Post Session: Quick Review

Indian equity benchmarks ended in red on Thursday. Indices made slightly positive start of the trading session, as sentiments got a boost as Principal Economic Adviser (PEA) Sanjeev Sanyal said the Indian economy is likely to witness close to double-digit growth in the current fiscal year despite the second Covid-19 wave ravaging the country. Some support came as data released by the RBI showed India reported a current account surplus of 0.9 percent of GDP in the pandemic-hit FY21, as against a deficit of 0.9 percent in FY20. 

But soon, markets turned volatile and remained weak for the whole trading day, after Indian manufacturing activity fell back into decline in the month of June, as the intensification of the pandemic and strict containment measures negatively impacted on demand. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - fell to 48.1 in June as against 50.8 in May.

Some anxiety also came as India's external debt surged by $11.5 billion year-on-year to $570 billion as of March-end 2021, according to the Reserve Bank of India data. The external debt to GDP ratio rose to 21.1 per cent as of March-end 2021 from 20.6 per cent a year ago. Besides, the Controller General of Accounts (CGA) in its latest data has showed that the central government's fiscal deficit stood at Rs 1.23 lakh crore or 8.2 per cent of the full year's Budget Estimate (BE) at end-May 2021. The fiscal deficit at the end of May 2020 was 58.6 per cent of the BE of 2020-21. In absolute terms, the fiscal deficit was Rs 1,23,174 crore at end-May 2021. The government expects the fiscal deficit for 2021-2022 at 6.8 per cent of Gross Domestic Product (GDP) or Rs 15,06,812 crore.

On the global front, European markets were trading higher kicking off the second half of 2021 on a positive note as investors anticipate the continent’s economic recovery. Asian markets settled mostly lower on Thursday, after South Korea's industrial production declined at a softer pace in May. The data from Statistics Korea said that industrial production fell a seasonally adjusted 0.7 percent month-on-month in May, following a 1.6 percent decline in April. Manufacturing output decreased 1.0 percent monthly in May, following a 1.6 percent fall in the previous month.

The BSE Sensex ended at 52318.60, down by 164.11 points or 0.31% after trading in a range of 52281.01 and 52638.50. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.19%, while Small cap index up by 0.32%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 0.79%, Consumer Disc up by 0.69%, Healthcare up by 0.64%, FMCG up by 0.38% and Consumer Durables up by 0.12%, while Power down by 1.44%, TECK down by 0.71%, Telecom down by 0.65%, IT down by 0.58% and Energy down by 0.58% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddy's Lab up by 2.56%, Bajaj Auto up by 1.84%, Sun Pharma up by 1.37%, Asian Paints up by 1.08% and Maruti Suzuki up by 1.01%. On the flip side, Bajaj Finserv down by 2.20%, Infosys down by 1.32%, Ultratech Cement down by 1.02%, Tech Mahindra down by 1.01% and Indusind Bank down by 0.84% were the top losers. (Provisional)

Meanwhile, Indian manufacturing activity fell back into decline in the month of June, as the intensification of the pandemic and strict containment measures negatively impacted on demand. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - fell to 48.1 in June as against 50.8 in May.

The report further said that the stretch of new order growth that started in August 2020 came to an end in June, with firms linking the deterioration in demand to the pandemic. Despite being solid, the pace of contraction was much softer than those registered at the onset of COVID-19 last year.

Besides, COVID-19 restrictions also curtailed international demand for Indian goods. New export orders decreased for the first time in ten months, albeit modestly. Falling new orders, business closures and the COVID-19 crisis triggered a reduction in output among Indian manufacturers. The decline was moderate relative to those seen in the first half of 2020, but ended a ten-month sequence of growth.

On the price front, input costs increased further in June, with firms reporting higher prices for chemicals, electronic components, energy, metals and plastics. Additional cost burdens were again transferred on to clients, with goods producers hiking their fees for the tenth straight month.

The CNX Nifty ended at 15680.00, down by 41.50 points or 0.26% after trading in a range of 15667.05 and 15755.55. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddy's Lab up by 2.50%, Hindalco up by 1.98%, Bajaj Auto up by 1.71%, Tata Motors up by 1.37% and Sun Pharma up by 1.29%. On the flip side, Bajaj Finserv down by 2.42%, Shree Cement down by 1.62%, Britannia down by 1.48%, Infosys down by 1.29% and Wipro down by 1.15% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 85.97 points or 1.22% to 7,123.44, France’s CAC increased 62.24 points or 0.96% to 6,570.07 and Germany’s DAX was up by 164.47 points or 1.06% to 15,695.51.

Asian markets settled mostly lower on Thursday ahead of the crucial monthly US Non-farm Payroll data due on Friday. Japanese shares closed down on concerns that the corona-virus delta variant will slow the economic recovery. Japan is expected to extend by two weeks or more coronavirus containment measures in the greater Tokyo area as infection numbers creep up less than a month before the Summer Olympics start. Further, Chinese shares ended lower amidst declines in industrial firms after data showing dip in Caixin China General Manufacturing PMI for June to 51.3, a three-month low from 52 in May. Meanwhile, Hong Kong’s stock market is closed for the Hong Kong Special Administrative Region Establishment Day.