Post Session: Quick Review

Indian equity benchmarks staged an enthusiastic performance on Thursday by rallying over one and half a percent and hitting new psychological 75,400 (Sensex) and 22,950 (Nifty) levels. Traders took support from positive HSBC Flash India Manufacturing PMI data. Banking sector’s stock witnessed heavy buying during the day. The broader indices, the BSE Mid cap index and Small cap index also ended in green.

Markets made positive start and extended their gains, as traders got encouragement after the Central Board of Directors of the Reserve Bank of India (RBI) has approved a record dividend of Rs 2,10,874 crore to the Government of India for the financial year 2023-24.  As per the interim budget estimates for fiscal year 2024/25, the Narendra Modi-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks and other financial institutions. Some support came in with a private report that India is seen as an emerging economic superpower of the world. India’s central bank in its monthly economic review says “there is a growing optimism that India is on the cusp of a long awaited economic take-off.” India is positioned to remain the fastest-growing major economy, demonstrating resilience amid geopolitical challenges and supply chain pressures. 

In afternoon session, indices continued their gaining momentum, as sentiments were positive after the business activity in India expanded robustly in the month of May, aided by rise in aggregate exports, the steepest expansion in private sector jobs since September 2006 and a notable improvement in business confidence. The headline HSBC Flash India Composite Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors - rose from a final reading of 61.5 in April to 61.7 in May, which indicated the third-strongest rate of expansion in close to 14 years. In late afternoon session, markets scaled new high levels as investors continued to hunt for fundamentally strong stocks.

On the global front, European markets were trading higher after strong forecasts from AI darling Nvidia lifted global chipmakers, while surveys pointing to improving business activity in the euro zone prompted traders to scale back bets of interest rate cuts this year. Asian markets ended mixed as rate worries lingered and China announced immediate military drills around Taiwan, marking a concerning escalation in the tensions between Taiwan and China, which has long claimed sovereignty over the island. Back home, credit rating agency ICRA in its latest report has said that benefits from the 38 critical mineral blocks that have been put on sale are not likely to accrue in the current decade ending 2030 as the mines are not fully explored.

The BSE Sensex ended at 75,418.04, up by 1196.98 points or 1.61% after trading in a range of 74,158.35 and 75,499.91. There were 27 stocks advancing against 3 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.58%, while Small cap index was up by 0.27%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 2.28%, Capital Goods up by 2.13%, Bankex up by 1.98%, Telecom up by 1.56% and Industrials was up by 1.55%, while Healthcare down by 0.61%, Metal down by 0.40% was the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 3.51%, Larsen & Toubro up by 3.38%, Axis Bank up by 3.05%, Maruti Suzuki up by 2.82% and Ultratech Cement up by 2.68%. On the flip side, Sun Pharma down by 2.76%, Power Grid down by 2.09% and NTPC down by 0.32% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) board, at its 608th meeting, has approved the transfer of Rs 2,10,874 crore as surplus to the government for the accounting year 2023-24, more than double of what was budgeted expectation, helping shore up revenue ahead of a new government taking office. The board has approved the transfer of surplus. The government had budgeted a receipt of Rs 1.02 lakh crore as dividends from the RBI, public sector banks and financial institutions in the interim budget for the fiscal year 2024-25 (April 2024 to March 2025) presented in February this year. The dividend or surplus transfer by the RBI to the Centre was Rs 87,416 crore for the fiscal 2022-23. The previous high was Rs 1.76 lakh crore in 2018-19.

The central government aims to contain the fiscal deficit or gap between expenditure and revenue to Rs 17.34 lakh crore (5.1 per cent of the GDP) during the current financial year. The RBI board also reviewed the global and domestic economic scenario, including risks to the growth outlook. The Board discussed the working of the Reserve Bank during 2023-24 and approved its Annual Report and Financial Statements for the last fiscal. The RBI said that during accounting years 2018-19 to 2021-22, owing to the prevailing macroeconomic conditions and the onslaught of the Covid-19 pandemic, the Board had decided to maintain the Contingent Risk Buffer (CRB) at 5.50 per cent of the Reserve Bank’s balance sheet size to support growth and overall economic activity.

The central bank added ‘With the revival in economic growth in FY 2022-23, the CRB was increased to 6.00 per cent. As the economy remains robust and resilient, the Board has decided to increase the CRB to 6.50 per cent for FY 2023-24’. The transferable surplus for 2023-24, the RBI said, has been arrived at on the basis of the Economic Capital Framework (ECF) adopted by it in August 2019, as per recommendations of the Bimal Jalan-headed expert committee. The committee had recommended that the risk provisioning under the CRB be maintained within a range of 6.5 to 5.5 per cent of the RBI’s balance sheet.

The CNX Nifty ended at 22,967.65, up by 369.85 points or 1.64% after trading in a range of 22,577.45 and 22,993.60. There were 44 stocks advancing against 6 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Enterprises up by 7.84%, Adani Ports up by 4.73%, Larsen & Toubro up by 3.60%, Mahindra & Mahindra up by 3.50% and Axis Bank up by 3.49%. On the flip side, Sun Pharma down by 2.87%, Power Grid down by 1.80%, Hindalco down by 1.13%, Coal India down by 0.88% and NTPC down by 0.41% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 0.12 points or 0% to 8,370.45, France’s CAC rose 8.69 points or 0.11% to 8,100.80 and Germany’s DAX was up by 31.51 points or 0.17% to 18,711.71. 

Asian markets ended mixed on Thursday amid Japanese shares led gains as strong financial results from AI chip giant Nvidia boosted technology shares, even as the minutes of recent US Fed meeting showed officials were disappointed in recent inflation data and discussed potential further rate hikes if inflation surged. However, South Korean shares closed marginally lower as the Bank of Korea held its benchmark policy rate unchanged for an 11th straight time amid sticky inflation. Chinese shares declined after China announced immediate military drills around Taiwan days after new president takes office.