As per provisional closing, the barometer index, the S&P BSE Sensex, was down 280.16 points or 0.35% to 80,148.88. The Nifty 50 index shed 65.55 points or 0.27% 24,413.50.

The broader market outperformed the headline indices. The S&P BSE Mid-Cap index added 0.68% and the S&P BSE Small-Cap index gained 1.91%.

The market breadth was strong. On the BSE, 2,804 shares rose and 1,091 shares fell. A total of 113 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, tumbled 7.72% to 11.76.

Economy:

Seasonally adjusted index, HSBC Flash India Composite Output Index rose from 60.9 in June to 61.4 at the start of the second fiscal quarter. Growth strengthened at goods producers and service providers, with the former leading the upturn, the strongest rate of expansion for three months.

HSBC Flash India Manufacturing PMI stood at 58.5 in July as against 58.3 in June, signalling a historically strong improvement in the health of the sector. Anecdotal evidence suggested that favourable market conditions and new business gains underpinned the upturn in private sector activity.

HSBC Flash India Services PMI Business Activity Index stood at 61.1 in July as compared with 60.5 in June while HSBC Flash India Manufacturing PMI Output Index increased to 62.2 in July from 61.9 in June.

The latest results also revealed that rising material and labour costs added to inflationary pressures. In particular, selling prices rose to the greatest extent since February 2013.

Pranjul Bhandari, Chief India Economist at HSBC, said: “The Flash Composite Output Index signalled continued robust growth in India’s private sector. The rise in output in July was led by a further increase in business activity in the manufacturing sector, while the pace of expansion in services output also accelerated and remained well above its long-run average. As a result, companies turned more optimistic in July, following a moderation in business confidence in June. We note that the rate of input cost inflation continued to trend higher in both sectors, which has driven firms to keep raising sales prices.”

Buzzing Index:

The Nifty Private Bank index shed 0.89% to 51,317. The index declined 1.84% in the two trading sessions.

Bandhan Bank (down 3.68%), Axis Bank (down 1.38%), IDFC First Bank (down 1.29%), Kotak Mahindra Bank (down 1.24%), State Bank of India (down 1.15%), IndusInd Bank (down 0.93%), HDFC Bank (down 0.7%), Punjab National Bank (down 0.65%), Bank of Baroda (down 0.54%) edged lower.

On the other hand, Federal Bank (up 2.12%), AU Small Finance Bank (up 0.64%) and ICICI Bank (up 0.02%) edged higher.

Stocks in Spotlight:

ICICI Securities rose 0.44%. The broking firm’s consolidated net profit zoomed 94.55% to Rs 526.91 crore in Q1 FY25 as against Rs 270.84 crore recorded in Q1 FY24. Total income was at Rs 1,644.11 crore in the quarter ended 30 June 2024, registering a growth of 75.95% year on year (YoY).

Bajaj Finserv declined 2.03%, The company’s consolidated net profit jumped 10.04% to Rs 2,137.70 crore on a 35.22% increase in total income to Rs 31,480.14 crore in Q1 FY25 over Q1 FY24. Profit before tax in Q1 FY25 stood at Rs 5,968.41 crore, up by 16.44% from Rs 5,125.37 crore in Q1 FY24.

Alembic Pharmaceuticals jumped 8.14% after the drug maker received final approval from US Food & Drug Administration (USFDA) for its abbreviated new drug application (ANDA), Fluphenazine Hydrochloride tablets.

ICICI Prudential Life Insurance Company soared 9% after the company's net profit rose 8.94% to Rs 225.40 crore in Q1 FY25 from Rs 206.91 crore posted in Q1 FY24. Total income grew by 8.14% year on year to Rs 25,458.43 crore in the quarter ended 30 June 2024.

Schaeffler India rallied 6.01% after the company reported 6.82% increase in standalone net profit to Rs 253.54 crore in Q2 CY24 as against Rs 237.2 crore posted in Q2 CY23. Revenue from operations jumped 13.27% year on year (YoY) to Rs 2,071.9 crore in Q2 CY24.

Bajel Projects surged 6.85% after the company announced that it has secured an Rs 586.28 crore contract from Power Grid Corporation of India for the supply of goods and services.

Global Markets:

European and Asian shares tumbled on Wednesday after major US technology companies, including Tesla and Alphabet, released underwhelming earnings reports.

Adding to the negative sentiment, Japanese manufacturing activity unexpectedly contracted in July, according to the au Jibun Bank flash manufacturing PMI. This data, coupled with ongoing frustration over the Bank of Japan's low-interest-rate policy, is putting pressure on the central bank to address inflation concerns.

In the US, stocks closed slightly lower on Tuesday as investors digested mixed corporate earnings reports and kept a close watch on the evolving presidential election. The broad-based S&P 500 declined 0.16%, while the tech-rich Nasdaq Composite Index dipped 0.06%. The Dow Jones Industrial Average declined 0.14%

The Federal Reserve's preferred inflation gauge, the PCE data, and US GDP data are both expected to be released later this week, potentially impacting interest rate expectations.