Post Session: Quick Review

In volatile trading session, Indian equity markets managed to trade in green till the end of the session and settled the Wednesday’s session with decent gains. The volatility in the day occurred ahead of outcome of general election results. Besides, traders awaited the release of the minutes of the US Fed's latest monetary policy meeting later in the day for clues about the outlook for interest rates. The broader indices, the BSE Mid cap index and Small cap index ended mixed.

Markets made positive start and traded with limited gains tracking overnight gains on Wall Street as well as broadly positive cues from Asian counterparts. Traders took support as an article on the state of the economy published in the Reserve Bank of India’s (RBI's) May Bulletin noted that India is likely to grow by 7.5 per cent in the first quarter of the current financial year (Q1FY25), with rising aggregate demand and non-food spending in the rural economy. Investors overlooked report that domestic rating agency ICRA projected India's GDP growth to moderate to a four quarter low of 6.7 per cent in March quarter of 2023-24 fiscal. For the full 2023-24 fiscal, ICRA estimates GDP growth to come in at 7.8 per cent. ICRA Chief Economist, Head-Research & Outreach Aditi Nayar said the lower volume growth coupled with diminishing gains from commodity prices dampening the profitability of some of the industrial sectors is expected to dampen India's GVA growth in Q4 FY2024. Markets maintained their gains in afternoon session. Sentiments were positive, amid a private report stating that private sector investment is likely to pick up in the second half of the current financial year in sectors like hotel and tourism, after years of government-led robust capex to promote infrastructure building. The government has been pushing capital expenditure to promote economic growth. The push in expenditure has helped the country sustain the growth momentum in the aftermath of the Covid pandemic. In late afternoon session, indices added points, as traders preferred to buy safe stocks. 

On the global front, European markets were trading lower as regional markets continue to see-saw over the inflation outlook and the trajectory of interest rates. Asian markets ended mixed as investors waited for cues from AI chip leader Nvidia's earnings and the release of minutes of the Federal Reserve's recent meeting. Back home, the Directorate General of Civil Aviation (DGCA) in its latest data has showed that India’s domestic air passenger traffic increased by 2.4% year-on-year to 132 lakh passengers in April 2024, as against 128.88 lakh passengers in April 2023.

The BSE Sensex ended at 74,221.06, up by 267.75 points or 0.36% after trading in a range of 73,860.33 and 74,307.79. There were 22 stocks advancing against 8 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index declined 0.05%, while Small cap index was up by 0.18%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.41%, FMCG up by 1.26%, IT up by 0.63%, TECK up by 0.61% and Utilities was up by 0.59%, while Bankex down by 0.52%, Metal down by 0.39%, Consumer Durables down by 0.18%, Oil & Gas down by 0.16% and Basic Materials was down by 0.15% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 2.33%, Reliance Industries up by 1.66%, Infosys up by 1.29%, Asian Paints up by 1.22% and ITC up by 1.10%. On the flip side, SBI down by 1.39%, JSW Steel down by 0.93%, Axis Bank down by 0.76%, ICICI Bank down by 0.66% and Tata Steel down by 0.57% were the top losers. (Provisional)

Meanwhile, with rising aggregate demand and non-food spending in the rural economy, an article on the state of the economy published in the Reserve Bank of India’s (RBI's) May Bulletin has noted that India is likely to grow by 7.5 per cent in the first quarter of the current financial year (Q1FY25). It said the Indian economy has demonstrated marked resilience in the face of geopolitical headwinds impacting the supply chain. It said ‘According to the economic activity index (EAI), activity rebounded in April, and early estimates suggest that Gross Domestic Product (GDP) growth for Q1:2024-25 is likely to remain close to 7.5 per cent’. The economic activity index (EAI) was constructed by extracting the common trend underlying twenty-seven high-frequency indicators of economic activity, using a Dynamic Factor Model. EAI was scaled to 100 in February 2020 and 0 in April 2020, the worst affected month due to mobility restrictions. 

The article noted that high-frequency indicators point towards sustained momentum in domestic demand conditions in April 2024. Toll collections increased by 8.6 per cent (y-o-y) in April 2024. Automobile sales increased by 25.4 per cent (y-o-y) in April 2024, led by strong growth in the two-wheelers and three-wheelers segment, while passenger vehicles recorded the highest-ever monthly sales. It said ‘There is a growing optimism that India is on the cusp of a long-awaited economic take-off. Recent indicators are pointing to a quickening of the momentum of aggregate demand’. Non-food spending is being pushed up by the green shoots of rural spending recovery. A modest easing of headline inflation in the reading for April 2024 confirms the expectation that an uneven and lagged pace of alignment with the target is underway.

It also noted that for the first time in at least two years, rural demand for fast-moving consumer goods (FMCG) has outpaced urban markets in the quarter just gone by. FMCG volume growth of 6.5 per cent was driven by rural growth of 7.6 per cent relative to urban growth of 5.7 per cent on the back of robust demand for home and personal care products. Turning to private investment, for listed private manufacturing companies, earnings remained the major source of funds during the second half of 2023-24. Results that have been declared by listed corporates so far indicate that they closed the financial year 2023-24 with the highest growth in quarterly revenues registered in January-March 2024. 

It highlighted that the prices of vegetables, cereals, pulses, meat and fish in the food category may keep the headline elevated and closer to 5 per cent in the near term, in line with projections set out in the April Monetary Policy Committee (MPC) resolution in spite of deflation in fuel prices and further softening of core inflation to a new historic low. The article is prepared by a team led by Reserve Bank Deputy Governor Michael Debabrata Patra. Meanwhile, the government will be releasing the quarterly GDP estimates for January-March, 2024 (Q4 2023-24), and provisional estimates of National Income for the year 2023-24 on May 31. 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.

The CNX Nifty ended at 22,597.80, up by 68.75 points or 0.31% after trading in a range of 22,483.15 and 22,629.50. There were 30 stocks advancing against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were Cipla up by 2.77%, Hindustan Unilever up by 2.43%, Tata Consumer up by 2.41%, Coal India up by 2.25% and Britannia up by 1.72%. On the flip side, Shriram Finance down by 1.54%, SBI down by 1.43%, Apollo Hospital down by 1.35%, Hindalco down by 1.30% and Hero MotoCorp down by 1.15% were the top losers. (Provisional)

European markets were trading lower; UK’s FTSE 100 decreased 28.2 points or 0.34% to 8,388.25, France’s CAC fell 47.62 points or 0.59% to 8,093.84 and Germany’s DAX was up by 69.5 points or 0.37% to 18,657.26.

Asian markets settled mixed on Wednesday ahead of AI chip leader Nvidia's earnings report and the release of minutes of the US Federal Reserve's recent meeting. Meanwhile geopolitical uncertainties in middle east also kept investors under pressure. Japanese shares declined after data showed bigger-than-expected trade deficit in April, as exports grew less than expected due to weak demand in countries like China. Seoul shares end almost flat as South Korea's producer prices rose for the fifth consecutive month in April, partially driven by the soaring prices of services and industrial goods, central bank data showed earlier in the day.