Post Session: Quick Review

Indian equity markets witnessed volatility in Tuesday’s trade and ended the session flat. In first half of the session, markets traded in red, while in second half of session markets managed to trade in green. Investors were cautious ahead of the release of the minutes of the latest Fed meeting. Besides, foreign fund outflows also dented sentiments in the markets. The broader indices, the BSE Mid cap index ended in green, while Small cap index ended in red. Traders were seen piling up positions in Metal sectors’ stocks while selling was witnessed in IT and Banking sectors’ stocks.

Markets made negative start and continued to trade lower tracking mixed cues from Wall Street overnight as well as weakness in Asian counterparts, amid lingering uncertainty about the outlook for interest rates, with some US Fed officials warning the central bank may still need to raise rates if inflation persists. Meanwhile, foreign institutional investors continue to sell Indian equities, with net sales of Rs 92.95 crore worth of shares on May 18. Some concern also came with a private report that demand-supply mismatches could keep prices of pulses elevated until the new crop starts arriving in the market in October, putting further pressure on already high food inflation. However, in late morning session, indices hit green territory to trade higher as traders took some support after India Ratings and Research expects the country's GDP growth rate for the March quarter at 6.2 per cent and around 6.9-7 per cent for the 2023-24 fiscal. The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter and 8.4 per cent in the December quarter of 2023-24. Further, markets managed to trade above neutral line in late afternoon session. Sentiments were positive as EPFO’s provisional payroll data showed that EPFO has added 14.41 lakh net members in the month of March, 2024. The data indicates that around 7.47 lakh new members have been enrolled during March 2024. But, in last leg of trade, markets trimmed their gains and ended flat on Tuesday.

On the global front, European markets were trading lower following losses in Asian equities, as calls from U.S. Federal Reserve officials for policy caution tempered investor enthusiasm about potential interest rate cuts this year. All Asian markets ended lower after South Korea's consumer sentiment decreased in May to the lowest level in six months. The survey results from the Bank of Korea showed that the consumer confidence index dropped to 98.4 in May from April's stable score of 100.7. Back home, Secretary in Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh has said that India has recently relaxed foreign direct investment (FDI) norms in the space sector and there is a possibility of further FDI liberalisation in certain other areas when the new government will come to power.

The BSE Sensex ended at 73,953.31, down by 52.63 points or 0.07% after trading in a range of 73,762.37 and 74,189.19. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index gained 0.34%, while Small cap index was down by 0.18%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 4.08%, PSU up by 2.10%, Utilities up by 1.99%, Power up by 1.96% and Basic Materials was up by 1.79%, while FMCG down by 0.51%, IT down by 0.46%, TECK down by 0.30%, Auto down by 0.24% and Bankex was down by 0.22% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.81%, JSW Steel up by 3.68%, Power Grid up by 2.71%, Tech Mahindra up by 1.65% and NTPC up by 1.50%. On the flip side, Nestle down by 1.37%, Maruti Suzuki down by 1.03%, Indusind Bank down by 0.85%, ICICI Bank down by 0.84% and Hindustan Unilever down by 0.74% were the top losers. (Provisional)

Meanwhile, ahead of the government’s provisional GDP estimates for the 2023-24 fiscal and the fourth quarter (January-March 2024) scheduled to be released by the government on May 31, India Ratings and Research (Ind-RA) has forecasted India’s Gross Domestic Product (GDP) growth rate for the March quarter at 6.2 per cent and around 6.9-7 per cent for the 2023-24 fiscal. The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter and 8.4 per cent in the December quarter of 2023-24.

Ind-RA’s principal economist Sunil Kumar Sinha has said the growth rate in the first two quarters benefited from a low base, though the 8.4 per cent growth rate in the third (October-December 2023) quarter was surprising. He noted ‘When we analyse the data then what is visible is the wedge between the GVA and GDP. A large impetus to Q3 GDP has come from higher tax collection, but this phenomenon is unlikely to be repeated in the fourth quarter. The wedge between the GDP and GVA is unlikely to be repeated in the fourth quarter’. While the gross value added (GVA) was 6.5 per cent in the third quarter, the GDP growth rate stood at 8.4 per cent. This wedge is on account of higher taxes collected during the quarter. In the first quarter, the GVA and GDP growth was 8.2 per cent, while in the second quarter, the GVA was 7.7 per cent and GDP 8.1 per cent.

GDP is the total value of goods and services produced in a given period. GVA is GDP minus net taxes (gross tax collection minus subsidy). As regards the economic growth in the current fiscal (FY25), Sinha said the GDP is expected to expand at 7.1 per cent. He added ‘Even if we set aside the tax component, the momentum witnessed in the first and second quarters has continued in the subsequent quarters, and the likelihood is that momentum will continue in FY25’. He said ‘The prediction of above normal monsoon (by the Indian Meteorological Department), if it turns out to be true, will see some revival in rural demand, which will support consumption demand, and make it broad-based, instead of skewed currently’.

The CNX Nifty ended at 22,529.05, up by 27.05 points or 0.12% after trading in a range of 22,404.55 and 22,591.10. There were 26 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 5.04%, Coal India up by 4.46%, Tata Steel up by 3.84%, JSW Steel up by 3.67% and Adani Ports up by 3.38%. On the flip side, Nestle down by 1.74%, Hero MotoCorp down by 1.10%, Maruti Suzuki down by 1.01%, ICICI Bank down by 0.87% and TCS down by 0.81% were the top losers. (Provisional)

European markets were trading lower; UK’s FTSE 100 decreased 37.4 points or 0.45% to 8,386.80, France’s CAC fell 67.54 points or 0.83% to 8,128.43 and Germany’s DAX was down by 88.1 points or 0.47% to 18,680.86. 

Asian markets settled down on Tuesday as US Treasury yields climbed on hawkish comments from the US Federal Reserve officials, while investors were cautiously awaiting the release of the minutes from the US Federal Reserve's latest monetary policy meeting. The minutes of the Reserve Bank of Australia's meeting earlier this month considered increasing interest rates during the meeting. Chinese shares declined, led by cyclical shares as China’s stimulus measures failed to lift sentiment in the market. Moreover, Japanese shares fell on the back of a mixed close from Wall Street overnight.