Post Session: Quick Review

Indian equity benchmarks ended with notable gains on Monday. The start of the trading session was in green terrain, as the Commerce and Industry Minister Piyush Goyal said India is one of the fastest-growing economies in the world and it is expected to reach $30 trillion in the coming 30 years. He said if India grows at 8 per cent every year on a compounded annual growth basis, the economy will double in about nine years.

Adding more optimism, a private report stated that India is rapidly emerging as a preferred country for foreign investments as the steps taken by the government led by Prime Minister Narendra Modi during the last eight years have borne fruit as is evident from the ever-increasing volumes of FDI inflow setting new records. Meanwhile, the government has extended the time for levy of GST compensation cess by nearly 4 years till March 31, 2026.

Markets remained higher during the whole trading session, as 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.

Traders remained positive during the day as the Reserve Bank of India (RBI) stated 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.

On the global front, European markets were trading higher. Asian markets settled mostly higher, 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 ended at 53161.28, up by 433.30 points or 0.82% after trading in a range of 53120.79 and 53509.50. There were 27 stocks advancing against 3 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.87%, while Small cap index up by 1.57%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 2.26%, IT up by 2.02%, TECK up by 1.84%, Metal up by 1.81% and Basic Materials up by 1.65%, while there were no losing sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Larsen & Toubro up by 2.69%, Tech Mahindra up by 2.67%, HCL Tech. up by 2.61%, Indusind Bank up by 2.27% and Infosys up by 2.25%. On the flip side, Kotak Mahindra Bank down by 0.41%, Reliance Industries down by 0.35% and Titan Co down by 0.07% were the only losers. (Provisional)

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 ended at 15832.05, up by 132.80 points or 0.85% after trading in a range of 15815.50 and 15927.45. There were 40 stocks advancing against 10 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 3.12%, ONGC up by 3.02%, Larsen & Toubro up by 2.74%, HCL Tech. up by 2.65% and Tech Mahindra up by 2.65%. On the flip side, Apollo Hospital Ent. down by 1.14%, Eicher Motors down by 1.03%, HDFC Life Insurance down by 0.61%, Kotak Mahindra Bank down by 0.40% and Britannia down by 0.30% were the top losers. (Provisional)

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.

Asian markets settled mostly higher on Monday after a surge in Wall Street at the end of last week and as hopes of less hawkish moves from the US Federal Reserve slightly eased fears of a global economic recession. Chinese shares gained after Shanghai declared victory over Covid-19 after the city reported zero new local cases for the first time in two months and data showed profits at China's industrial firms shrank at a slower pace in May. Although, investors are cautiously awaiting the US quarterly GDP growth rate numbers due this week.