Post Session: Quick Review

With the help of marginal gains, Indian equity benchmarks made possible to extend gaining rally for the fourth straight day, amid positive cues from Asian counterparts, as data showing a slowdown in U.S. manufacturing activity in the month of April raised hopes the US Fed will start thinking of cutting interest rates soon. After a positive start, markets remained higher for the whole day, as traders took encouragement with a private report stating that India's GDP growth is likely to average 7% from 2024-25 to 2029-30.  During the trading session, domestic sentiments were positive, as Reserve Bank of India (RBI) in the article themed, 'State of the economy', said conditions in India are shaping up for an extension of the trend upshift that took the average real GDP growth above 8 per cent during 2021-24.

However, in the last hour of the trade, gains got trimmed as traders offloaded their positions in Telecom, TECK and IT stocks. Investors also got cautious, as the country's agriculture exports declined by 8.8 per cent to $43.7 billion during April-February period of 2023-24 fiscal due to factors like the Red Sea crisis, Russia-Ukraine war, and domestic restrictions imposed on critical items like rice, wheat, sugar and onion. According to the data of the commerce ministry, the exports stood at $47.9 billion in April-February 2022-23. Some concerns came amid foreign fund outflows. Foreign institutional investors (FIIs) net sold shares worth Rs 3,044.54 crore on April 23, provisional data from the NSE showed.

On the global front, European markets were trading higher, as German business sentiment improved in April. The survey data from the ifo Institute showed that the business confidence index climbed to 89.4 in April. The street had forecast the score to rise moderately to 88.9 from March's initially estimated value of 87.8. Asian markets settled higher on Wednesday, after South Korea's consumer sentiment held steady in April after easing in the previous month. The survey results from the Bank of Korea showed that the consumer confidence index stood at 100.7 in April, unchanged from March. The consumer confidence survey was conducted between April 8 and 16 among 2,500 households.

Back home, on the sectoral front, telecom industry stocks remained in focus as data released by the Telecom Regulatory Authority of India (TRAI) showed that the telecom sector witnessed a 1.88 per cent sequential growth in adjusted gross revenue (AGR), reaching Rs 67,835 crore in the third quarter (October-December) of FY24. Besides, realty stocks were in watch, as India Ratings and Research (Ind-Ra) has maintained a neutral outlook for the Indian residential real estate sector for the financial year 2024-25 (FY25). It said absorption in residential real estate and prices are likely to be supported by affordability and stability of interest rates. However, given the high base of the just-concluded financial year 2023-24, the growth rates are likely to taper down.

The BSE Sensex ended at 73852.94, up by 114.49 points or 0.16% after trading in a range of 73788.61 and 74121.61. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.92%, while Small cap index was up by 0.79%.(Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.83%, Basic Materials up by 1.62%, PSU up by 1.20%, Industrials up by 1.13% and Healthcare up by 1.03%, while Telecom down by 1.40%, TECK down by 0.82% and IT down by 0.62% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were JSW Steel up by 3.95%, Tata Steel up by 2.73%, Power Grid up by 1.75%, Kotak Mahindra Bank up by 1.64% and Ultratech Cement up by 1.48%. On the flip side, Tech Mahindra down by 1.17%, TCS down by 1.07%, Maruti Suzuki down by 0.72%, Infosys down by 0.68% and Reliance Industries down by 0.61% were the top losers. (Provisional)

Meanwhile, credit rating agency ICRA in its latest report has said that capital expenditures (capex) for electric vehicle (EV) components are likely to exceed Rs 25,000 crore in the next 3-4 years, for capacity building, technology and product enhancements. About 45-50% of this, would be towards battery cells. The PLI scheme, recent e-vehicle policy and state incentives would also contribute to accelerating capex.  

It said spurred by government support in the form of subsidies, enhanced awareness, and increasing product launches, the EV segment in India has seen a significant upturn in prospects over the past two years. A confluence of factors such as improving product portfolio, charging infrastructure, and financing availability and a gradual decline in battery prices are likely to aid in the acceleration of EV penetration across segments over the medium term. EV penetration reached 4.7% in FY2024, with much of it driven by the electric two-wheeler (2W) segment, although e-three-wheelers (e-3Ws) and electric buses have also contributed to the same.

According to the report, at present, only around 30-40% of the EV supply chain is localised. Chassis components that require minimal technology upgradation are manufactured locally. There has been substantial localisation in traction motors, control units, and battery management systems over the years. However, advance chemistry batteries, which remain the most critical and the costliest component, accounting for almost 35-40% of the vehicle price, are imported. The low localisation levels give rise to manufacturing opportunities for domestic auto component suppliers. For parts that are already used in internal combustion engine (ICE) vehicles, there could be technological advancements in certain cases, resulting in higher content per vehicle.

ICRA expects EVs to account for around 25% of domestic 2W sales and 15% of passenger vehicle sales by 2030, translating into strong market potential for EV components. Accordingly, the rating agency projects the Indian e-2W component market potential to exceed Rs 1,00,000 crore by 2030, while the e-passenger vehicle (e-PV) component is foreseen at another Rs 50,000 crore at least, in terms of revenue potential for ancillaries. The actual growth for domestic auto component suppliers would depend on localisation levels and value addition.

The CNX Nifty is currently trading at 22402.40, up by 34.40 points or 0.15% after trading in a range of 22384.00 and 22476.45. There were 28 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 3.97%, Cipla up by 3.82%, JSW Steel up by 3.68%, Tata Steel up by 2.73% and Power Grid up by 1.77%. On the flip side, Tata Consumer Products down by 5.39%, Grasim Industries down by 1.37%, Tech Mahindra down by 1.21%, HDFC Life Insurance down by 1.16% and TCS down by 1.13% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 46.05 points or 0.57% to 8,090.86, France’s CAC rose 31.01 points or 0.38% to 8,136.79 and Germany’s DAX gained 49.67 points or 0.27% to 18,187.32.

Asian markets settled higher on Wednesday, buoyed by the tech rally ahead to key US mega cap earnings report due this week. Subdued trend in dollar, gold, crude oil and treasury bond yield notes also encouraged equity investments. Technical buying after the steep losses so far this month on wary over higher for longer interest rates and Middle east tensions. Intensified bets over Chinese corporate governance reforms, and dip in Hong Kong inflation rate also lifted investor sentiments. Nikkei soared with chip related stocks after upbeat earnings from Texas instruments. 34-year low local currency yen and optimism over accommodative monetary policy by BoJ also lifted Japanese stocks further.