent expansion in FY25. READ MORE

Separately, State Bank of India (SBI), in a report on Friday, claimed a significant decline in the headline poverty ratio in rural areas on account of enhanced physical infrastructure, higher consumption growth in the bottom fractile and direct benefit transfers (DBTs). Using the latest annual Household Consumption Expenditure Survey (HCES) data for August 2023-July 2024, the report claimed that poverty ratio in rural areas declined to 4.86 per cent in FY24 from 7.2 per cent in FY23.

In the market, meanwhile, Janakiraman Rengaraju, chief investment officer of emerging markets equity-India, Franklin Templeton Asset Management, says the recent spike in volatility stems from a combination of several factors. However, according to Janakiraman, the recent easing in valuations has opened up bottom-up opportunities across various market capitalisations (mcaps).

That apart, mutual funds (MFs) achieved nearly 40 per cent growth in assets under management (AUM) in calendar year (CY) 2024, despite a lacklustre fourth quarter. The AUM growth rate of 39.4 per cent is the highest recorded in at least the last decade.

For instance, the defence ministry’s focus on modernisation, new technologies, and exports, along with the concentration of orders in the fourth quarter (Q4) of 2024-25 and long-term growth opportunities from indigenisation, are expected to strengthen the revenue and earnings potential of India’s defence sector. The recent decline in stock prices of listed defence majors has made the risk/reward equation more attractive for investors, according to brokerages.

Along the same lines, for India’s capital goods and engineering firms, analysts expect a steady profitability streak for the December 2024-ended quarter (Q3FY25) even as a slump in stock market valuation is seen over order book growth concerns.

Separately, as the Indian auto components sector faces a projected revenue slowdown to 6-8 per cent this and the next financial year due to softening of demand and sluggish global markets, industry players are actively diversifying their markets to mitigate the impact.

However, the recent depreciation of the Indian rupee against the US dollar may not necessarily bode well for India’s pharmaceutical exporters in the immediate term, experts said. While some believe the devaluing rupee will have little immediate impact on exports due to annual contracts being hedged against currency fluctuations, others warn that smaller players may lower prices in response to the currency tailwind, potentially triggering price renegotiations.

In the primary markets, meanwhile, Standard Glass Lining Technology IPO in the mainline section and Indobell Insulation IPO in the SME section will open for subscription, while Fabtech Technologies Cleanrooms IPO (SME) will enter its second day of subscription, and Davin Sons Retail IPO (SME) and Parmeshwar Metal IPO (SME) will see their final day subscription today.

That apart, investors on Dalal Street are poised for yet another eventful week, with three mainline IPOs (Initial Public Offerings), and four Small and Medium Enterprises (SME) IPOs set to open for public subscription. READ MORE

In the previous trading session, meanwhile, benchmark equity indices BSE Sensex and NSE Nifty50 ended in the negative territory. The 30-share Sensex shed 720.60 points or 0.90 per cent to settle at 79,223.11, while the NSE Nifty50 settled in the red at 24,004.75, with a loss of 183.90 points or 0.76 per cent.

Broader markets mirrored the benchmarks as the Nifty Midcap 100 and Nifty Smallcap 100 indices ended lower by 0.30 per cent and 0.24 per cent, respectively. Sectoral indices ended on a mixed note. The Bank Nifty index shed as many as 616 points to settle at 50,988.80, dragged by HDFC Bank and ICICI Bank, which ended lower by 2.53 per cent and 1.94 per cent, respectively.

Among others, the Nifty FMCG, Media, Metal, PSU Bank, and OMC indices ended higher by up to 1.26 per cent. Meanwhile, Nifty Financial Services, IT, Private Bank, and Healthcare indices were the top laggards, ending lower by up to 1.41 per cent on Friday.

On Monday, Asian share markets got off to a wary start ahead of a week brimming with economic news that should underline the relative outperformance of the United States and support the dollar’s ongoing bull run.

The star of the US line up is the December payrolls report on Friday, where analysts expect a rise of 150,000 with unemployment holding at 4.2 per cent. These will be previewed by data on ADP hiring, job openings and weekly jobless claims, along with surveys on manufacturing, services and consumer sentiment.

Anything upbeat would support the case for fewer rate cuts from the Federal Reserve, and markets have already scaled back expectations to just 40 basis points for 2025.

Minutes of the Fed’s last meeting due Wednesday will offer colour on their dot plot predictions, while there will be plenty of live comment with at least seven top policy makers speaking including influential Fed Governor Christopher Waller.

Inflation figures from the EU and Germany this week will refine the outlook for more rate cuts from the European Central Bank, while China’s consumer prices on Thursday is expected to support the case for further stimulus there.

With so much event risk ahead, investors were understandably cautious and MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 per cent.

Japan’s Nikkei slipped 1.05 per cent, while South Korea’s Kospi added 1.12 per cent, amid continued political uncertainty there.

Australia’s ASX 200 was ahead by 0.12 per cent, while Hong Kong’s Hang Seng index was higher by 0.45 per cent.

In mainland China, the CSI 300 was lower by 0.06 per cent and the Shanghai Composite was behind by 0.05 per cent.

Futures for the S&P 500 and Nasdaq were a fraction firmer in early trade.

Analysts at Goldman Sachs noted the S&P 500 boasted a total return of 25 per cent in 2024, the second year of gains above 20 per cent and the last time that happened was 1998/99.

The rally was narrow, with almost half the rise coming from just five stocks, yet Goldman expects another 11 per cent increase this year driven by a similar rise in earnings. Reports for the latest earnings season start to flow on Jan. 15.

The US bond market has not been so fortunate and 10-year yields inched higher to 4.631 per cent, very close to last week’s eight-month top of 4.641 per cent.

Investor appetite will be sorely tested this week by the sale of $119 billion in new three-, 10- and 3-year Treasuries.

The steady climb in yields kept the dollar index up at 108.950, having risen almost 0.9 per cent last week to a top of 109.540.

The strength of the dollar was a hurdle for gold, keeping the metal at $2,641 an ounce.

Oil has found support from colder weather in Europe and the United States, with a winter storm bringing snow, ice and freezing temperatures to a broad swath of the US on Sunday.

Brent rose 19 cents to $76.70 a barrel, while US crude added 27 cents to $74.23 per barrel.