Equity Indices End Tad Lower; Sectoral Trends Mixed

Highlights 

• Blue Star, Voltas, other AC stocks rise up to 7% on higher sales hope after IMD's heatwave warning
• AstraZeneca Pharma’s shares gain 3% on CDSCO nod for expanded use of cancer drug Imfinzi
• Bajaj Auto top loser in BSE Auto index after hitting 52-week low as February sales skid
• Coffee Day shares rise 20% after NCLAT overturns insolvency plea in a ₹2.28 billion default case
• Paytm shares slips 2% on show cause notice from ED on FEMA violations
• Granules India shares jump as LIC raises stake to over 5%

Indian equity markets closed slightly lower today as heightened volatility persisted due to a mix of positive domestic economic indicators and global uncertainties. While stronger GDP growth and rising GST collections provided support, concerns over global trade tensions and uncertainty surrounding the Ukraine peace negotiations weighed on investor sentiment.

The Nifty50 index extended its losing streak to a ninth consecutive session, while the BSE Sensex declined for the second straight day. Broader markets also faced significant selling pressure, with most small-cap stocks trading in the red, as investors continued to offload their holdings in large volumes.

Sectoral Performance
On the sectoral front, performance remained mixed.  Media, PSU banks, and oil and gas sectors declined between 0.3% and 1.1%. Consumer durables, IT, metals, and real estate sectors advanced 0.5-1.3%. 
Real estate stocks saw strong buying interest, with Prestige Estates and Godrej Properties among the top gainers. Aditya Birla Real Estate surged 7% following the launch of a new residential project.

Auto stocks exhibited a mixed trend, as companies reported their February sales figures. M&M, Escorts Kubota, Eicher Motors, and TVS Motors gained, having exceeded sales expectations. Maruti Suzuki, Bajaj Auto, Hero MotoCorp, and Tata Motors declined following weaker-than-anticipated results.

The yield on 10-year government bonds edged higher, as demand for longer-duration bonds remained subdued amid growing uncertainty regarding future bond purchases by the Reserve Bank of India.

 
The prospect of elevated bond supply from state governments and public sector entities is dampening investor sentiment, as markets anticipate a potential rise in borrowing costs. Indian states are set to raise ₹505 billion through bond issuances on Tuesday, exceeding earlier estimates by over ₹100 billion. Over the course of March, states are expected to raise another ₹1.35 trillion through three more auctions, while state-run companies are also preparing to issue bonds.

The Indian rupee appreciated by 13 paise against the US dollar, tracking gains in Asian currencies at the start of the trading week. Meanwhile, the US dollar index fell 0.4% in Asian trading hours to 107.21, as market participants remained focused on the impending implementation of new tariffs.

Uncertainty surrounding tariffs is prompting foreign investors to withdraw from emerging markets, including India. Last week, US President Donald Trump signalled that tariffs on Canada and Mexico would take effect on Tuesday, alongside an increase in tariffs on Chinese imports. This has heightened risk aversion among global investors.

Outlook
Indian equities are expected to remain subdued on risk aversion as US tariffs on Canada, China and Mexico scheduled to take effect from Tuesday. 

Key Drivers:
•    Key US economic indicators, including ISM manufacturing and services data, as well as non-farm payrolls, are scheduled for release this week. 
•    The dollar/rupee is expected to be influenced by tariff-related developments. While regional currency upticks may offer some support, uncertainties surrounding US tariff policies could lead to volatility. Likely trading within the 87.00-87.50 range. 

EVENTS AND DATA TO WATCH ON TUESDAY
•    US February ISM Report On Business Manufacturing PMI 
•    US February Domestic Auto Industry Sales Data
•    Eurozone January Unemployment Rate 
•    US Johnson Redbook Retail Sales Index for the week ended Mar.1 

CORPORATE ACTION ON TUESDAY 
•    Coforge Ltd’s board to consider stock split

OTHER EVENTS TO WATCH 
•    14 states to raise ₹505 billion via bond sale
•    Mizoram government to present Budget for FY26.
•    US Federal Reserve Bank of Richmond President Thomas Barkin speaks