Benchmarks end in green on Thursday

Indian equity benchmarks ended in green on Thursday led by gains in Utilities, Power and Energy stocks. Markets opened at new record highs and stayed in green for almost whole day 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 also 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. Some optimism also came as the latest data released by the Controller General of Accounts (CGA) stated 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. In the corresponding period of 2023-24 (FY24), fiscal deficit was 25.3 per cent of the full-year target.

However, markets gave up most of their morning gains in late afternoon deals, as the foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 3,462 crore on July 31. Some concern also came with the Ministry of Commerce & Industry in its latest data showing that the output of eight core industries slowed down to 4 percent in June 2024 from 8.4 percent in the same period last year, due to a decline in the output of crude oil, and refinery products. The core sectors' production grew by 6.4 percent in May 2024. Sentiments also got hit as 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, key gauges regained some traction in final minutes of trade to end at record closing high levels, after the US Federal Reserve indicated a rate cut by September.  

On the global front, European markets were trading mostly in red with a slew of disappointing earnings as well as downbeat PMI and unemployment data weighing on markets. The eurozone manufacturing sector remained in contraction territory in July, according to a survey. Besides, the unemployment rate posted 6.5 percent in June, up from 6.4 percent in May. Asian markets settled mostly down on Thursday as a private survey showed China's factory activity shrank for the first time in nine months in July. 

Finally, the BSE Sensex rose 126.21 points or 0.15% to 81,867.55, and the CNX Nifty was up by 59.75 points or 0.24% points to 25,010.90.

The BSE Sensex touched high and low of 82,129.49 and 81,700.21 respectively. There were 15 stocks advancing against 15 stocks declining on the index.

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

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.

The top gainers on the Sensex were Power Grid Corporation up by 3.63%, NTPC up by 1.75%, HDFC Bank up by 1.44%, Nestle up by 1.38% and Adani Ports &SEZ 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.

Meanwhile, 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.

The report further noted that buoyant demand conditions created a ripple effect across the manufacturing industry, mainly through a substantial upturn in new work intakes. Despite slowing since June, the pace of sales growth was sharp in the context of historical data. Production volumes were raised substantially at the start of the second fiscal quarter. The rate of growth eased from June, but the respective index was nevertheless nearly six points above the average seen since the survey began in March 2005.

On the price front, strong input demand drove cost inflation higher. The overall rate of increase was marked and among the fastest in just under two years. Indian goods producers sought to protect margins from cost increases by raising selling prices. Further, Indian manufacturers experienced a robust increase in international sales during July, amid strengthening demand from clients based in Asia, Europe, North America and the Middle East.

As per the report, companies continued to take on extra staff in July, with offers of both permanent and short-term contracts. The latest increase in employment was softer than in June, though one of the strongest in the survey history. Finally, the overall level of positive sentiment towards the year-ahead outlook for production was broadly unchanged since June. Growth is expected to be supported by marketing efforts and new client enquiries.

The CNX Nifty traded in a range of 25,078.30 and 24,956.40. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 3.82%, Coal India up by 3.47%, ONGC up by 2.03%, HDFC Bank up by 1.97% and Dr. Reddy's Lab up by 1.96%. On the flip side, Mahindra & Mahindra down by 2.78%, Tata Steel down by 1.37%, Hero MotoCorp down by 1.35%, Britannia Industries down by 1.32% and Tata Motors down by 1.21% were the top losers. 

European markets were trading mostly in red; France’s CAC fell 63.71 points or 0.85% to 7,467.78 and Germany’s DAX lost 145.18 points or 0.78% to 18,363.47, while UK’s FTSE 100 increased 6 points or 0.07% to 8,373.98.

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.