Benchmarks end near day’s high

Indian equity benchmarks ended Thursday’s session near day’s high with a gain of over two percent each, on the back of strong buying in banking, financial and metal stocks despite weak cues from global markets. Key bourses started the day on tepid note, as border tensions between India and China continued to simmer while COVID-19 infections surged. But, markets soon inched higher and traded in fine fettle as traders found some support with Federation of Indian Export Organisations (FIEO) President S K Saraf’s statement that the ongoing India-China border tensions may not have any immediate impact on the bilateral trade relations. Some optimism also came as Prime Minister Narendra Modi told the Chief Ministers of 14 States and the Lieutenant-Governor of a Union Territory to think about Unlock 2, following the graded opening of economic activities under Unlock 1 since June 1.

Markets extended northward moment in the last leg of trade, as investments through participatory notes (P-notes) in the domestic capital market rose to Rs 60,027 crore till May-end, making it the second consecutive monthly increase. Sentiments also remained buoyant with report that the finance ministry has released Rs 15,187 crore to 28 states as grants to rural local bodies to help them restart economic activity. The basic grants can be used by the local bodies for location-specific felt needs, except for salary or other establishment expenditure. Investors paid no heed towards global rating agency Fitch Ratings’ report in which it has revised India's outlook to 'negative' from 'stable', stating that the coronavirus pandemic has significantly weakened the country's growth prospects for the year and exposed the challenges associated with a high public-debt burden.

On the global front, Asian markets were trading mostly in red, while European markets were trading in red, as spiking coronavirus cases and prospects of new lockdowns erased earlier confidence about a global economic recovery. Back home, stocks related to Tyre sector ended higher as Automotive Tyre Manufacturers Association (ATMA) said restrictions on import of tyres will pave the way for increased domestic production while accelerating exports besides unlocking job creation potential. Agriculture stocks were buzzing as the government's wheat procurement so far in the 2020-21 marketing year has reached an all-time record of 38.2 million tonnes, with Madhya Pradesh surpassing Punjab as the country's biggest wheat procuring state.

Finally, the BSE Sensex gained 700.13 points or 2.09% to 34,208.05, while the CNX Nifty was up by 210.50 points or 2.13% to 10,091.65.

The BSE Sensex touched high and low of 34,276.01 and 33,371.52, respectively and there were 22 stocks advancing against 8 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.05%, while Small cap index was up by 1.48%.

The top gaining sectoral indices on the BSE were Bankex up by 3.81%, Finance up by 3.55%, Metal up by 3.00%, Power up by 2.48% and Energy up by 2.34%, while Telecom down by 0.12% and Healthcare down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 5.46%, Kotak Mahindra Bank up by 5.02%, Axis Bank up by 4.10%, HDFC Bank up by 3.96% and SBI up by 3.87%. On the flip side, ONGC down by 0.71%, Hindustan Unilever down by 0.63%, TCS down by 0.52%, Bharti Airtel down by 0.48% and Sun Pharma down by 0.35% were the top losers.

Meanwhile, rating agency Crisil in its latest report has stated that the liquidity cover for non-banking financial companies (NBFCs) has not been affected much in April and May, as they managed partial collections and on lack of fresh disbursements. However, the NBFC sector continues to find challenges in fundraising due to risk-averse sentiment from investors amid lockdown due to coronavirus pandemic.

The report further stated that despite cash outflow owing to debt repayments, a combination of partial collections, incremental funding, and negligible disbursements has supported the liquidity levels of NBFC. It noted that in its base-case scenario, where collections in the next few months will be similar to April May levels without any moratorium on liabilities, the proportion of NBFCs with liquidity cover of less than one time will be 8 percent during the three months through August.

According to the agency, in a stress case, where collections are nil and there is no moratorium on liabilities, the proportion of companies with low liquidity could go up to 25 per cent. It said in an alternative case, where NBFCs get benefit of moratorium on their bank loans but there being no collections, the proportion of NBFCs with low liquidity cover is likely to be reduced to 5 percent.

The CNX Nifty traded in a range of 10,111.20 and 9,845.05 and there were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 8.22%, Coal India up by 6.33%, Bajaj Finance up by 5.48%, Zee Entertainment up by 5.42% and Vedanta up by 4.70%. On the flip side, TCS down by 0.57%, Hindustan Unilever down by 0.54%, Bharti Airtel down by 0.44%, Asian paint down by 0.37% and Bajaj Auto down by 0.35% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 9.54 points or 0.15% to 6,243.71, France’s CAC fell 27.19 points or 0.54% to 4,968.78 and Germany’s DAX was down by 40.84 points or 0.33% to 12,341.30.

Asian markets ended mostly lower on Thursday as spike of corona virus cases in Beijing and United States dampened investor confidence over the potential economic recovery. Meanwhile, Federal Reserve Chair Jerome Powell said in virtual testimony to the House Financial Services Committee that it would be a concern if Congress were to pull back from the support that it is providing too quickly. Japanese shares declined as the yen strengthened against the dollar, hurting the earnings outlook for exporters. Seoul shares ended modestly lower as the market sentiment was dented by the tensions with North Korea. Though, Chinese shares gained after China's central bank governor said he wants the flow of credit in the economy to increase to at least 30 trillion yuan ($4.2 trillion) this year, as part of efforts to push the economy out of the corona virus-induced slump.