Post Session: Quick Review

Indian equity benchmarks ended flat with a negative bias on Tuesday. Indices made a positive start of the day, as better-than-expected GDP numbers supported the market sentiments. Amid the coronavirus pandemic, India's GDP grew at 1.6% in the January-March quarter of the fiscal year 2020-21, higher than the street forecast, but witnessed a contraction of 7.3% for the entire fiscal year. Even then, the figure beat the CSO's estimate of 8% contraction. Adding more optimism, Chief Economic Adviser K V Subramanian said the overall impact of the second wave of Covid-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. Besides, the output of eight core sectors jumped by 56.1% mainly due to low base effect and uptick in production of natural gas, refinery products, steel, cement and electricity.

But soon, markets turned volatile, as domestic sentiments got hit, after India's manufacturing sector activity witnessed a significant loss of growth momentum in May due to the intensification of the COVID-19 crisis and its detrimental impact on demand. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI), fell to 50.8 in May, down from 55.5 in April, as companies observed the slowest rises in new work and output in ten months amid the intensification of the COVID-19 crisis. Traders remained cautious with a FICCI's Business Confidence Survey stating that the business sentiment in the country has been deeply impacted due to the second wave of coronavirus infections. It said that the overall business confidence index has nosedived and stood at 51.5 in the current round after reporting a decadal high value of 74.2 in the previous survey round.

Finally, indices ended in red terrain, after State Bank of India (SBI) revised India's growth outlook downwards for the current financial year as the second wave of Covid-19 and the resultant restrictions will again cripple economic activities. The latest SBI Ecowrap report has projected a 7.9 per cent growth for India's GDP, down from its previous projection of 10.4 per cent growth. Some concerns also came as the Organisation for Economic Co-operation and Development (OECD) cut its growth projection for India for FY22 to 9.9 per cent from 12.6 per cent estimated in March, as the second wave of coronavirus infections has paused economic recovery in Asia's third largest economy. Traders ignored reports that Moody’s Investors Service pegged India's GDP growth at 9.3 per cent in the current fiscal ending March 2022 and 7.9 per cent in FY23.

On the global front, European markets were trading higher with U.S. equity futures, and commodities including oil jumped, as optimism mounted over the economic recovery from the pandemic. Asian markets ended mostly higher on Tuesday, even after Malaysia's producer prices increased in April. The figures from the Department of Statistics showed that the producer price index rose 10.6 percent year-on-year in April, following a 6.7 percent increase in March. Among sectors, prices of mining increased the most by 92.4 percent annually in April and prices for agriculture, forestry and fishing grew 49.8 percent.

The BSE Sensex ended at 51934.88, down by 2.56 points after trading in a range of 51808.88 and 52228.65. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.01%, while Small cap index was down by 0.31%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.71%, Energy up by 0.70%, PSU up by 0.38%, Consumer Durables up by 0.25% and Industrials up by 0.25%, while Metal down by 1.63%, Basic Materials down by 1.09%, Bankex down by 0.55%, Realty down by 0.52% and Consumer Disc down by 0.38% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 3.52%, Bajaj Finance up by 2.93%, SBI up by 1.97%, HDFC up by 1.01% and Bajaj Auto up by 0.97%. On the flip side, ICICI Bank down by 1.80%, Ultratech Cement down by 1.63%, Asian Paints down by 1.51%, Axis Bank down by 0.69% and Kotak Mahindra Bank down by 0.65% were the top losers. (Provisional)

Meanwhile, Indian manufacturing activity eased in the month of May, showing a significant loss of growth momentum. Due to the intensification of the COVID-19 crisis and its detrimental impact on demand, companies observed the slowest rises in new work and output for ten months. There was also a substantial slowdown in growth of input purchasing and another round of job shedding.

As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - stood at 50.8 in May as against 55.5 in April. The report said that firms scaled up production volumes during May, but the pace of expansion was modest in the context of historical data. In fact, the rise was the weakest in the current ten-month period of growth.

On the price front, raw material scarcity exerted further upward pressure on input costs. The rate of inflation eased to a four-month low, but remained sharp and above its long-run average. Amid reports of ongoing efforts to protect margins from cost increases, firms lifted their selling prices again in May. The rate of charge inflation was solid, but softened from April.

The CNX Nifty ended at 15574.85, down by 7.95 points or 0.05% after trading in a range of 15528.30 and 15660.75. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & SEZ up by 3.72%, ONGC up by 3.48%, Bajaj Finance up by 2.79%, SBI up by 1.93% and Bajaj Auto up by 1.10%. On the flip side, JSW Steel down by 2.31%, Tata Steel down by 2.20%, ICICI Bank down by 1.91%, Grasim Industries down by 1.81% and Ultratech Cement down by 1.59% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 73.44 points or 1.05% to 7,096.05, France’s CAC increased 42.07 points or 0.65% to 6,489.24 and Germany’s DAX was up by 181.78 points or 1.18% to 15,602.91.

Asian markets ended mostly higher on Tuesday after surveys showed factory activity continued to expand in key Asian economies in May. Caixin’s China manufacturing Purchasing Managers' Index rose to 52.0 in May, the highest level since December and inching up from 51.9 in April. South Korea's PMI stood at 53.7 in May, slowing from April but extending growth into an eighth straight month. While, Japan PMI Manufacturing was finalized at 53.0 in May, down from April’s 53.6. Chinese shares ended marginally higher, supported by Beijing’s latest three-child policy after recent data showed population growth slipping to its slowest rate since the 1950s. However, Japanese shares edged lower as investors awaited US factory activity numbers that will be released on Tuesday, and payrolls data due on Friday for further clues on the outlook for the American economy.