Post Session: Quick Review

Indian equity markets saw heavy selling pressure in last leg of trade and ended flat on Monday. Since morning, markets traded in green tracking broadly firm cues from Asian counterparts as well as the broadly positive cues from Wall Street on Friday. Markets scaled fresh peak during the day. The broader indices ended mixed on Monday. Traders were seen piling up positions in Bankex and IT sectors’ stocks, while selling was witnessed in Energy and Oil & Gas sectors’ stocks.

Markets made positive start and added more points, as some support came with the latest data published by the Reserve Bank of India showing that India’s forex reserves surged by $4.54 billion to $648.7 billion as of May 17, marking an all-time high. Traders took note of the Finance Ministry’s report that the economic momentum in the April-June quarter of 2024-25 will continue with a likely boost in the merchandise exports as a result of supply chain resilience, while India’s macroeconomic buffers will help navigate through the risk of volatility in oil prices. Investors overlooked the report that India has recorded a trade deficit, the difference between imports and exports, with nine of its top 10 trading partners, including China, Russia, Singapore, and Korea, in 2023-24. The data also showed that the deficit with China, Russia, Korea, and Hong Kong increased in the last fiscal compared to 2022-23, while the trade gap with the UAE, Saudi Arabia, Russia, Indonesia, and Iraq narrowed. In afternoon session, markets achieved fresh levels as investors continued to hunt for fundamentally strong stocks. Domestic sentiments remained optimistic, as the Ministry of Commerce & Industry said that the World Intellectual Property Organization (WIPO) treaty on intellectual property, Genetic resources and associated traditional knowledge, is a significant win for countries of the global South and for India, which is a mega biodiversity hotspot with abundance of traditional knowledge, and wisdom. However, in last leg of trade, markets witnessed sharp selloff as traders opted to book profit. 

On the global front, European markets were trading in green as investors awaited the release of key U.S. and European inflation readings this week for additional clues on the rate outlook. Meanwhile, German business sentiment remained unchanged in May. Asian markets ended mostly in green as investors awaited U.S., European, inflation readings this week for clarity on the global interest rate outlook. Back home, Fitch Ratings in its latest report has said that the larger-than-expected Reserve Bank of India (RBI) dividend to the government should help to ensure the 5.1% of Gross domestic product (GDP) deficit target for the fiscal year ending March 2025 (FY25) and could be used to lower the deficit beyond the current target.

The BSE Sensex ended at 75,390.50, down by 19.89 points or 0.03% after trading in a range of 75,175.27 and 76,009.68. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index gained 0.63%, while Small cap index was down by 0.09%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 0.76%, Bankex up by 0.63%, IT up by 0.48%, TECK up by 0.18% and PSU was up by 0.17%, while Oil & Gas down by 0.71%, Energy down by 0.66%, Basic Materials down by 0.61%, Power down by 0.49% and Metal was down by 0.39% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 1.44%, Axis Bank up by 1.00%, Bajaj Finance up by 0.87%, HDFC Bank up by 0.68% and Tata Steel up by 0.60%. On the flip side, Wipro down by 2.13%, Sun Pharma Inds. down by 1.36%, Mahindra & Mahindra down by 1.23%, NTPC down by 1.17% and ITC down by 0.89% were the top losers. (Provisional)

Meanwhile, despite strong external headwinds, the monthly economic review of the Department of Economic Affairs under the Ministry of Finance has said that the Indian economy closed the just-concluded financial year 2023-24 (FY24) strongly with its growth surpassing market expectations. The review report said early indications suggest a continuation of the economic momentum during the first quarter of 2024-25 (April-June). It said ‘The emerging robust trends in important high-frequency indicators of growth like the GST collections, e-way bills, electronic toll collections, sale of vehicles, purchasing managers' indices and the value and number of digital transactions attest to the growing strength of the economy’. 

Citing performance in Index of Industrial Production and Purchasing Managers' Index (PMI) for manufacturing, it asserted that Industrial activity is gaining momentum. Concurrently, fixed investment is gathering pace on the back of the focus of the government on capital spending and the resultant crowing in of private investment. The report said ‘The forward-looking surveys of the Reserve Bank also indicate improving consumer confidence and industrial outlook’. Along with growth, it asserted that the other macroeconomic indicators are also improving. Retail inflation clocked 4.83 per cent in April 2024, the lowest in the past 11 months.

On the external front, it said despite global challenges, India's foreign exchange reserves are comfortable, and the Indian rupee has been one of the most resilient vis-a-vis the US dollar in recent months. From the fiscal angle, it noted robust trends in the capital spending of the general government during April-February of 2023-24, combined with the fiscal consolidation plans reflected in the Budget for 2024-25, have laid to rest concerns about debt sustainability. Thus, the major pillars of India's macro-economic strength, including growth, price stability and fiscal management, are directionally positive. The geopolitical tensions and volatility in global commodity prices, especially of petroleum products, present substantial multi-frontal challenges.

In context to India, the report that the expectation is that the macro-economic buffers nurtured and strengthened during the post-Covid management of the economy will help the Indian economy navigate these challenges reasonably smoothly. India's GDP grew at a massive 8.4 per cent during the October-December quarter of the financial year 2023-24, and the country continued to remain the fastest-growing major economy and is poised to maintain its growth trajectory going ahead. The size of India's GDP is currently ranked 5th, after the US, China, Germany, and Japan. It overtook the UK in 2022. Just a decade ago, Indian GDP was the eleventh largest in the world. Currently, India's GDP is estimated to be around $3.7 trillion.

The CNX Nifty ended at 22,932.45, down by 24.65 points or 0.11% after trading in a range of 22,871.20 and 23,110.80. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Divi's Lab up by 3.22%, Indusind Bank up by 1.62%, Axis Bank up by 1.11%, Adani Ports up by 1.10% and LTIMindtree up by 1.08%. On the flip side, Adani Enterprises down by 2.83%, Wipro down by 2.42%, Grasim Industries down by 2.06%, ONGC down by 1.98% and SBI Life Insuran down by 1.81% were the top losers. (Provisional)

European markets were trading in green; France’s CAC rose 13.86 points or 0.17% to 8,108.83 and Germany’s DAX was up by 18.43 points or 0.1% to 18,711.80.

Asian markets settled mostly higher on Monday ahead of the United States, European, Japanese and Australian inflation readings this week for clarity on the global interest rate outlook. Meanwhile, China's official PMI figures as well as India's fiscal fourth-quarter GDP numbers will be out on Friday. Chinese shares gained after official data showed profits at China's industrial companies rose 4.3% in the first four months from the same period last year. Moreover, Japanese shares rose by tracking Wall Street’s gains last Friday. Bank of Japan Governor Kazuo Ueda said that they have made progress in moving away from zero and lifting inflation expectations but added that they now must re-anchor them at the 2% target.