Sensex, Nifty continue firm trade in late morning session

Indian equity benchmarks continued firm trade in late morning session, tracking positive cues from other Asian markets. Heavy buying witnessed in Metal, IT and Capital Goods counters. Domestic sentiments were positive, amid a private report stating that India’s economy gathered momentum in May driven by pent up demand for services and higher output from industries as reopening continued from pandemic restrictions. Besides, the Finance Ministry has asked public sector banks to explore fintech partnerships and co-lending opportunities to expand their business. However, some gains got trimmed, after a report stated that as many as 423 infrastructure projects, each entailing an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.95 lakh crore.

On the global front, Asian markets were trading mostly in green, after Japan's leading index improved to a 4-month high in April as initially estimated. The final data from the Cabinet Office showed that the leading index, which measures future economic activity, rose to 102.9 in April from 100.8 in March. That was in line with flash data published on June 7. A similar higher reading was seen in December last year.

The BSE Sensex is currently trading at 53162.83, up by 434.85 points or 0.82% after trading in a range of 53162.83 and 53509.50. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.81%, while Small cap index was up by 1.46%.

The top gaining sectoral indices on the BSE were Metal up by 2.24%, IT up by 1.96%, Capital Goods up by 1.94%, Basic Materials up by 1.78% and TECK up by 1.56%, while Consumer Durables down by 0.06% was the only losing index on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.91%, HCL Tech. up by 2.71%, Sun Pharma up by 2.46%, Larsen & Toubro up by 2.44% and Indusind Bank up by 2.25%. On the flip side, Kotak Mahindra Bank down by 0.39% and Titan Co down by 0.14% were the only losers.

Meanwhile, the Reserve Bank of India (RBI) has said that net profits of manufacturing companies surged by 50.2 per cent during 2021-22, the input cost pressures notwithstanding. It said net profit also increased for the information technology (IT) companies, whereas the non-IT services sector continued to record losses at the aggregate level. It noted that operating profit margins remained healthy for all the three sectors. It also stated that net profit margins remained stable for manufacturing and IT companies, whereas it remained in the negative terrain for non-IT services companies.

The data further showed that private corporate sales and profitability recorded healthy growth in during 2021-22 as the effects of the Covid-19 pandemic subsided and economic activities recovered, especially in the second half of the year. It said sales of 1,865 listed private manufacturing companies witnessed broad based recovery and expanded by 36.7 per cent during 2021-22 as compared with a contraction of 2.8 per cent in the preceding year; both volume and price components contributed to the higher growth and it was also aided by favourable base effects.  IT companies also improved their performance and their sales growth accelerated to 19.8 per cent from 4.4 per cent in the previous year. Sales in non-IT services sector made a broad based recovery in 2021-22, registering 27.2 per cent annual expansion as against 14.6 per cent decline in the previous year.

On expenditure, the RBI said consistent with the rise in production and sales, manufacturing companies’ expenditure on raw materials increased by 48.6 per cent during the year and its share in their total sales increased. It added that unlike manufacturing and non-IT sector, which witnessed a turnaround during 2021-22 from the pandemic-led contraction in sales and staff cost in the previous year, the IT sector weathered the successive waves of the pandemic and logged sustained growth in both these parameters.

The CNX Nifty is currently trading at 15844.25, up by 145.00 points or 0.92% after trading in a range of 15843.05 and 15927.45. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.60%, UPL up by 3.59%, JSW Steel up by 2.93%, Tech Mahindra up by 2.87% and ONGC up by 2.62%. On the flip side, Apollo Hospital Ent. down by 1.37%, Divi's Lab down by 0.47%, HDFC Life Insurance down by 0.44%, Kotak Mahindra Bank down by 0.43% and Britannia down by 0.25% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 684.47 points or 3.15% to 22,403.53, Nikkei 225 surged 399.44 points or 1.51% to 26,891.41, Taiwan Weighted strengthened 307.82 points or 2.01% to 15,611.14, KOSPI rose 49.02 points or 2.07% to 2,415.62, Shanghai Composite gained 29.41 points or 0.88% to 3,379.16 and Straits Times advanced 18.60 points or 0.6% to 3,130.25. On the flip side, Jakarta Composite lost 58.66 points or 0.83% to 6,984.28.