Barometers near days low; Auto shares decline

The key equity benchmarks traded with substantial losses in afternoon trade. The Nifty dropped below the 24,600 level. Auto shares declined after advancing for two consecutive trading sessions.

At 14:25 IST, the barometer index, the S&P BSE Sensex, was down 559.48 points or 0.67% to 80,558.65. The Nifty 50 index declined 193.25 points or 0.78% to 24,587.85.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index dropped 1.96% and the S&P BSE Small-Cap index tumbled 3.22%.

The market breadth was weak. On the BSE, 558 shares rose and 3,380 shares fell. A total of 92 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.

Buzzing Index:

The Auto index declined 1.70% to 24,821.40. The index rose 0.96% in the past two trading session.

Exide Industries (down 4.1%), Mahindra & Mahindra (down 2.88%), Samvardhana Motherson International (down 2.43%), Tata Motors (down 2.36%) and Apollo Tyres (down 2.1%), Bharat Forge (down 2.06%), TVS Motor Company (down 1.85%), Maruti Suzuki India (down 1.73%), Ashok Leyland (down 1.58%) and Bosch (down 1.53%) declined.

Numbers to Track:

The yield on India's 10-year benchmark federal paper advanced 1.43% to 6.935 as compared with previous close 6.950.

In the foreign exchange market, the rupee was flat. The partially convertible rupee was hovering at 84.0750, compared with its close of 84.0750 during the previous trading session.

MCX Gold futures for 31 October 2024 settlement rose 0.39% to Rs 77,807.

The United States 10-year bond yield rose 0.65% to 4.214.

In the commodities market, Brent crude for December 2024 settlement shed 26 cents or 0.35% to $74.03 a barrel.

Stock in Spotlight:

HFCL declined 6.32%. The company's consolidated net profit rose 4.50% to Rs 73 crore on 1.61% decline in revenue to Rs 1094 crore in Q2 September 2024 over Q2 September 2023.

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