Post Session: Quick Review

Ignoring lackluster cues from global markets, Indian benchmarks continued their gaining rally on Wednesday ahead of April F&O expiry. Sustained buying activities in Banking and IT counters largely supported the markets to register day’s highs in last leg of trade.  However, markets traded with limited gains during the session amid cautiousness about upcoming earnings. Besides, investors were worried amid rising recession fears in the United States.

After making slightly negative start, Indian markets struggling for direction, as traders were cautious after finance ministry in its Monthly Economic Review for March said that India’s economy continues to be robust, but downside risks such as rising crude oil prices, adverse weather conditions, and the global banking crisis outweigh the upside potential in gross domestic product (GDP) growth in the current financial year (FY24). Indices found grip in green territory in afternoon deals as traders took some support with Deepak Sood, Secretary General at ASSOCHAM stating that private investment is picking up in sectors like infrastructure, green energy and electronics. He also said quicker execution of the projects in the railways, ports, airports and highways, as was witnessed in 2022-23, would make a difference in creating a positive spiral for the private investment to crowd in. Continuing their trade in green zone, markets managed to end the session near day’s high levels.

On the global front, European markets were trading lower as banking sector worries overshadowed initial euphoria from solid earnings by tech giants Microsoft and Alphabet. Asian markets ended mixed as interest-rate worries persisted, with investors focusing on upcoming U.S. GDP data and PCE inflation for additional clue son the Fed's policy path. Back home, sector wise, fertilizer sector remained in focused after credit rating agency, India Ratings and Research (Ind-Ra) has maintained a neutral outlook for the fertilizer sector for FY24. A neutral outlook is also on the back of moderation in the raw material prices across urea and nutrient-based fertilizers starting 4QFY23, coupled with the likelihood of a continued healthy demand in view of the GoI’s focus to increase farmer income.

The BSE Sensex ended at 60,300.58, up by 169.87 points or 0.28% after trading in a range of 59,954.91 and 60,362.79. There were 21 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index gained 0.27%, while Small cap index was up by 0.34%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.30%, Capital Goods up by 1.00%, Telecom up by 0.88%, Power up by 0.87% and Industrials was up by 0.71%, while Metal down by 0.53%, Oil & Gas down by 0.16%, Energy down by 0.06% and Healthcare was down by 0.04% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 2.49%, Indusind Bank up by 1.49%, Larsen & Toubro up by 1.39%, Nestle up by 1.38% and HCL Tech. up by 1.11%. On the flip side, Bajaj Finserv down by 0.96%, NTPC down by 0.70%, Reliance Industries down by 0.55%, Kotak Mahindra Bank down by 0.40% and Bajaj Finance down by 0.39% were the top losers. (Provisional)

Meanwhile, expressing cautiousness, the Finance Ministry in its March edition of Monthly Economic Review has said that India needs to be vigilant against potential risks of lower agriculture output, elevated prices and geopolitical developments. Although the 6.5 per cent growth projection for India for the current fiscal is in line with the estimates of the World Bank and the Asian Development Bank (ADB), it said there are factors which could affect the favourable combination of growth and inflation outcomes currently estimated. The review said ‘It is important… to be vigilant against potential risks such as El Nino conditions creating drought conditions and lowering agricultural output and elevating prices, geopolitical developments and global financial stability’. The report said FY23 has been strong for India’s economy despite the tailwind of the pandemic and the headwind of the geopolitical conflict intertwining to escalate global economic uncertainty.

It said ‘the strength is seen in the economy, estimated to grow at 7 per cent, higher than the trend rate and the growth of the other major economies. Growing macroeconomic stability as seen in the improved current account deficit, easing inflation pressure, and a banking system strong enough to survive the increase in policy rates, has made the growth rate further sustainable’. On the financial sector, the report said banking supervision is robust with the RBI’s overarching coverage of institutions, regardless of asset size, in its bi-annual assessment of financial stability. Macro stress tests are also performed from time to time on individual banks. Investment in held-to-maturity (HTM) securities is limited to 23 per cent of deposits, reflecting an effective insulation of asset value from adverse market developments.

With regard to the price situation, the report said, the sequential growth of CPI-core in March 2023 is the weakest since June 2022 and can be attributed to the beginning of the pass-through of declining WPI inflation in consumer goods prices. Although CPI for the full year rose from 5.5 per cent in FY22 to 6.7 per cent in FY23, the report said it was much lower in the second half of FY23 at 6.1 per cent compared to 7.2 per cent in the first half. On the external sector, it said, the narrowing of the Current Account Deficit (CAD), accompanied by a rising inflow of foreign portfolio investment (FPI) resulted in an increase in foreign exchange reserves by the end of Q3. With forex reserves further increasing by the end of FY23, prospects of a still narrower CAD in Q4 are bright.

The CNX Nifty ended at 17,813.60, up by 44.35 points or 0.25% after trading in a range of 17,711.20 and 17,827.75. There were 34 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 2.32%, Nestle up by 1.75%, Tata Consumer up by 1.67%, Indusind Bank up by 1.43% and Larsen & Toubro up by 1.25%. On the flip side, Hindalco down by 1.16%, Adani Ports down by 1.01%, Bajaj Auto down by 1.00%, Bajaj Finserv down by 0.82% and NTPC down by 0.73% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 36.62 points or 0.47% to 7,854.51, France’s CAC fell 73.31 points or 0.98% to 7,458.30 and Germany’s DAX was down by 110.02 points or 0.7% to 15,762.11.

Asian markets closed mostly lower on Wednesday tracking Wall Street’s overnight fall after US Consumer confidence worsened more than expected in April, while weak results from First Republic Bank also fuelled concerns about the health of the US banking sector. Japanese shares declined marginally ahead of Friday's interest rate decision from the Bank of Japan, while looming recession fears also dampened sentiments. Investors were awaiting upcoming US GDP data and PCE inflation for additional clues on the Federal Reserve's interest rate outlook. Meanwhile, Chinese shares finished almost flat ahead of Golden Week holiday.