Sensex slips 694 pts; PSU banks tumble

The key equity benchmarks traded with major losses in the mid-afternoon trade. The Nifty tanked below the 23,800 level after hitting the day's high of 24,089.95 in the early trade. PSU bank shares declined after advancing for the previous four consecutive trading sessions.

Investors turned cautios after the first Human Metapneumovirus (HMPV) case being detected in Bengaluru amid reports of a virus outbreak in China.

At 11:30 IST, the barometer index, the S&P BSE Sensex, declined 693.79 points or 0.88% to 78,529.32. The Nifty 50 index shed 227.90 points or 0.95% to 23,776.85.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index shed 1.53% and the S&P BSE Small-Cap index slipped 2.04%.

 

The market breadth was weak. On the BSE, 846 shares rose and 3,083 shares fell. A total of 145 shares were unchanged.

Economy:

The seasonally adjusted HSBC India Services Business Activity Index - based on a single question asking how the level of business activity compares with the situation the month before rose from 58.4 in November to 59.3 in December, highlighting the strongest rate of expansion in four months.

At 59.2 in December, up from 58.6 in November, the HSBC India Composite Output Index signaled the strongest rise for four months. Private sector companies in India posted a faster increase in output at the end of the calendar year. The acceleration was driven by service providers who recorded a quicker increase in business activity when factory production growth softened.

Ines Lam, Economist at HSBC, said: Indias services companies expressed strong optimism in December as business activity growth surged to a four-month high. Forward-looking indicators such as new business and future activity suggested that the strong performance will likely continue in the near future. The easing of input price inflation in the month also supported business sentiment. Strength in the services PMI stands in contrast with the growing signs of a slowdown in the manufacturing industry.

Indias foreign exchange (forex) reserves declined by $4.112 billion to an eight-month low of $640.279 billion during the week ended December 27, according to the latest RBI data.

For the week ending December 27, foreign currency assets, a major component of the reserves, decreased by $4.641 billion to $551.921 billion.

Gold reserves increased by $541 million to $66.268 billion during the week. The special drawing rights (SDRs) were down by $12 million to $17.873 billion, according to the RBI.

Indias reserve position with the IMF was unchanged at $4.217 billion in the reporting week, the apex bank data showed.

Buzzing Index:

The Nifty PSU Bank index slipped 2.99% to 6,421.15. The index added 1.94% in the past four consecutive trading sessions.

Union Bank of India (down 7.09%), Bank of Baroda (down 4.29%), Punjab National Bank (down 3.67%), Central Bank of India (down 3.39%), Canara Bank (down 3.35%), Indian Bank (down 3.32%), Bank of India (down 2.98%), Bank of Maharashtra (down 2.87%), Indian Overseas Bank (down 2.75%) and Punjab & Sind Bank (down 2.68%) declined.

Stocks in Spotlight:

Dabur India slipped 3.37% after the company informed that it is set to record low single-digit growth in consolidated revenue in the December quarter (Q3 FY25), owing to a subdued demand in the healthcare and beverage segment.

Equitas Small Finance Bank (SFB) rose 1.10% after the banks total deposits including certificate of deposits jumped 25.79% to Rs 40,738 crore as on 31 December 2024 as against Rs 32,385 crore recorded as on 31 December 2023.

KNR Constructions added 1.08% after the company announced the receipt of letter of acceptance (LoA) for a contract worth Rs 198.28 crore from the Irrigation & CAD Department, Government of Telangana.

Global Markets:

The Dow Jones index futures were down 58 points, signaling a mildly negative opening for U.S. stocks today.

Asian equities traded mixed on Monday, following a positive close on Wall Street where major indices snapped a five-day losing streak, buoyed by renewed demand for technology stocks.

China's services sector expanded in December at the fastest pace in seven months, driven by robust domestic demand. The Caixin services PMI surged to 52.2, exceeding both market expectations of 51.4 and the November reading of 51.5.

In South Korea, a court dismissed an appeal by lawyers of impeached President Yoon Suk Yeol against an arrest warrant, according to a local media report Sunday.

Investor sentiment remains mixed after a turbulent end to 2024. While anticipated monetary policy easing and the potential of artificial intelligence to drive growth remain supportive factors, the threat of escalating US-China trade tensions could derail any market rally. Investors are also closely monitoring Beijing for further stimulus measures.

US tech stocks staged a strong rebound on Friday, recovering from the losses seen in the final week of 2024. Investors had capitalized on the year-end rally, a period often characterized by positive market movements known as the "Santa Rally."

On Friday, the Dow Jones Industrial Average rose 0.8% to 42,732.13, the S&P 500 gained 1.3% to 5,942.47, and the NASDAQ Composite surged 1.8% to 19,621.68.

This week will feature a shortened trading schedule as the New York Stock Exchange will be closed on Thursday to honor the passing of former President Jimmy Carter.

The minutes from the Federal Reserve's December 17-18 meeting, scheduled for release on Wednesday, will provide further insights into the Fed's interest rate outlook. Recent statements have indicated a more cautious approach to rate cuts this year due to persistent inflation and a resilient economy.

The US December jobs report is due on Friday.

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