Post Session: Quick Review

Snapping seven days of losing streak, Indian equity benchmarks finally witnessed some recovery on Friday as traders opted to buy beaten down but fundamentally strong stocks after the fresh US sanctions on Russia neither included removing Russia off from SWIFT messaging system nor had any measure that put restrictions on Russian energy exports. Besides, US President Joe Biden’s announcement that the country is working with allies on a release of oil from strategic reserves after crude prices shot up, too aided sentiments. Markets made an optimistic start as traders took some support with report that the heightened geopolitical tensions and their possible impact on global growth have led investors to believe that US Federal Reserve will ton down its aggressive interest rate hike pitch going ahead.

Markets extended gains as sentiments got support with report that Moody’s Investors Service upgraded its financial year 2022-2023 (FY23) growth forecast for the Indian economy to 8.4 per cent from the earlier estimated 7.9 per cent as the country moves to normalcy, post the removal Covid-19 restrictions. Meanwhile, Fitch Ratings maintained its earlier projection of 10.3 percent growth in FY23 compared to 8.4 percent estimated for FY22. Some support came in as Chief Economic Advisor (CEA) V Anantha Nageswaran said that the Indian economy is now poised for recovery but high crude oil price is a cause for concern. He said the banking sector in the country is stable, capital is available and credit offtake is poised to take off. Besides, the income tax department said it has issued refunds of close to Rs 1.83 lakh crore to more than 2.07 crore taxpayers so far this fiscal. This includes 1.67 crore refunds of the 2020-21 fiscal ended March 31, 2021, amounting to Rs 33,818.97 crore.

Positive opening in European markets and strong ending in Asian counters too aided sentiments, tracking a fragile global rebound as market participants assessed the impact of Western sanctions against Russia. Back home, pharma stocks remained in focus as the government removed export curbs on Remdesivir injection and its active pharmaceutical ingredients (APIs) amid declining COVID-19 cases in the country. Auto stocks remained in limelight after Crisil Ratings has said that two-wheeler sales volume is likely to dip by 8-10 per cent this fiscal year due to factors like sluggish rural demand, low festive-season sales, higher prices, and deferred purchases as consumers’ eye electric vehicles. The decline in sales volume in the current financial year is expected on an already-low base after two consecutive years of decline -- at 13 per cent in fiscal 2021 and 18 per cent in fiscal 2020.

The BSE Sensex ended at 55858.52, up by 1328.61 points or 2.44% after trading in a range of 55299.28 and 56183.70. There were 29 stocks advancing against 1 stock declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index surged 4.07%, while Small cap index was up by 4.17%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 5.91%, Realty up by 5.47%, Power up by 4.64%, Utilities up by 4.43% and Basic Materials was up by 4.16%, while there were no losers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Tata Steel up by 6.33%, Indusind Bank up by 5.87%, Bajaj Finance up by 5.16%, NTPC up by 4.71% and Tech Mahindra up by 4.37%. On the flip side, Nestle down by 0.25% was the lone loser. (Provisional)

Meanwhile, Chief Economic Advisor (CEA) V Anantha Nageswaran has expressed optimism over economic growth and said that the Indian economy is now poised for recovery but high crude oil price is a cause for concern. He said the banking sector in the country is stable, capital is available and credit offtake is poised to take off. He also said ‘we are not unique to the phenomenon of uncertain growth and high inflation due to the pandemic. Developed countries are also facing the same problem.’ The budget for 2022-23 has been made keeping in mind that the price of crude oil will be around $75 per barrel. But due to the conflict between Russia and Ukraine, the price of Texas crude is now $96 per barrel.

Nageswaran said ‘Its impact on the Indian economy will depend how long this high price will remain’. According to him, inflation and purchasing power is a worldwide problem. This has been due to rise in shipping costs, high container costs and high oil prices. He said in India inflation rates are hovering around 5.2 per cent at the moment. ‘But, I feel it should remain within four to six per cent in the next fiscal which the RBI is targeting’. He said the market has begun to correct in India. Activity levels in some industries have crossed the pre-pandemic levels. But the services sector is yet to recover.

Regarding private sector investment scenario, the CEA said it is yet to pick up due to the pandemic cloud which is still there. It will pick up when consumption levels increase. He said ‘But the capital expenditure plan in the budget is higher in 2022-23. This has been done to fill in the void. In fact, capital expenditure by the states have also increased’. He noted that for India to achieve $5 trillion economy, the share of agriculture, manufacturing and services should be in the ratio 20:30:50 in the country’s GDP.

The CNX Nifty ended at 16658.40, up by 410.45 points or 2.53% after trading in a range of 16478.30 and 16748.80. There were 47 stocks advancing against 3 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 8.97%, Tata Motors up by 7.43%, Tata Steel up by 6.64%, Adani Ports up by 6.15% and Indusind Bank up by 5.87%. On the flip side, Britannia down by 0.67%, Nestle down by 0.17% and Hindustan Unilever down by 0.03% were the only losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 110.87 points or 1.54% to 7,318.25, France’s CAC increased 61.31 points or 0.94% to 6,582.36 and Germany’s DAX was up by 89.00 points or 0.63% to 14,141.10.

Most of Asian markets ended higher on Friday powered by the strong rally in US markets on Thursday as the West imposed retaliatory sanctions on Russia. Russia finally invaded Ukraine, firing missiles at several Ukrainian cities and landing troops on Ukraine's south coast. Several countries, including the U.S. and U.K., Australian and Japan have already imposed severe sanctions on Russia following the invasion, potentially targeting the country's all-important energy sector. U.S. President Joe Biden said the new sanctions will limit Russia's ability to do business in dollars, euros, pounds and yen, stop Russia's ability to finance and grow their military and impair their ability to compete in high-tech 21st century economy. China's Shanghai Composite Index gained after the People's Bank of China injected 300-billion-yuan worth of liquidity into the banking system, far higher than the 10 billion yuan of expiring loans.