Sensex, Nifty end flat amid volatility

Indian equity benchmarks ended flat after a choppy trading session on Tuesday amid weak trends from Asian and European markets. Markets opened on a negative note amid foreign fund outflows. Foreign institutional investors continue to sell Indian equities, with net sales of Rs 92.95 crore worth of shares on May 18. Traders remained concerned 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, markets erased initial losses and managed to trade in green in early afternoon deals, as traders took support with data shared by the Reserve Bank of India (RBI) showing that India's foreign exchange reserves rose for the second straight week, by $2.561 billion to $644.151 billion in the week that ended on May 10. 

Sentiments remained positive as 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. Adding some optimism, the 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. A noticeable aspect of the data is the dominance of the 18-25 age group, constituting a significant 56.83% of the total new members added in March 2024 indicating the majority of individuals joining the organized workforce are youth, primarily first-time job seekers. However, markets failed to hold recovery and ended flat as cautious comments from US Fed officials weighed on investor sentiment. As the general election approaches its final stages, volatility is anticipated to remain elevated. 

On the global front, European markets were trading lower following cautious comments from Federal Reserve officials on inflation and the interest rate outlook. However, the European Central Bank reported that the euro area current account surplus increased in March on improving primary income. Asian markets settled down on Tuesday as a stimulus-driven China rally paused and minutes of the May 2024 Reserve Bank of Australia meeting showed the central bank considered increasing interest rates during the meeting.

Finally, the BSE Sensex fell 52.63 points or 0.07% to 73,953.31, and the CNX Nifty was up by 27.05 points or 0.12% points to 22,529.05. 

The BSE Sensex touched high and low of 74,189.19 and 73,762.37 respectively. There were 12 stocks advancing against 18 stocks declining on the index.

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

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 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 down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.81%, JSW Steel up by 3.68%, Power Grid Corporation 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.

Meanwhile, 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. He said that in the last few years, India has liberalised FDI policy in many segments. India has one of the most liberal FDI policies in the world and in fact more liberal than many Southeast Asian countries that the country is often compared with.

The Secretary further said the government has eased FDI norms in the space sector by allowing 100 per cent overseas investment in making components for satellites, as part of efforts to attract overseas players and private companies into the segment. According to the government data, FDI in India declined 13 per cent to $32.03 billion in April-December 2023, dragged down by lower infusion in computer hardware and software, telecom, auto, and pharma sectors.

Talking about the success of the production linked incentive schemes (PLI), he said so far Rs 1.13 lakh crore of investments have come in and the beneficiary companies have recorded over Rs 9 lakh crore of sales, exports of Rs 3.45 lakh crore and created jobs for over 8 lakh people. The scheme was announced in 2021 for 14 sectors, including telecommunication, white goods, textiles, manufacturing of medical devices, automobiles, speciality steel, food products, high efficiency solar PV modules, advanced chemistry cell battery, drones, and pharma with an outlay of Rs 1.97 lakh crore.

The CNX Nifty traded in a range of 22,591.10 and 22,404.55. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.79%, Coal India up by 4.49%, Tata Steel up by 3.63%, JSW Steel up by 3.53% and Adani Ports & SEZ up by 3.16%. On the flip side, Nestle down by 1.61%, Hero MotoCorp down by 1.27%, Maruti Suzuki down by 1.10%, Indusind Bank down by 1.02% and ICICI Bank down by 1.02% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 31.14 points or 0.37% to 8,393.06, France’s CAC fell 80.81 points or 1% to 8,115.16 and Germany’s DAX lost 78.56 points or 0.42% to 18,690.40.

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.