Post Session: Quick Review

In volatile session, Indian equity benchmarks managed to scale their fresh closing highs on Thursday, as investors cheered Fed Chair Jerome Powell's dovish remarks on interest-rate cuts. After a strong start, markets held their gaining momentum in morning deals, as traders took encouragement after Commerce and Industry Minister Piyush Goyal expressed hope that steps such as focus on self-sufficiency, technology, stronger currency and fundamentals would help India become a $55-trillion economy by 2047. Traders took some support with Finance minister Nirmala Sitharaman’s statement that the budget seeks to strike a fine balance among several overriding priorities and will provide impetus to local manufacturing, boost employment and raise India's share in global growth. She added growth, employment, welfare spending, capital investments, and fiscal consolidation are given equal place. 

However, in noon deals, a sharp correction witnessed over the Dalal Street, as sentiments got hit, after India's manufacturing sector growth eased in the month of July, amid slightly softer increases in new orders and output. According to the survey report, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased to 58.1 in July 2024 as against 58.3 in June 2024. However, the latest reading was above the series long-run average and one of the highest seen in recent years. But, markets managed to trade higher for the most part of the session and finally ended above their neutral lines, as some optimism came after the latest data released by the Controller General of Accounts (CGA) stating that sharp reduction in capital expenditure (capex) during election months and record-high dividend from the Reserve Bank of India (RBI) led to a decrease in the central government’s fiscal deficit to 8.41 per cent of the full-year target for the April-June quarter (Q1) of 2024-25 (FY25), along with the most recent FY25 Budget figures. 

On the global front, European markets were trading lower, as the euro area manufacturing sector continued to contract on steep reduction in orders and output in July. The final data from S&P Global showed that the HCOB manufacturing Purchasing Managers' Index posted 45.8 in July, unchanged from June and above the flash estimate of 45.6. There was a marked reduction in the health of the euro area's goods-producing economy. Asian markets settled mostly down on Thursday, as China's manufacturing sector fell into the contraction zone in July on renewed decline in new work and weak output growth. The survey data from S&P Global showed that the Caixin manufacturing Purchasing Managers' Index fell to 49.8 in July from 51.8 in June. The reading was expected to drop moderately to 51.5. The score suggested that conditions in the manufacturing sector deteriorated for the first time in nine months. 

The BSE Sensex ended at 81867.55, up by 126.21 points or 0.15% after trading in a range of 81700.21 and 82129.49. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.80%, while Small cap index down by 0.70%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 2.04%, Power up by 0.86%, Energy up by 0.80%, Oil & Gas up by 0.59% and Metal up by 0.35%, while Realty down by 1.67%, Capital Goods down by 1.18%, Industrials down by 1.09%, Auto down by 0.78% and Telecom down by 0.73% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 3.63%, NTPC up by 1.75%, HDFC Bank up by 1.44%, Nestle up by 1.38% and Adani Ports up by 1.26%. On the flip side, Mahindra & Mahindra down by 2.68%, Tata Steel down by 1.39%, Bajaj Finserv down by 1.18%, SBI down by 1.15% and Tata Motors down by 1.02% were the top losers. (Provisional)

Meanwhile, India Ratings & Research (Ind-Ra) has upped India's Gross domestic product (GDP) growth forecast for the current fiscal (FY25) to 7.5 per cent from 7.1 per cent projected earlier on expectation of improved consumption demand. It said the ongoing growth momentum led by government capex, deleveraged balance sheets of corporates/banks, and incipient private corporate capex cycle has now found support from the union government budget.

The rating agency said the budget promises to bolster agricultural/rural spending, improve credit delivery to MSMEs and incentivise employment creation in the economy. It believes these measures would help in broad basing the consumption demand. Ind-Ra's growth projection is higher than that of RBI which projected FY25 growth at 7.2 per cent and Finance Ministry's Economic Survey which estimated GDP expansion between 6.5-7 per cent. It expects Private Final Consumption Expenditure (PFCE) to grow to a 3-year high of 7.4 per cent in FY25, from 4 per cent in FY24. 

Ind-Ra stated that the consumption demand is highly skewed, as it is driven by the goods and services largely consumed by households belonging to the upper-income bracket. However, an above-normal monsoon coupled with the measures announced in the union budget FY25 is expected to correct it, by boosting the demand of goods and services consumed by the rural and households belonging to the lower income bracket. Although food inflation continues to be a risk, the expectation of retail inflation in FY25 averaging lower than in FY24 will support the real wage growth.

The CNX Nifty ended at 25010.90, up by 59.75 points or 0.24% after trading in a range of 24956.40 and 25078.30. There were 28 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 3.70%, Coal India up by 3.49%, ONGC up by 2.26%, Dr. Reddy's Lab up by 2.04% and Shriram Finance up by 1.95%. On the flip side, Mahindra & Mahindra down by 2.73%, Hero MotoCorp down by 2.12%, Tata Steel down by 1.37%, SBI down by 1.12% and Tata Motors down by 1.06% were the top losers. (Provisional)

European markets were trading lower; UK’s FTSE 100 decreased 10.85 points or 0.13% to 8,357.13, France’s CAC fell 73.99 points or 0.99% to 7,457.50 and Germany’s DAX lost 179.32 points or 0.98% to 18,329.33.

Asian markets settled mostly down on Thursday. Japanese shares declined as the yen rallied sharply after the Bank of Japan raised interest rates to a 15-year high on Wednesday, ended its eight-year stretch of negative rates. A strong yen hurts the profit outlook for Japanese export heavy industries. Chinese and Hong Kong shares dropped after data showed that the China Caixin manufacturing purchasing managers’ index fell to 49.8 last month from 51.8 in June. Meanwhile, US Fed Chair Jerome Powell's dovish outlook after its overnight decision to leave interest rates unchanged failed to boost market sentiment.