On the eve of the national budget announcement, India’s leading stock indices, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), demonstrated a cautious stance. Investors exhibited restraint amidst economic forecasts and mixed corporate earnings reports, contributing to a largely flat trading session.
Market Performance Overview
The BSE Sensex concluded the day at 80,502.08 points, a marginal decline of 102.57 points or 0.13%. Similarly, the NSE Nifty 50 ended at 24,509.25 points, down by 21.65 points or 0.09%. This tepid performance reflects a market in wait-and-see mode, anticipating the potential impacts of the forthcoming budget.
Sectoral and Stock Movements
Sectoral performance was mixed. The BSE MidCap and SmallCap indices outperformed, gaining 1.27% and 0.85%, respectively, as investors sought value in smaller stocks. Conversely, the IT and Media sectors faced declines, with indices slipping by 0.07% and 0.7%, respectively.
Prominent among the laggards were shares of Wipro and Reliance Industries Ltd. (RIL). Wipro’s shares plummeted by 9% following disappointing Q1 FY25 results, which showed sluggish growth and a decline in large deal Total Contract Value (TCV). RIL also faced a 3.5% drop due to a 5.5% year-on-year decline in consolidated profit, driven by weakness in its oil-to-chemicals business.
On the upside, the Auto and Pharma sectors saw gains, with indices rising over 1%. Notably, fertilizer stocks like National Fertilizers Limited (NFL) and Rashtriya Chemicals & Fertilizers (RCF) surged by up to 13% ahead of the budget, fueled by expectations of favorable sector-specific announcements.
Economic Sentiments and Influences
The cautious market behavior is largely attributed to conservative growth forecasts and mixed corporate earnings. The economic survey preceding the budget introduced volatility, highlighting concerns over potential slowdowns in earnings growth for FY25. Analysts warned of a possible 5-10% correction in the headline indices, citing stretched valuations and a lack of immediate positive catalysts.
Despite these concerns, there were signs of underlying economic resilience. Real estate sales hit their highest levels since 2013, with a 41% increase in Q1 2024 compared to the previous year. This surge underscores robust demand in the housing market, driven by sustained growth in new housing unit launches.
Global Market Influence and Currency Movements
Global market sentiments also played a role in the day’s trading outcomes. Major international indices such as Japan’s Nikkei 225 and the US Dow Jones Industrial Average closed lower, reflecting broader economic uncertainties. Meanwhile, the Indian Rupee ended slightly lower against the US dollar, adding to the cautious domestic sentiment.
Investor Outlook
Looking ahead, market participants are keenly focused on the budget’s potential impact on various sectors. Key areas of interest include possible fiscal measures to support manufacturing, infrastructure development, and rural economy revitalization. Investors are also watching for indications of policy reorientation in the agricultural sector, as highlighted by Chief Economic Advisor V. Anantha Nageswaran.
In conclusion, while the BSE and NSE closed flat today, the broader market dynamics and sectoral performances suggest a market poised for significant movements post-budget announcement. Investors remain vigilant, balancing between cautious optimism and concerns over economic forecasts and corporate earnings.
