SENSEX TUMBLES 432 PTS; IT SHARES UNDER PRESSURE

The key equity indices continued to trade with moderate losses in mid-morning trade. The Nifty hovered below the 25,150 mark. IT shares extended losses for the second consecutive trading session.

At 11:30 IST, the barometer index, the S&P BSE Sensex, tumbled 432.96 points or 0.52% to 82,122.48. The Nifty 50 index slipped 159.05 points or 0.63% to 25,120.80.

In the broader market, the S&P BSE Mid-Cap index declined 0.53% and the S&P BSE Small-Cap index rose 0.11%.

The market breadth was weak. On the BSE, 1,664 shares rose and 2,091 shares fell. A total of 140 shares were unchanged.

Economy :

Indian service providers signaled that the strong start to the second fiscal quarter continued into August, with business activity expanding to the greatest extent since March as growth of incoming new business ticked higher. Moreover, payroll numbers rose solidly as companies remained upbeat regarding the economic outlook.

Another positive development included a slowdown in output charge inflation, which was helped by cost pressures retreating to their lowest in four years.

At 60.9 in August, the seasonally adjusted HSBC India Services Business Activity Index was inside expansion territory for the thirty-seventh straight month. Moreover, rising from 60.3 in July, the headline figure indicated the strongest rate of expansion since March and one that was well above its long-run average.

According to panel members, growth was underpinned by productivity gains and positive demand trends. The current run of new order growth was also stretched to 37 months in August. The rate of increase quickened marginally from July and was the strongest since April, as more than one-quarter of panelists reported an improvement and only 5% indicated deterioration.

August data showed another substantial increase in Indian private sector output. At 60.7, the HSBC India Composite Output Index matched July`s reading and therefore remained comfortably above its long-run average of 54.6.

Service providers signalled the strongest increase in business activity since March, while goods producers posted the weakest rise in production for seven months.

A similar trend was seen for new orders, with the service sector posting a quicker increase as manufacturing saw a slowdown. At the composite level, sales rose substantially during August, though at the weakest pace since May.

Trends for input prices were consistent at manufacturing companies and their services counterparts, as both saw cost pressures receded in August. The aggregate rate of inflation retreated to a six-month low.

August survey data showed that prices charged for Indian goods and services rose to a lesser extent than in July. Manufacturers continued to note the quicker increase.

IPO Update :

The initial public offer (IPO) of Gala Precision Engineering received 16,76,80,800 bids for shares as against 22,23,830 shares on offer, according to stock exchange data at 11:20 IST on Wednesday (4 September 2024). The issue was subscribed 75.40 times.

The issue opened for bidding on Monday (2 September 2024) and it will close on Wednesday (4 September 2024). The price band of the IPO is fixed between Rs 503 to Rs 529 per share. An investor can bid for a minimum of 28 equity shares and in multiples thereof.

Buzzing Index :

The Nifty IT index fell 1.65% to 42,145.55. The index slipped 1.93% in the two consecutive trading sessions.

Mphasis (down 3.38%), Wipro (down 3.06%), Coforge (down 2.21%), LTIMindtree (down 2.13%), Infosys (down 1.81%), Persistent Systems (down 1.77%), Tech Mahindra (down 1.75%), L&T Technology Services (down 1.58%), Tata Consultancy Services (down 1.34%) and HCL Technologies (down 0.58%) edged lower.

Stocks in Spotlight :

Rama Steel Tubes zoomed 9.87% after the company announced a strategic collaboration with Onix Renewable for provide steel structures for latter�s solar projects. Operating in the domain of green and renewable energy, this partnership will focus on leveraging the expertise of RAMA Steel Tubes to provide steel structures along with single-axis trackers, and will also focus on dual-axis trackers to be expanded in the future essential for solar projects undertaken by Onix Renewable.

Adani Enterprises fell 0.71%. The company announced that its step-down subsidiary, Adani Global Pte (AGPTE), Singapore has incorporated a wholly owned subsidiary named, Adani Energy Resources (Shanghai) Co. (AERCL), domiciled in Shanghai, China on 2 September 2024.

Global Markets :

Asian shares traded lower on Wednesday as oil prices plummeted to multi-month lows. A sharp tech selloff on Wall Street, coupled with resurgent concerns about U.S. growth, drove investors away from riskier assets.

Recent data from China revealed that its economy is still struggling to gain traction, leading to renewed calls for more stimulus from Beijing. The sluggish Chinese outlook, the world`s largest oil importer, further exacerbated the decline in oil prices due to expectations of weakening demand.

September has historically been a challenging month for stocks, but analysts attributed the current rout to a confluence of factors, including tepid U.S. manufacturing data.

U.S. stocks closed sharply lower overnight after the holiday, with AI leader NVIDIA tumbling nearly 10% as investors tempered their enthusiasm about artificial intelligence. The return from the Labor Day holiday saw a widespread air of portfolio de-risking across capital markets. Growth concerns were the dominant theme, leading to a sell-off in cyclical-sensitive assets and aggressive hedging.

The Dow Jones Industrial Average fell 1.51%, the S&P 500 slid 2.12% and the Nasdaq Composite dropped 3.26%. All three indexes notched their worst days since the global sell-off on Aug. 5.

US manufacturing contracted at a moderate pace in August. The Institute for Supply Management (ISM) said its manufacturing PMI rose to 47.2 last month from 46.8 in July, which was the lowest reading since November. The PMI remained below the 50 threshold for the fifth straight month.

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