Markets trim opening gains; trade slightly higher in early deals

Indian equity benchmarks made optimistic start on Thursday following record rally on Wall Street overnight coupled with broadly firm cues from Asian counterparts as traders reacted positively to a closely watched report on US consumer price inflation that showed a smaller-than-expected increase in the month of April to reinforce expectations the US Fed will begin cutting interest rates in September. Meanwhile, Japan's gross domestic product contracted a seasonally adjusted 0.5 percent on quarter in the first quarter of 2024. Closer home, Sensex and Nifty soon trimmed some of their opening gains and are trading slightly higher in early deals led by buying at Telecom, TECK and IT counters. Broader indices -- BSE mid & small cap -- are outperforming larger peers with gains of over half a percent each.

Some support came in with report that India's monsoon is forecast to hit the Kerala coast in the southwest on May 31, offering relief to farmers after below average rainfall last year. The monsoon, the lifeblood of the country's $3.5 trillion economy, delivers nearly 70% of the rain that India needs to water farms and recharge reservoirs and aquifers. Nearly half of India's farmland, without any irrigation cover, depends on the annual June-September rains to grow a number of crops. However, gains got timed amid continued FIIs outflows. FIIs sold shares worth Rs 2,832.83 crore on May 15. So far in May, the FIIs have been aggressive sellers and reportedly build high short positions in the derivatives market. 

On the sectoral front, Oil & gas industry stocks are in focus after the government in its bi-weekly review cut the windfall tax on petroleum crude from Rs 8,400 to Rs 5,700 per metric tonne with effect from May 16. Also, the Organisation of Petroleum Exporting Countries said India’s oil demand is expected to grow to 5.80 million barrels per day in 2025, up 4.1% from the 5.57 million barrels per day projected in 2024. In stock specific development, Titagarh Rail Systems soared as it reported a 64 percent year-on-year increase in net profit in Q4FY24.

The BSE Sensex is currently trading at 73136.56, up by 149.53 points or 0.20% after trading in a range of 73136.42 and 73396.75. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.55%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Telecom up by 1.46%, TECK up by 1.45%, IT up by 1.18%, Realty up by 1.08% and Metal up by 0.77%, while FMCG down by 0.41%, Utilities down by 0.19%, Healthcare down by 0.18% and Power down by 0.08% were the few losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.89%, Infosys up by 1.80%, Tech Mahindra up by 1.53%, HCL Tech. up by 1.27% and Wipro up by 0.87%. On the flip side, Maruti Suzuki down by 1.76%, Tata Motors down by 0.77%, Power Grid down by 0.73%, Nestle down by 0.66% and Sun Pharma down by 0.65% were the top losers.

Meanwhile, in a major relief to the country’s agriculture economy, the India Meteorological Department (IMD) has stated that the southwest monsoon is likely to hit Kerala on May 31. Southwest monsoon normally sets in over Kerala on June 1 with a standard deviation of about seven days. The advance of the southwest monsoon over the Indian mainland is marked by monsoon onset over Kerala and is an important indicator characterising the transition from a hot and dry season to a rainy season. 

As the monsoon progresses northward, relief from scorching summer temperatures is experienced over the areas. These rains are crucial to the Indian agriculture economy (especially for kharif crops). India has three cropping seasons -- summer, kharif and rabi. Traditionally, the Kharif area/output is heavily reliant on the normal progression of monsoon rainfall. 

The IMD further said that the southwest monsoon is very likely to advance into South Andaman Sea, some parts of the Southeast Bay of Bengal and Nicobar Islands around May 19. Recently, the IMD had forecast above-normal rain in the monsoon season in India with favourable La Nina conditions expected to set in by August-September.

The CNX Nifty is currently trading at 22239.35, up by 38.80 points or 0.17% after trading in a range of 22236.35 and 22330.00. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 3.04%, ONGC up by 1.79%, Infosys up by 1.77%, Tech Mahindra up by 1.37% and Hero MotoCorp up by 1.36%. On the flip side, Maruti Suzuki down by 1.78%, Shriram Finance down by 1.59%, Cipla down by 0.96%, Tata Motors down by 0.91% and Divi's Lab down by 0.91% were the top losers.

All Asian markets are trading higher; Nikkei 225 surged 325.71 points or 0.84% to 38,711.44, Hang Seng advanced 296.37 points or 1.53% to 19,370.08, Taiwan Weighted added 147.63 points or 0.69% to 21,294.84, Jakarta Composite gained 81.74 points or 1.13% to 7,261.57, Straits Times rose 26.14 points or 0.79% to 3,315.56, KOSPI increased 19.48 points or 0.71% to 2,749.82 and Shanghai Composite was up by 15.07 points or 0.48% to 3,134.97.