Summary of the Day's Market Performance

• Indian equity indices ended the volatile session on a flat note on October 10, with minor losses.

• The Sensex dropped by 167.71 points (-0.21%) to close at 81,467.10, and the Nifty slipped 31.20 points (-0.12%) to settle at 24,982.

• Despite the weak close in large-cap indices, the BSE Midcap and Smallcap indices continued their strong performance, rising over 1% each.

Performance of Key Sectors

• Among sectors, FMCG (-1.3%) and oil & gas (-0.6%) ended in the red, weighed down by inflationary concerns and profit booking.

• Other sectors witnessed gains, led by pharma, power, and realty, which climbed 1-2%, supported by stock-specific action.

Market Transactions:

• Foreign Institutional Investors (FII): ₹-4,562.71 crore (Net Sellers)

• Domestic Institutional Investors (DII): ₹3,508.61 crore (Net Buyers)

FIIs continued to sell in the Indian market, while DIIs remained net buyers, providing some support.

• FMCG Weakness: Persistent inflationary pressures affected FMCG stocks, with major players like ITC, Nestlé, and HUL underperforming due to concerns over input costs and margin compression.

• Broader Market Resilience: The broader market witnessed strong stock-specific action, with sectors like pharma and realty gaining fresh buying interest.

• Investor Focus: Amid no expectation of a near-term rate cut from the RBI, investors are taking a stock-to-stock approach, focusing on individual company fundamentals and opportunities to capitalize on the recent market correction.

• The Reserve Bank of India (RBI) has kept interest rates unchanged for the 10th time. The repo rate remains at 6.5%, as it has been since February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

• Key Policy Rates Unchanged: The Reserve Bank of India (RBI) has kept interest rates unchanged for the 10th time. The repo rate remains at 6.5%, as it has been since February 2023.

• Policy Stance Changed to Neutral: RBI has shifted its approach from 'accommodative' to 'neutral,' signaling that it could reduce rates in the future if inflation is under control.

• Focus on Inflation: The RBI’s main goal is to bring inflation down and keep it stable around 4%. Food inflation might ease next year, but weather and global events (like the Middle East crisis) could still push prices higher.

• No Immediate Rate Cut: RBI is being cautious and wants to make sure inflation is under control before making any decisions about cutting rates. Rate cuts might only be considered around December.

• Growth and Inflation Projections:

  • GDP Growth: RBI expects India’s economy to grow by 7.2% in FY25.

  • Inflation: Inflation is forecasted to be 4.5% in FY25.

• UPI Limits Increased:

  • UPI 123Pay transaction limit: Increased from ₹5,000 to ₹10,000.

  • UPI Lite wallet limit: Increased from ₹2,000 to ₹5,000.

• Relief for Small Businesses: Banks and NBFCs are now not allowed to charge fees for early loan repayment for micro and small enterprises.

• Monitoring of Loans: RBI is keeping a close watch on loans like credit cards, microfinance loans, and other unsecured loans.

• Growth of NBFCs: While NBFCs (Non-Banking Financial Companies) have grown quickly, the RBI is concerned about some of them growing too aggressively without proper checks. If needed, the RBI will take action.

• Foreign Investments: India has seen strong foreign investment flows, with $19.2 billion coming in between June and October. India’s forex reserves have also crossed $700 billion.

• Inflation Concerns: Retail inflation is expected to rise in September due to higher food prices and unfavorable comparisons to last year.

• RBI’s Stance on the Future: The central bank feels inflation is starting to moderate but is aware of the risks. The change in policy stance shows that both growth and inflation are balanced well, making it the right time for this shift.

Key Stock Movements and News

• Biggest Nifty Gainers: Trent, Cipla, Tata Motors, SBI, and Maruti Suzuki led the index with solid gains.

• Biggest Nifty Losers: ITC, Nestlé, Reliance Industries, ONGC, and HUL dragged down the index.

• Easy Trip Planners: The board will consider a bonus issue of shares on October 14.

• NCLT Ahmedabad: Approved ICICI Securities' delisting while rejecting objections from minority shareholders.

• Diamond Power Infrastructure: To consider a stock split on October 15.

• RITES: Shares surged +10% after signing an MoU with Etihad Rail for rail infrastructure work in the UAE.

• Premier Energies: Stock jumped +7% after its subsidiary secured a solar module supply order.

• Adani Enterprises: In focus after reports suggested the company is in talks to raise $2 billion via the QIP route.

• Kalpataru Projects International: Announced plans to sell its 100% stake in Vindhyachal Expressway.

• Hyundai Motor India: Set the price band at ₹1,865-1,960 for its ₹27,870-crore IPO.

• SpiceJet: Settled disputes with lessors under the management of Babcock & Brown Aircraft, lifting market sentiment.

• Reliance Industries: Morgan Stanley retained its ‘overweight’ rating on the stock with a target price of ₹3,325.

• Akzo Nobel India: Surged +9% amid speculation of a potential Asian Paints buyout.

• Ashok Leyland: Fell -3% intraday after CLSA downgraded the stock, cutting its target price to ₹188 per share from ₹258 earlier.

• RITES: Positive outlook after signing an MoU for international projects, particularly in the UAE.

• Premier Energies: Continued demand for renewable energy projects makes this stock an attractive mid-term play.

• Akzo Nobel India: The potential buyout by Asian Paints has led to investor interest.

• Adani Enterprises: Investors will closely watch for developments regarding the QIP fundraising.

The Indian markets ended on a cautious note amid concerns over sticky inflation and profit booking, especially in FMCG and oil & gas stocks. While the major indices posted small losses, the broader market remained resilient, with gains in mid-and small-cap stocks. Investors are now focusing on stock-specific opportunities in a volatile environment, with a cautious eye on inflation trends and the RBI's future policy stance.

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Disclaimer: The information provided in this newsletter is for informational purposes only and should not be considered financial advice.

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