Post Session: Quick Review

Indian equity markets snapped three-day gaining streak on Wednesday amid foreign fund outflows. Markets witnessed volatility ahead of election outcome. Besides, investors also await crucial inflation data from the US later in the day, which will provide further cues to the investors regarding the Federal Reserve's next move on interest rates. As for broader indices, the BSE Mid cap index and Small cap index ended with gains of over half a percent. 

Markets made positive start tracking overnight gains on Wall Street. Sentiments got boost as Moody's Ratings said the Indian economy is projected to expand 6.6 per cent in the current fiscal year and said strong credit demand fuelled by robust economic growth will support the NBFC sector's profitability. It added that the Indian economy is estimated to have expanded 8 per cent in the 2023-24 fiscal year. However, markets failed to hold gains and slipped in red terrain as traders turned cautious with ICRA Chief Economist Aditi Nayar’s statement that the wholesale food inflation, which is at a four-month high, will continue to be a cause for concern in May and June as heatwave is likely to jack up prices of perishable commodities. Although the impact of high base of last year will play out in July and August, the impact of monsoon will determine the price conditions in the subsequent months. Some concern also came with a private report that even as stocks have bounced back, foreign investors continue to remain aggressive sellers this month. On Tuesday, FIIs net sold stocks worth Rs 4,065 crore, taking the May month’s tally to Rs 33,540 crore. Further, indices continued their weak trade in afternoon session. Traders were worried as India's merchandise trade deficit expanded to $19.1 billion in April. India's exports rose marginally by 1.06 per cent to $34.99 billion in April 2024, against $34.62 billion during the same period last year. Markets traded in red till end of the session. 

On the global front, European markets were trading mostly in green after Federal Reserve chairman Jerome Powell said that the central bank is unlikely to raise its key interest rate to tackle elevated inflation. Asian markets ended mixed with Hong Kong and South Korean markets remained close for Buddha's birthday. Back home, NITI Aayog member VK Saraswat has said that India's defence capabilities have gone up substantially during the past decade of the Modi government and now the country is dependent on arms import only for immediate requirements of the armed forces.

The BSE Sensex ended at 72,987.03, down by 117.58 points or 0.16% after trading in a range of 72,822.66 and 73,301.47. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index gained 0.60%, while Small cap index was up by 0.96%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 2.13%, Power up by 2.01%, Industrials up by 1.76%, PSU up by 1.39% and Utilities was up by 1.27%, while FMCG down by 0.75%, Auto down by 0.31% and Bankex was down by 0.17% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 2.38%, Power Grid up by 1.62%, NTPC up by 1.59%, Mahindra & Mahindra up by 1.32% and Larsen & Toubro up by 1.14%. On the flip side, Tata Motors down by 1.89%, Asian Paints down by 1.77%, HDFC Bank down by 1.41%, JSW Steel down by 1.28% and Sun Pharma down by 1.10% were the top losers. (Provisional)

Meanwhile, expressing optimism over India’s economic growth prospects, Moody's Ratings has projected that the country’s economy to expand 6.6 per cent in the current fiscal year (FY25) and 6.2 per cent the following year and said strong credit demand fuelled by robust economic growth will support the non-bank finance companies (NBFCs) profitability. The Indian economy is estimated to have expanded 8 per cent in the 2023-24 fiscal year.

On the NBFCs, Moody's said robust economic conditions will help them preserve their asset quality even as rise in interest rates increase the debt burdens of their customers. It said ‘Funding costs for non-bank finance companies (NBFCs) in India are rising, but strong credit demand fuelled by country's robust economic growth will support the sector's profitability. Also, robust economic conditions will help them preserve their asset quality even as rises in interest rates increase the debt burdens of their customers’.

Aggregate year-on-year loan growth at NBFCs accelerated to 20.8 per cent in September 2023 from 10.8 per cent a year earlier, driven by demand for retail loans, including financing for housing and automobiles. Moody's Ratings expects loans at NBFCs to grow about 15 per cent in the next 12-18 months, driven by various types of lending, including infrastructure financing by large government-owned NBFCs and loans to small and medium-sized enterprises.

It said ‘Growth in unsecured retail loans will slow after the Reserve Bank of India (RBI) raised the risk weight of such credit assets for both banks and NBFCs by 25 percentage points in December 2023’. NBFCs will continue to play an important role in meeting credit needs among individuals and businesses in India's vast economy. The largest 20 NBFCs have strong market positions and long histories of providing specific types of loans, such as financing for housing or commercial vehicles. Also, most of them are owned by the government or by large corporate groups, which would lend stability to their funding in times of stress.

The CNX Nifty ended at 22,200.55, down by 17.30 points or 0.08% after trading in a range of 22,151.75 and 22,297.55. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 4.27%, Cipla up by 3.64%, BPCL up by 3.15%, Bharti Airtel up by 1.99% and Power Grid up by 1.81%. On the flip side, Asian Paints down by 1.83%, Tata Motors down by 1.80%, Bajaj Auto down by 1.79%, Eicher Motors down by 1.72% and HDFC Bank down by 1.54% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 17.6 points or 0.21% to 8,445.73 and Germany’s DAX was up by 89.66 points or 0.48% to 18,806.08. On the flip side, France’s CAC was down by 11.28 points or 0.14% to 8,214.52. 

Asian markets settled mixed in thin trade on Wednesday amid Hong Kong and South Korean markets were closed for Buddha's birthday. Meanwhile, investors were cautiously awaiting key US CPI data due later in the day for clues on the US Federal Reserve's next steps. US Federal Reserve chairman Jerome Powell said that the US Federal Reserve is unlikely to raise its key interest rate in response to signs of stubborn inflation and underscored his view that price increases would soon start to cool again. Chinese shares declined as the US administration announced steep tariff increases on a wide range of Chinese imports and PBoC left a key policy rate unchanged when rolling over maturing medium-term lending facility loans. Japanese shares gained marginally with expectations for an interest-rate hike by the Bank of Japan by July and ahead of the release of the first estimate of the domestic GDP for the January-March period on Thursday.