Benchmarks end higher ahead of RBI’s policy decision

Indian equity benchmarks ended higher by over half percent on Wednesday, aided by Telecom, Utilities and Metal stocks ahead of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting outcome on June 8.  Key indices made an optimistic start and stayed in green for whole day as provisional data from the National Stock Exchange shows foreign institutional investors (FIIs) bought shares worth Rs 385.71 crore on June 6. Traders took support with Credit rating agency ICRA in its latest report stating that India Inc. have witnessed sequential expansion in margins in Q4 FY2023, with a YoY increase of 11.4%, while the sequential revenue growth was relatively moderate at 5.2%. 

Markets extended gains in late afternoon deals, as the sentiments were further supported with the World Bank stating that India would remain the fastest-growing economy in terms of both aggregate and per capita gross domestic product (GDP) among the largest emerging market and developing economies in FY24.  Some solace also came amid a private report stating that the Reserve Bank of India is expected to pause for a second straight month as inflation eases and market watchers are looking for cues of a shift in policy stance to support growth in Asia’s third largest economy. Adding to optimism, Union Minister for Law and Justice Arjun Ram Meghwal has said that the government has undertaken several steps to strengthen the judiciary and alternate dispute resolution mechanism which will act as an incentive to foreign investors and help take India-UK relations to new heights.

On the global front, European markets were trading mostly in red as Chinese trade data disappointed and investors awaited cues from key central bank meetings due next week. Official data showed Chinese exports fell 7.5 percent from a year earlier in May, marking the first drop in three months. Imports fell 4.5 percent, indicating slowing overseas demand for Chinese goods. Asian markets settled mostly higher on Wednesday amid hopes of interest rate pause by the Federal Reserve. 

Finally, the BSE Sensex rose 350.08 points or 0.56% to 63,142.96 and the CNX Nifty was up by 127.40 points or 0.68% to 18,726.40.   

The BSE Sensex touched high and low of 62,917.39 and 63,196.43, respectively. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.09%, while Small cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Telecom up by 2.99%, Utilities up by 1.94%, Metal up by 1.70%, Capital Goods up by 1.66% and Realty up by 1.52%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Nestle up by 2.97%, Tata Steel up by 2.29%, Tata Motors up by 2.21%, Bharti Airtel up by 1.70% and Larsen & Toubro up by 1.66%. On the flip side, Kotak Mahindra Bank down by 1.15%, Bajaj Finance down by 0.51%, Mahindra & Mahindra down by 0.35%, ICICI Bank down by 0.24% and Maruti Suzuki down by 0.21% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has said that India Inc. have witnessed sequential expansion in margins in Q4 FY2023, with a YoY increase of 11.4%, while the sequential revenue growth was relatively moderate at 5.2%. On a YoY basis, almost all sectors reported revenue expansion in Q4 FY2023, with aviation, hotels, ports and gems & jewellery leading the trend. This was supported by the easing of commodity prices which continued to positively impact consumer sentiments. 

According to the report, in terms of sequential performance, sectors such as consumer durables, construction, port and gems & jewellery reported significant growth in revenues due to successive price hikes and strong demand witnessed in some sectors. On the other hand, it said few sectors like fertilizers and retail witnessed sequential decline in revenues during the quarter due to decline in realisations, following reduction in input costs.

The interest coverage ratio of ICRA’s sample, adjusted for sectors with relatively low debt levels (IT, FMCG and pharma), witnessed a YoY moderation in Q4 FY2023 to 4.7 times from 5.7 times, mainly on account of lower earnings in select sectors compared to historic trends and higher interest rates on the back of rate hikes by the Monetary Policy Committee (MPC). Other factors contributing to the same included, India Inc’s increased reliance on external borrowings due to higher capital expenditure undertaken for future expansion and higher inventory stocking to mitigate supply chain uncertainties. However, India Inc. showed some improvement in its interest coverage ratio on a sequential basis in Q4 FY2023, aided by the sequential improvement in earnings during the quarter.

The CNX Nifty traded in a range of 18,738.95 and 18,636.00. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Britannia Industries up by 4.17%, Tata Consumer Products up by 3.89%, BPCL up by 3.30%, Nestle up by 2.99% and HDFC Life Insurance up by 2.67%. On the flip side, Kotak Mahindra Bank down by 1.00%, Cipla down by 0.98%, Maruti Suzuki down by 0.65%, Bajaj Finance down by 0.41% and Adani Ports and SEZ down by 0.26% were the top losers. 

European markets were trading mostly in red; France’s CAC fell 10.33 points or 0.14% to 7,198.67 and Germany’s DAX lost 20.3 points or 0.13% to 15,972.14, while UK’s FTSE 100 increased 9.41 points or 0.12% to 7,637.51.

Asian markets settled mostly higher on Wednesday with the prospect of a pause in the Federal Reserve's interest rate hike cycle next week. Meanwhile, investors awaited cues from US inflation data for directional cues. Wall Street’s overnight gains also helped the Asian markets to trade higher. Chinese shares traded almost flat with positive momentum due to expected stimulus measures to boost growth. But, some gains were capped by disappointed Chinese trade data. However, Japanese shares declined on profit booking.