Benchmarks extend gains in late afternoon session

The Indian equity benchmarks extended their gains in late afternoon session, with the Sensex and the Nifty gaining above 500 and 100 points, respectively. Among heavy-weights Bajaj Finance, Power Grid and Kotak Mahindra Bank exhibited a smart performance. Traders took encouragement 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. Some support also came 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. Traders overlooked Fitch ratings in its latest report 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, European markets were trading higher despite spike in COVID-19 cases in China and some U.S. states triggered fears of a second wave of infections, knocking back hopes of a swift recovery from the pandemic-led economic slump. Sector wise, Banking stocks remained in focus with report that no new cars, no interior decoration items, no unnecessary travel, no refurbishment of guesthouses, and a freeze on revision of prerequisites - these are part of a finance ministry diktat to state-owned banks to defer avoidable expenditure until the next fiscal.

The BSE Sensex is currently trading at 34089.12, up by 581.20 points or 1.73% after trading in a range of 33371.52 and 34091.11. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.96%, while Small cap index was up by 1.51%.

The top gaining sectoral indices on the BSE were Power up by 2.65%, Metal up by 2.60%, Bankex up by 2.59%, PSU up by 2.49% and Energy was up by 1.81%, while Healthcare down by 0.06% was the only losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.27%, Power Grid up by 3.82%, Kotak Mahindra Bank up by 3.19%, HDFC up by 3.05% and ITC up by 3.03%. On the flip side, ONGC down by 1.01%, Nestle down by 0.72%, Bajaj Auto down by 0.46%, Hindustan Unilever down by 0.36% and Maruti Suzuki down by 0.27% were the top losers.

Meanwhile, in the wake of COVID-19, global rating agency Fitch Ratings in its latest report 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.

The rating agency has revised the outlook on India's long-term foreign-currency issuer default rating (IDR) to negative from stable and affirmed the rating at 'BBB-'. As per the rating agency, economic activity is expected to contract by 5 per cent in the fiscal year ending March 2021 (FY21) due to the strict lockdown measures imposed since March 25, before rebounding by 9.5 per cent in FY22.

Fitch Ratings further noted that its forecasts are subject to considerable risks due to the continued acceleration in the number of new COVID-19 cases as the lockdown is eased gradually. As per the report, it remains to be seen whether India can return to sustained growth rates of 6 per cent to 7 per cent as previously estimated, depending on the lasting impact of the pandemic, particularly in the financial sector.

The CNX Nifty is currently trading at 10055.90, up by 174.75 points or 1.77% after trading in a range of 9845.05 and 10056.40. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Coal India up by 6.03%, Bajaj Finserv up by 5.66%, Vedanta up by 4.60%, Zee Entertainment up by 4.36% and Bajaj Finance up by 4.34%. On the flip side, ONGC down by 0.95%, Nestle down by 0.67%, Bajaj Auto down by 0.42%, Hindustan Unilever down by 0.39% and Maruti Suzuki down by 0.28% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 12.27 points or 0.2% to 6,265.52, France’s CAC increased 3.05 points or 0.06% to 4,999.02 and Germany’s DAX was up by 43.10 points or 0.35% to 12,425.24.