Post Session: Quick Review

Indian equity markets entered into northward phase on Tuesday, as traders opted for bargain hunting. The mood of the markets was largely positive from the beginning under the influence of optimistic global cues. The strength on markets partly reflected a positive reaction to the latest efforts to address turmoil in the banking sector, including UBS Group's (UBS) state backed acquisition of Credit Suisse (CS). Besides, investors awaited the Federal Reserve's interest rate decision. Traders worldwide were expecting the US Federal Reserve to raise interest rates by a smaller quantum of 25 basis points this month. Back home, banking counters mainly helped the Indian markets to trade higher. However, IT stocks hang out the day in red territory. The broader indices, the BSE Mid cap index and Small cap index were too supportive during the session.

Tracing US markets overnight, indices made optimistic start after previous session losses, as traders picked up fundamentally strong stocks at lower level. Further, markets continued to trade in green, as sentiments got a boost with Finance Ministry’s statement that Indian economy is expected to grow at 7 per cent in FY23 despite global headwinds while retail inflation would moderate in line with wholesale inflation which fell to a 25-month low in January. Sentiments remained up-beat with Minister of State for Finance Bhagwat K Karad stating that the government has taken various reforms following which asset quality of public sector banks has improved significantly with gross NPA ratio declining from the peak of 14.6 per cent in March 2018 to 5.53 per cent in December 2022. In late afternoon session, markets soared at day’s high levels, as some optimism that the Fed will hold off on raising interest rates. Finally, both Nifty and Sensex ended the session near day’s high as investors opted to buy beaten down but fundamentally strong stocks.

On the global front, European markets were trading higher, with banking stocks leading the recovery following a raft of measures to stabilise the sector, while investors hoped for less-aggressive moves by the U.S. Federal Reserve at its policy meeting this week. All Asian markets ended in green, from the previous day's rout, with lenders boosted by easing concerns of another financial crisis, while focus turned to the Federal Reserve's policy decision later in the week. Back home, Ministry of Labour and Employment has said that retail inflation for agricultural and rural workers increased to 6.94 per cent and 6.87 per cent, respectively, in February 2023, due to increases in prices of medicines, doctor's fees, and bus fares, among others.

The BSE Sensex ended at 58,074.68, up by 445.73 points or 0.77% after trading in a range of 57,730.09 and 58,133.33. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.66%, while Small cap index was up by 0.50%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.57%, Bankex up by 1.30%, Energy up by 0.99%, Capital Goods up by 0.90% and Power was up by 0.74%, while IT down by 0.84%, TECK down by 0.61%, FMCG down by 0.56%, Healthcare down by 0.31% and Realty was down by 0.12% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 3.11%, Bajaj Finance up by 2.94%, Titan up by 2.15%, Axis Bank up by 2.14% and Indusind Bank up by 1.94%. On the flip side, Power Grid down by 2.11%, Hindustan Unilever down by 1.88%, Tech Mahindra down by 1.19%, TCS down by 1.12% and Infosys down by 0.91% were the top losers. (Provisional)

Meanwhile, the Finance Ministry in its Monthly Economic Review has said that Indian economy is likely to grow at 7 per cent in FY23 despite global headwinds while retail inflation would moderate in line with wholesale inflation which fell to a 25-month low in January. It noted that supported by the gains from high services exports, the moderation in oil prices, and the recent fall in import-intensive consumption demand, India's current account deficit is estimated to fall in FY23 and FY24, providing a buffer to the rupee in uncertain times. It said this will provide a much-needed cushion to India's external sector at a time when the Fed is likely to raise rates further and ensure that India's external finances are not a major cause of concern.

It said the jump in net service exports over the previous year is a critical development as India increases its market share in both IT and non-IT services, whose demand has been triggered by the pandemic, and added that imports are also less costly now with the easing of global commodity prices. It further said ‘With a manageable current account deficit and a growth rate highest among the major economies in FY23, the Indian economy has shown a new-found resilience in sailing through the turbulence caused by the pandemic and geopolitical stress’. As per the report, macroeconomic stability is likely to receive a further boost in FY23 as the current account deficit is set to narrow from the year-beginning estimates.

With regard to growth, the report said real Gross Domestic Product (GDP) estimates for Q3 of 2022-23 reaffirm the ability of the Indian economy to grow on the strength of its domestic demand even as a rise in global uncertainties slows global output. Indian economy witnessed a growth of 4.4 per cent in the third quarter that ended in December 2022. Growth momentum gathered in Q3 of 2022-23 is likely to be sustained in Q4, as reflected in the performance of High-Frequency Indicators for January/February 2023. GST collections have now, in February 2023 crossed the Rs 1.4 lakh crore benchmark for twelve successive months.

Noting that falling international commodity prices and government measures have aided in easing inflationary pressures, the report said ‘with WPI inflation declining to a 25-month low, its transmission to CPI inflation is soon expected. Household inflation expectations remained anchored, as seen in the January 2023 round of RBI's Households' Inflation Expectations Survey’. It said going forward the inflation trajectory will likely be determined by extreme weather conditions like heatwaves and the possibility of an El Nino year, volatility in international commodity prices and pass-through of input costs to output prices. Forecasts by various international agencies show that inflation in India will moderate in FY24 compared to FY23 and is likely to remain in the range of 5-6 per cent, with risks evenly balanced.

The CNX Nifty ended at 17,107.50, up by 119.10 points or 0.70% after trading in a range of 17,016.00 and 17,127.70. There were 26 stocks advancing against 23 stocks declining, while 1 stock remain unchanged on the index. (Provisional)

The top gainers on Nifty were HDFC Life Insurance up by 3.76%, Reliance Industries up by 3.11%, Bajaj Finance up by 2.87%, Bajaj Auto up by 2.65% and SBI Life up by 2.20%. On the flip side, Hindustan Unilever down by 1.94%, Power Grid down by 1.91%, Britannia down by 1.55%, Tech Mahindra down by 1.20% and TCS down by 1.18% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 101.28 points or 1.35% to 7,505.13, France’s CAC rose 110.8 points or 1.56% to 7,123.94 and Germany’s DAX was up by 224.1 points or 1.48% to 15,157.48.

Asian markets settled higher on Tuesday amidst Wall Street gains overnight following easing fears of banking turmoil. The US Federal Reserve and five other central banks said they are taking action to boost dollar liquidity, as banking crises sweep the United States and Europe. Chinese shares gained, led by defense stocks after the nation's state assets regulator said it would encourage and support centrally administered military related state-owned enterprises (SOEs) to become stronger, better, and bigger. However, investors were cautiously awaiting Fed policy review in Wednesday with hopes of a smaller 25 bps hike in US interest rates. Meanwhile, Japanese market was closed for Vernal Equinox holiday.