Bourses sustain gains in late afternoon session

Indian equity markets sustained their gains as the sentiment continued to remain firm in the backdrop of strong global cues. The broader indices, the BSE Mid cap index and Small cap index were also trading above a percent each. Buying in Capital Goods, IT and TECK stocks helped markets to trade higher. Traders took support after Federation of Indian Export Organisations (FIEO) said that proposed free trade agreements (FTAs), including with the UK, European Union and GCC would open new opportunities to boost India’s exports in these markets. FIEO also said the government initiatives are helping the country record a healthy growth rate in exports. Besides, Commerce and Industry Minister Piyush Goyal said that India is one of the fastest-growing economies in the world and it is expected to reach USD 30 trillion in the coming 30 years.

On the global front, Asian markets were trading mostly in green as fears of prolonged inflation eased and data showed profits at China's industrial firms shrank at a slower pace in May. European markets were trading higher following on from gains made in Asia and a late-week rally on Wall Street, as concerns eased that aggressive central bank actions may spark a wider economic downturn.

The BSE Sensex is currently trading at 53,262.96, up by 534.98 points or 1.01% after trading in a range of 53155.92 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 gained 1.05%, while Small cap index was up by 1.74%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.44%, IT up by 2.35%, TECK up by 2.08%, Metal up by 1.92%, Basic Materials up by 1.80%, while there were no losers on the sectoral indices on the BSE.

The top gainers on the Sensex were HCL Tech up by 3.13%, Tech Mahindra up by 3.11%, Larsen & Toubro up by 2.87%, Infosys up by 2.53% and Sun Pharma up by 2.26%. On the flip side, Kotak Mahindra Bank down by 0.46% and Titan Company down by 0.17% were the only losers.

Meanwhile, expressing some concerns, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the continued muted hikes in employee cost by large corporates despite strong profitability may impact consumption demand, if inflationary pressures remain elevated.

According to the report, a sustained weak demand would limit the ability of corporates to pass on price increases to end-consumers, affecting their top line and hence EBITDA generation. Resultantly, the muted real wage growth since FY20 is expected to remain low in the next 12 to 18 months and turn negative in the medium term, driven by elevated inflationary pressures and constrained ability of most businesses to provide a material wage hike.

Therefore, the agency said that broad-based consumption demand is likely to remain sluggish, although the higher end of consumption demand will remain healthy. As per the rating agency, any increase in employee cost is a function of an improvement in the payment to employees.

The CNX Nifty is currently trading at 15,852.45, up by 153.20 points or 0.98% after trading in a range of 15831.90 and 15927.45. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were HCL Tech up by 3.11%, UPL up by 2.97%, Tech Mahindra up by 2.91%, Larsen & Toubro up by 2.87% and Hindalco up by 2.85%. On the flip side, Eicher Motors down by 0.87%, Kotak Mahindra Bank down by 0.70%, Apollo Hospital down by 0.56%, Hero MotoCorp down by 0.50% and Titan Co down by 0.28% were the top losers.

Asian markets were trading mostly in green, Hang Seng increased 510.46 points or 2.35% to 22,229.52, Nikkei 225 surged 379.30 points or 1.43% to 26,871.27, Taiwan Weighted strengthened 244.69 points or 1.6% to 15,548.01, KOSPI rose 35.32 points or 1.49% to 2,401.92, Shanghai Composite gained 29.44 points or 0.88% to 3,379.19 and Straits Times was up by 27.82 points or 0.89% to 3,139.47. On the flip side, Jakarta Composite was down by 26.88 points or 0.38% to 7,016.06.

European markets were trading higher, UK’s FTSE 100 increased 53.22 points or 0.74% to 7,262.03, France’s CAC increased 49.43 points or 0.81% to 6,122.78 and Germany’s DAX was up by 190.88 points or 1.46% to 13,309.01.