Sensex Drops on Muted Earnings, Budget Caution

Mumbai, Jul 22 (PTI) Stock markets closed lower on Monday with benchmark Sensex dropping 102 points due to selling in index heavyweight Reliance Industries and Kotak Bank on muted earnings and caution ahead of the Union Budget.

Falling for the second day in a row, the 30-share BSE Sensex dropped by 102.57 points or 0.13 per cent to settle at 80,502.08. The barometer fell by 504 points or 0.62 per cent to hit an intra-day low of 80,100.65 but recovered most of the losses as Infosys and HDFC Bank advanced.

The broader Nifty of the NSE dipped 21.65 points or 0.09 per cent to 24,509.25. During the day, it dropped 168.6 points or 0.68 per cent to 24,362.30.

Among Sensex shares, Reliance Industries declined over 3 per cent after the company reported a 5 per cent drop in its June quarter net profit.

Kotak Mahindra Bank also fell more than 3 per cent after its June quarter earnings failed to cheer investors. ITC, State Bank of India, HCL Technologies and IndusInd Bank were the other big laggards in Sensex shares.

However, gains in HDFC Bank after its financial results, and continued buoyancy in Infosys Ltd restricted the losses.

NTPC, UltraTech Cement, and Mahindra & Mahindra also advanced.

HDFC Bank climbed over 2 per cent after the company's consolidated net profit grew 33.17 per cent to Rs 16,474.85 crore in the June 2024 quarter.

"The conservative economic growth forecast for FY25, presented in the economic survey, has introduced some spikes in volatility ahead of the budget. Further, the below-estimated Q1 results from certain index heavyweights like RIL added to apprehensions of a slowdown in earnings growth in FY25.

"Although the budget is anticipated to be favourable, investors will closely monitor whether it continues to tickle traction, given high valuations and the risk of a downgrade in earnings," said Vinod Nair, Head of Research, Geojit Financial Services.

In the broader market, the BSE midcap gauge jumped 1.27 per cent and smallcap index climbed 0.83 per cent.

Among the indices, Energy declined by 0.67 per cent, Realty by 0.53 per cent, FMCG by 0.27 per cent and Bankex by 0.27 per cent.

Commodities, Consumer Discretionary, Financial Services, Healthcare, Industrials, Utilities and Power sector indices were among the gainers.

"After a sharp fall in early trades, markets were on a recovery mode and ended with marginal losses on profit-taking in banking and realty stocks. Investors traded with caution as nervousness gripped in ahead of tomorrow's Budget.

"However, markets could see volatility during the Budget announcement on Tuesday and one may see sector-based action," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

"Benchmark equity indices closed lower for a second consecutive session as investors awaited updates on the final budget and corporate earnings," said Avdhut Bagkar Technical and Derivatives Analyst, StoxBox.

In Asian markets, Seoul, Tokyo and Shanghai settled lower, while Hong Kong ended in the positive territory.

European markets were trading higher in the mid-session deals. US markets ended lower in overnight trade on Friday.

According to the Economic Survey, 2023-24 tabled in Parliament on Monday, capital markets are becoming more prominent in India's growth story, with an expanding share in capital formation and investment landscape on the back of technology, innovation and digitisation.

Further, Indian markets are resilient to global geo-political and economic shocks, it added.

"Despite heightened geo-political risks, rising interest rates and volatile commodity prices, Indian capital markets have been one of the best performing among emerging markets in FY24," the Economic Survey said.

The Survey projected India's GDP to grow at 6.5-7 per cent in 2024-25, down from a high of 8.2 per cent in the the preceding financial year.

Meanwhile, global oil benchmark Brent crude dipped 0.08 per cent to USD 82.53 a barrel.

Foreign Institutional Investors (FIIs) bought equities worth Rs 1,506.12 crore on Friday, according to exchange data.

The BSE benchmark hit its new all-time high of 81,587.76 in the initial trade on Friday but failed to carry forward the winning momentum and tanked 738.81 points or 0.91 per cent to settle below the 81,000 mark at 80,604.65.

Nifty tumbled 269.95 points or 1.09 per cent and ended at 24,530.90 after hitting its fresh record peak of 24,854.80 during the opening bell on Friday.