Sensex down 120 pts; realty shares under pressure

The key equity benchmarks traded sideways in mid-morning trade, as the Reserve Bank of India (RBI) began its three-day monetary policy meeting. Investors remain cautious, awaiting a widely anticipated rate cut aimed at boosting growth. With global trade uncertainties in the backdrop, all attention is focused on the RBI's decision, which is set to be announced on Friday. The Nifty traded near the 23,750 mark. Realty shares advanced after declining for the previous consecutive trading sessions.

At 11:30 IST, the barometer index, the S&P BSE Sensex, declined 120.05 points or 0.15% to 78,460.17. The Nifty 50 index rose 11.35 points or 0.05% to 23,750.60.

The broader market outperformed the headline indices. The S&P BSE Mid-Cap index rose 1.15% and the S&P BSE Small-Cap index added 1.55%.

The market breadth was strong. On the BSE, 2,600 shares rose and 1,116 shares fell. A total of 171 shares were unchanged.

Economy:

In January, the seasonally adjusted HSBC India Services PMI Business Activity Index stood at 56.5, indicating a sharp rate of expansion in business activity compared to the previous month. However, the headline figure declined from 59.3 in December to its lowest level since November 2022. This drop suggests a slowdown in the pace of growth within the sector.

India's private sector economy lost some growth momentum in January, as a quicker increase in factory production was more than offset by a softer expansion in service activity. The HSBC India Composite Output Index dropped from 59.2 in December to a 14-month low of 57.7. Despite the decline, the latest figure remained above the long-run series average, indicating that the economy is still experiencing a robust upturn.

Pranjul Bhandari, Chief India Economist at HSBC, commented, "Indias services sector lost growth momentum in January, although the PMI remained well above the 50-breakeven level. The business activity and new business PMI indices eased to their lowest levels since November 2022 and November 2023, respectively. That said, new export business partly countered the downtrend and continued to rebound from a dip in late-2024, in line with official data which showed Indias services exports shining in December and capturing a larger share of global trade."

Buzzing Index:

The Nifty Realty index shed 0.85% to 946.85. The index rose 0.85% in previous trading sessions.

Sobha (down 4.26%), Phoenix Mills (down 2.48%), Mahindra Lifespace Developers (down 1.58%), Prestige Estates Projects (down 1.52%), Godrej Properties (down 1.34%), Macrotech Developers (down 0.42%), Brigade Enterprises (down 0.37%), Oberoi Realty (down 0.1%) edged lower.

Stocks in Spotlight:

Ultracab (India) zoomed 8.41% after the company announced that it has bagged an order worth Rs 51.06 crore from Maharashtra State Electricity Distribution Company (MSEDCL).

Lemon Tree Hotels rose 0.77%. The companys consolidated net profit surged 76.53% to Rs 62.49 crore on 22.4% increase in revenue from operations to Rs 355.18 crore in Q3 FY25 over Q3 FY24.

Tata Power Company added 1.78% after the companys consolidated net profit rose 8.2% YoY to Rs 1,030.70 crore in the quarter ended 31st December 2024. Net sales increased 5.1% to Rs 15,391.06 crore in Q3 FY25 as compared with Rs 14,651 crore in Q3 FY24.

Global Markets:

Asian stocks traded mixed on Wednesday after Wall Street rose overnight, shrugging off Trump tariffs and Chinas retaliatory measures.

US President Donald Trump extended the proposed 25% import duties on Canada and Mexico by 30 days but remained firm on China, allowing his 10% tariffs on Chinese goods to take effect on Tuesday.

In response, Beijing hit back with a 15% tariff on US coal and liquefied natural gas imports, along with an additional 10% duty on crude oil, agricultural equipment, and automobiles, effective February 10.

Chinas commerce ministry also imposed export controls on rare earths and exotic materials, where the country dominates global supply. The restricted materials include tungsten, tellurium, ruthenium, and molybdenum.

The Caixin/S&P Global Services purchasing managers' index (PMI) slipped to 51.0 from 52.2 in December but remained above the 50-mark that separates expansion from contraction on a monthly basis.

Despite trade tensions, US markets rebounded on Tuesday, recovering from steep losses on Monday. The S&P 500 climbed 0.7%, the NASDAQ Composite jumped 1.4%, and the Dow Jones Industrial Average edged up 0.3%.

However, Alphabets Class A shares tumbled 7.4% in aftermarket trading after the companys fourth-quarter revenue fell short of expectations, particularly due to weak earnings from its cloud division, which is closely linked to AI.

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