Markets opens at record highs; Manufacturing PMI eyed

Indian equity benchmarks started on an optimistic note on Monday, with both the indices opening at record highs tracking broadly positive cues from Wall Street on Friday after U.S. economic data alleviated growth concerns. Markets are trading firm in early deals with Sensex and Nifty are hovering above psychologic levels 82,600 and 25,300, respectively, ahead of the HSBC manufacturing PMI for August. Sentiments got some support as the RBI said India’s forex reserves jumped by $7.023 billion to touch a new high of $681.688 billion in the week ended August 23. Traders took note of Defence Minister Rajnath Singh’s statement that the Indian economy has now improved to Fabulous Five from the Fragile Five before 2014. The minister also added that the Indian economy is one of the fastest-growing large economies now. Investors largely overlooked the government data showing that India’s economic growth slowed to a 15-month low of 6.7% in April-June 2024-25, mainly due to poor performance of the agriculture and services sectors. The GDP expanded by 8.2% in the April-June quarter of 2022-23. 

On the global front, Asian markets are trading mixed as traders react to downbeat factory activity data from China for the fourth straight month in August. The manufacturing PMI fell to a six-month low of 49.1, a faster contraction compared to the 49.4 seen in July. Also, the manufacturing sector in Japan continued to contract in August, albeit at a slower rate, with a manufacturing PMI score of 49.8. That's up from 49.1 in July, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Investors also remain optimistic over the outlook for interest rates after a report showing US consumer prices increased in line with estimates in July, while the annual rate of price growth was unexpectedly flat. 

Back home, auto stocks are in focus reacting to their monthly sales numbers. Also, Crisil Ratings asserted that the revenue growth of auto dealers is expected to slow to 7-9 per cent this financial year after a healthy 14 per cent last year, due to a moderation in sales volume growth and modest price hikes by car manufacturers. In stock specific development, SJVN, RailTel, and NHPC zoomed after the central government granted Navratna Status to these companies. Now, these state-owned companies will not have to seek the government's approval for investments upto Rs 1,000 crore.

The BSE Sensex is currently trading at 82620.18, up by 254.41 points or 0.31% after trading in a range of 82499.73 and 82725.28. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.11%, while Small cap index was down by 0.02%.

The top gaining sectoral indices on the BSE were FMCG up by 0.56%, Energy up by 0.53%, IT up by 0.37%, Utilities up by 0.25% and Basic Materials up by 0.24%, while Telecom down by 0.85%, Consumer Durables down by 0.38%, Industrials down by 0.18%, Realty down by 0.16% and Metal down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.77%, Bajaj Finserv up by 1.19%, Asian Paints up by 1.12%, ITC up by 1.08% and Reliance Industries up by 1.00%. On the flip side, Mahindra & Mahindra down by 1.04%, Tata Motors down by 0.95%, NTPC down by 0.65%, Bharti Airtel down by 0.43% and ICICI Bank down by 0.25% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the slowing of India's economic growth to a 15-month low of 6.7 per cent in the April-June quarter (Q1) of fiscal year 2024-25 (FY25) was due to ‘lower’ government spending in the wake of the enforcement of the model code of conduct for the recent Lok Sabha polls. The RBI had projected a growth rate of 7.1 per cent for the April-June quarter of this fiscal. 

He said the components and main drivers responsible for the Gross Domestic Product (GDP) growth like consumption, investment, manufacturing, services and construction have registered a growth of more than 7 per cent. Only two aspects have pulled the growth rate slightly down. He pointed out those are government (both central and state) expenditure and agriculture.

He said the government expenditure was low during the first quarter perhaps due to elections (April to June) and operation of model code of conduct by the Election Commission. He added ‘We would expect the government expenditure to pick up in coming quarters and provide the required support to growth’. 

Similarly, the agriculture sector has recorded a minimal growth rate of around 2 per cent in the April to June quarter. However, he noted the monsoon was very good and spread all over India except a few areas. So, everyone is optimistic and positive about the agriculture sector. He asserted ‘Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2 per cent projected by the RBI will be materialized in coming quarters’.

The CNX Nifty is currently trading at 25318.35, up by 82.45 points or 0.33% after trading in a range of 25281.75 and 25333.65. There were 36 stocks advancing against 13 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bajaj Auto up by 2.22%, Tata Consumer Products up by 1.88%, Hero MotoCorp up by 1.72%, HCL Technologies up by 1.55% and Asian Paints up by 1.54%. On the flip side, Tata Motors down by 1.17%, Mahindra & Mahindra down by 0.91%, Hindalco down by 0.91%, Dr. Reddy's Lab down by 0.89% and ONGC down by 0.65% were the top losers.

Asian markets are trading mixed; Hang Seng declined 315.28 points or 1.78% to 17,673.79, Nikkei 225 slipped 108.22 points or 0.28% to 38,539.53, Taiwan Weighted lost 32.14 points or 0.14% to 22,235.95 and Shanghai Composite weakened 17.71 points or 0.63% to 2,824.50. On the other hand, Jakarta Composite rose 34.31 points or 0.45% to 7,705.04, Straits Times added 13.77 points or 0.4% to 3,456.70 and KOSPI was up by 4.18 points or 0.16% to 2,678.49.