Nifty tanks below 24,600 level; European mkt opens lower

The headline equity benchmarks traded with major losses in afternoon trade. The Nifty dropped below the 24,600 level. All the sectoral indices on NSE were in the red with realty, PSU bank and metal shares loosing the most.

At 13:30 IST, the barometer index, the S&P BSE Sensex, was down 542.09 points or 0.67% to 80,608.94. The Nifty 50 index declined 187.30 points or 0.76% to 24,593.80.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index dropped 1.87% and the S&P BSE Small-Cap index tumbled 3.24%.

The market breadth was weak. On the BSE, 565 shares rose and 3,331 shares fell. A total of 94 shares were unchanged.

Economy:

According to the RBI article, findings on monetary policy transmission in India suggest that monetary policy changes affect short term interest rates more than long-term rates. RBI in this article examines the impact of the monetary policy tightening that was undertaken since May 2022 in India. While anticipated policy changes do not have any instantaneous impact on long-term rates, policy 'surprises' significantly impact all market segments and across tenors. Policy signals tend to wane, however, beyond the three-year tenure, the paper noted.

Policy 'surprises' are found to have a relatively lower but significant pass-through to the exchange rate and equity prices. In terms of the impact of the policy rate tightening on the real economy, a significant negative impact on inflation expectations is observed. The long-run elasticity of the policy rate with respect to inflation expectation reveals that an increase in policy rate anchors expectations effectively. As per the article, the macroeconomic impact of monetary policy on aggregate demand and inflation indicate that the 250 basis points increase since May 2022 has negatively contributed to aggregate demand and headline inflation by 160 bps each till Q2:2024-25, working through various channels of policy transmission.

Gainers & Losers:

ICICI Bank (up 0.85%), Nestle India (up 0.78%), ITC (up 0.28%), Infosys (up 0.21%) and HCL Technologies (up 0.19%) were major Nifty gainers.

Adani Enterprises (down 3.68%), Bharat Electronics (down 3.12%), State Bank of India (down 2.49%), Tata Steel (down 2.47%) and Tata Motors (down 2.42%) were major Nifty losers.

Stocks in Spotlight:

Ambuja Cements fell 1.22%. The company said that it has signed a binding agreement for the acquisition of Orient Cement (OCL) at an equity value of Rs 8,100 crore. Ambuja will acquire 46.8% shares of OCL from its current promoters and certain public shareholders. The acquisition will be fully funded through internal accruals.

HFCL tumbled 5.55%. The telecom gear maker's consolidated net profit rose 4.50% to Rs 73 crore on 1.61% decline in revenue to Rs 1094 crore in Q2 September 2024 over Q2 September 2023.

City Union Bank surged 13.48% after the private sector bank's net profit rose 1.62% to Rs 285.17 crore on 11.71% jumped in total income to Rs 1,660.26 crore in Q2 FY25 over Q2 FY24.

Lemon Tree Hotels slipped 3.88%. The company announced the signing of a new property in Kalaburagi, Karnataka. The hotel, to be managed by Carnation Hotels, is expected to open in fiscal year 2027.

Mahindra Logistics declined 4.74%. The company's consolidated net loss narrowed to Rs 10.75 crore in Q2 FY25 as against a net loss of Rs 15.93 crore posted in Q2 FY24. Revenue from operations grew by 11.45% to Rs 1,521.10 crore in Q2 FY25 as compared to Rs 1,364.76 crore recorded in Q2 FY24.

Spectrum Foods rose 2.89% after the company signed non-binding letter of intent with InterContinental Hotels Group (IHG) for the management and branding of their upcoming 5-star resort in Pushkar, Rajasthan.

Cyient DLM tumbled 5.46%. The company reported consolidated net profit of Rs 15.50 crore in Q2 FY25, up 5.44% as against Rs 15.50 crore posted in Q2 FY24. Revenue from operation was at Rs 389.40 crore in Q2 FY25, registering a growth of 33.44% year on year.

Union Bank of India slipped 2.90%. The bank's standalone net profit jumped 34.41% to Rs 4,719.74 crore on 13.27% increase in total income to Rs 32036.46 crore in Q2 FY25 over Q2 FY24.

Global Markets:

European stocks declined on Tuesday as investors assessed earnings from bellweather firms across the region.

Most Asian shares traded higher on Tuesday. In Japan, investors await general elections and a Bank of Japan (BoJ) meeting at the end of October. Tokyo's inflation data, due later this week, will likely influence expectations for Japanese interest rates.

Wall Street's retreat from record highs also weighed on regional sentiment. Rising Treasury yields and the looming earnings season contributed to the S&P 500's 0.18% decline. The Dow Jones Industrial Average fell 0.8%, while the NASDAQ Composite gained 0.27%.

NVIDIA Corporation's 4% surge to a new all-time high, boosting its market cap above $3.5 trillion, helped mitigate broader market losses as investors anticipated the start of big tech earnings season.

With the U.S. presidential elections less than two weeks away, investors were keenly focused on that event. Additionally, a series of major U.S. corporate earnings reports were expected to shape market sentiment.

In the Middle East, Israel's ongoing offensive against Hamas and Hezbollah continued to garner significant attention. Concerns about a potential Israeli strike on Iran also remained prominent.