Post Session: Quick Review

Indian equity benchmarks ended flat with a positive bias on Monday’s trading session. After a negative start of the trading day, markets saw a sharp fall during early morning deals, as Former RBI Governor D Subbarao has expressed concerns over ‘extreme unevenness’ in economic recovery and ‘sharpening inequalities’ between upper-income segments and lower-income households in the country, cautioning that the trend will hit growth prospects going forward. Terming the uneven recovery ‘morally wrong and politically corrosive’ he said liquidity in the domestic market and foreign fund inflows are leading to soaring prices of stocks and other assets despite disruptions due to the Covid pandemic.

Indices soon cut some of their losses but remained lower for the most part of the trading session, as cautiousness came in as the GST Council, at its single-agenda meeting, decided to retain the GST on Covid-19 vaccines at 5 per cent. However, it temporarily slashed the tax rates on most supplies and also exempted drugs for treating the black fungus.  Sentiments remained downbeat as the wholesale price-based (WPI) inflation accelerated to a record high of 12.94 per cent in May, on rising prices of crude oil and manufactured goods. Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent. This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49 per cent.

However, in the last hours of the trade, markets turned positive,  after Moody's Investors Service said that India's and Brazil's first-quarter 2021 real GDP data show a strong rebound in both economies following a contraction last year of 4.4 per cent in Brazil and 7.1 per cent in India. Brazil's first-quarter GDP expanded 1.2 per cent from the previous quarter and 2.3 per cent from first-quarter 2020. India's first-quarter GDP rose 1.5 per cent quarter on quarter and year on year. Traders took note of the government data showing that the Index of Industrial Production (IIP) stood at 126.6 points in April this year. The IIP was at 54 points in April 2020 and 126.5 points in April 2019. As per the partial data, IIP growth works out to be 134 per cent in April 2021 over the same month last year, mainly due to the low base effect.

On the global front, European markets were trading higher as investors look ahead to the June meeting of the US Federal Reserve. Asian markets settled mostly higher on Monday, after Malaysia's industrial production accelerated in April. The data from the Department of Statistics showed that industrial production rose 50.1 percent year-on-year in April, following a 9.3 percent increase in March. The growth in production was mainly driven by a rise in production of manufacturing industry, mining and quarrying, and electricity.

The BSE Sensex ended at 52551.53, up by 76.77 points or 0.15% after trading in a range of 51936.31 and 52590.92. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.68%, while Small cap index was down by 0.16%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 0.81%, IT up by 0.46%, TECK up by 0.39%, Consumer Durables up by 0.38% and Oil & Gas up by 0.37%, while Power down by 1.98%, Realty down by 1.55%, Industrials down by 1.07%, Utilities down by 0.96% and Capital Goods down by 0.48% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 1.46%, Bajaj Finance up by 1.23%, ONGC up by 1.05%, Infosys up by 1.01% and Power Grid up by 0.97%. On the flip side, Kotak Mahindra Bank down by 1.51%, HDFC down by 0.76%, Sun Pharma down by 0.59%, Bajaj Auto down by 0.57% and NTPC down by 0.51% were the top losers. (Provisional)

Meanwhile, India’s inflation based on wholesale price index (WPI) rose to 12.94% (Provisional) for the month of May 2021 as compared to -3.37% in May 2020, primarily due to low base effect and rise in prices of crude petroleum, mineral oils viz. petrol, diesel, naphtha, furnace oil etc. and manufactured products as compared the corresponding month of the previous year.

Component wise, primary articles index having weight of 22.62%, declined by 0.86% to 150.5 (Provisional) in May 2021 from 151.8 (Provisional) for the month of April 2021. Prices of Non-food Articles increased in May 2021 (as compared to April 2021) by 1.26%, Crude Petroleum & Natural Gas by 0.67% and Food Articles declined by 1.48%.

Fuel & Power index, having weight of 13.15%, increased by 1.75% to 110.5 (Provisional) in May 2021 from 108.6 (Provisional) for the month of April 2021. Prices of Mineral Oils increased by 3.12% in May 2021 as compared to April 2021. Besides, Manufactured Products constituting the major portion of the index with weight of 64.23%, increased by 1.24% to 131.0 (Provisional) in May 2021.

The CNX Nifty ended at 15811.85, up by 12.50 points or 0.08% after trading in a range of 15606.50 and 15823.05. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 1.48%, Reliance Industries up by 1.43%, Wipro up by 1.32%, Divis Lab up by 1.24% and Bajaj Finance up by 1.21%. On the flip side, Adani Ports & SEZ down by 8.49%, Coal India down by 2.03%, Kotak Mahindra Bank down by 1.47%, HDFC down by 0.80% and Maruti Suzuki down by 0.64% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 23.16 points or 0.32% to 7,157.22, France’s CAC increased 28.89 points or 0.44% to 6,629.55 and Germany’s DAX was up by 48.66 points or 0.31% to 15,741.93.

Asian markets settled mostly higher on Monday tracking weekend's solid finish on Wall Street, while investors remained cautious ahead of the US Federal Reserve's monetary policy meeting scheduled for Tuesday and Wednesday for more cues about economic recovery and monetary policy. The market sentiment improved further after the G7 summit ended with a pledge to continue to support economies with investment until pandemic subsidies. Japanese shares ended with solid gains after the Japanese government lifted the Corona-virus state of emergency in Olympics city Tokyo and downgraded it to quasi-emergency state in three prefectures. Meanwhile, markets in Taiwan, China and Hong Kong were closed for the Dragon Boat Festival.