Sensex, Nifty end lower ahead of Budget; RIL, Kotak Bank, ITC among top laggards

Indian benchmark indices ended lower in the volatile trade on Monday, extending losses for the second straight session, as investors turned jittery ahead of Union Budget 2024 slated to be tabled in Parliament on July 23. The market witnessed lackluster trade today, moving in a narrow range, as investors reacted to Economic Survey 2024 presented by Union Finance Minister Nirmala Sitharaman in Parliament today.

The S&P BSE Sensex fell 102.5 points, or 0.13%, to close at 80,502 levels, while the Nifty50 slipped 22 points, 0.1%, to settle at 24,509 level. In sharp contrast, the BSE midcap index rose 1.27%, while the BSE Smallcap index settled 0.83% higher.

On the sectoral front, the Nifty Auto and Pharma indices were among top performers, gaining 1% each. On the other hand, the Nifty Media, and IT indices fell up to 0.7%.

Among the 30 constituents of Sensex, Reliance Industries, Kotak Mahindra Bank, ITC, State Bank of India, and HCL Tech were among top losers. On the flip side, NTPC, Ultratech Cement, HDFC Bank, Tata Steel, and M&M shares ended in green zone.

According to market experts, the conservative economic growth forecast for FY25, presented in the Economic Survey, as well as disappointing earnings by big players such as RIL, Wipro, Kotak Bank also injected volatility ahead of the budget. 

"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" says Vinod Nair, Head of Research, Geojit Financial Services.

The Economic Survey pegged the country’s FY25 GDP growth in the range of 6.5%-7%. The Survey suggested that the government continued to stick to the fiscal glide path, with the fiscal deficit expected to drop to 4.5% of GDP or lower by FY26. This approach, it says, has helped keep the sovereign debt sustainable, keeping sovereign bond yields and spreads in check.

The broader market is expected to remain under pressure due to ample opportunities for profit booking, says Shrey Jain, Founder and CEO SAS Online. “Going into the Budget the market will be trading cautiously, but If the Budget delivers on expectations, aggressive retail buying can lift the market to new highs,” he says.

Jain believes the Nifty may find support near the 24,350 levels, a move below these levels, the profit-taking phase could drive it towards the 23,800 – 24,000 in the eventful week. “For above range, Nifty can see resistance 24,585 – 24,650”.

Early today, the 30-share Sensex opened 196 points lower at 80,409 against the previous closing price of 80,605. The BSE benchmark swung between gains and losses during the session, hitting an intraday high and low of 80,801 and 80,101, respectively.

In a similar trend, the Nifty50 belled the day in negative terrain, down 85 points at 24,446 against Friday’s closing level of 24,531.

“With no major significant cues in the morning, the benchmark index Nifty started the week’s trading activity on a flat note. In the first half, prices dipped, testing levels below 24250. However, during the second half, the bulls took charge, pushing prices higher and ending near the day’s high, though without a major change from the previous close," says Rajesh Bhosale, Equity Technical Analyst, Angel One.

“We reiterate that a correction is likely in the near term, either price-wise or time-wise, and today it seemed Nifty favored the latter. The immediate trading range is visible between 24200 and 24500, with key levels extending to 24000 – 24600,” adds Bhosale.

He adds that any dip toward the lower end would be a buying opportunity, whereas any upside toward the mentioned resistance should prompt traders to book profits. Traders should monitor these levels and adjust their strategies accordingly, he adds.

Reliance Industries (RIL) was the top laggard, falling over 3.5% as investors reacted negatively to its June quarter earnings report. However, analysts see an upside potential of up to 22% on the country’s most-valued stock from the current market prices, expecting continued growth in consumer business and revival in refining and petrochem segments from the current levels.

Among other stocks, Kotak Mahindra Bank and Wipro shares ended lower after they reported lower than expected earnings in June quarter. 

On the other hand, HDFC Bank shares were among top performers, rising 2.15% after the country’s largest private sector lender reported better than expected earnings in June quarter of FY25.  Overall, the Sashidhar Jagdishan-led bank put on a good show in June quarter, aided by better interest income, operating expenses, and lower provisions.

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