Broader mkt underperforms; metal stocks under pressure

The domestic equity indices traded with significant losses in early afternoon trade. The Nifty tanked below the 24,650 mark after the hitting day's high of 24,882 in morning trade. Metal shares extended losses for the second consecutive trading session.

At 12:30 IST, the barometer index, the S&P BSE Sensex, was down 393.84 points or 0.49% to 80,757.43. The Nifty 50 index fell 141.30 points or 0.57% to 24,639.80.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index dropped 1.57% and the S&P BSE Small-Cap index tumbled 2.73%.

The market breadth was weak. On the BSE, 676 shares rose and 3,136 shares fell. A total of 105 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.

Derivatives:

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, fell 1.29% to 13.32. The Nifty 31 October 2024 futures were trading at 24,731.90, at a premium of 92.1 points as compared with the spot at 24,639.80.

The Nifty option chain for the 31 October 2024 expiry showed maximum Call OI of 57.2 lakh contracts at the 26,000 strike price. Maximum Put OI of 44.2 lakh contracts were seen at 24,500 strike price.

Buzzing Index:

The Nifty Metal index fell 1.67% to 9,446.30. The index declined 3.15% in the two trading session.

Jindal Stainless (down 5.26%), Hindustan Copper (down 2.94%), Ratnamani Metals & Tubes (down 2.56%), NMDC (down 2.42%), Jindal Steel & Power (down 2.04%), Adani Enterprises (down 2.04%), Tata Steel (down 1.88%), Steel Authority of India (down 1.83%), Welspun Corp (down 1.62%) and National Aluminium Company (down 1.47%) edged lower.

Stocks in Spotlight :

Lemon Tree Hotels slipped 3.49%. 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 4.07%. 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.

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