Benchmarks end at record closing highs; Nifty settles near 23,000 mark

Thursday turned out to be a remarkable day of trade for Indian equity benchmarks, with frontline gauges recapturing their crucial 75,400 (Sensex) and 22,950 (Nifty) levels. After a flat start, the markets steadily climbed throughout the day, following buying in Auto, Capital Goods and Banking shares. Sentiments remained up-beat as private survey showed business activity in India expanded robustly in May, helped by the dominant services industry. It also showed exports rising at a record pace and the sharpest job addition rate in nearly 18 years. HSBC's flash India Composite purchasing managers' Index, compiled by S&P Global, rose slightly to 61.7 this month from April's final reading of 61.5, marking the 34th month above the 50-level separating growth from contraction.

Markets extended rally in second half of trading session and settled at record closing highs, taking support from a private report that India is seen as an emerging economic superpower of the world. India’s central bank in its monthly economic review says “there is a growing optimism that India is on the cusp of a long-awaited economic take-off.” India is positioned to remain the fastest-growing major economy, demonstrating resilience amid geopolitical challenges and supply chain pressures. Traders took a note of report that the Reserve Bank of India's board approved transfer of Rs 2.11 trillion ($25.35 billion) as surplus to the federal government for the fiscal year ended March. As per the interim budget estimates for fiscal year 2024/25, the Narendra Modi-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks and other financial institutions. 

On the global front, European markets were trading mostly higher as a survey showed business activity in the euro zone accelerated in May. The HCOB Flash Eurozone purchasing managers' index (PMI) published by S&P Global improved to 52.3 from 51.7 in April. That was the highest reading in 12 months. Asian markets ended mixed on Thursday as rate worries lingered and China announced immediate military drills around Taiwan, marking a concerning escalation in the tensions between Taiwan and China, which has long claimed sovereignty over the island. 

Finally, the BSE Sensex rose 1196.98 points or 1.61% to 75,418.04, and the CNX Nifty was up by 369.85 points or 1.64% points to 22,967.65. 

The BSE Sensex touched high and low of 75,499.91 and 74,158.35 respectively. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.58%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Auto up by 2.28%, Capital Goods up by 2.13%, Bankex up by 1.98%, Telecom up by 1.56% and Industrials up by 1.55%, while Healthcare down by 0.61% and Metal down by 0.40% were the only losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 3.64%, Mahindra & Mahindra up by 3.55%, Axis Bank up by 3.30%, Maruti Suzuki up by 2.82% and Ultratech Cement up by 2.74%. On the flip side, Sun Pharma down by 2.94%, Power Grid Corporation down by 1.86% and NTPC down by 0.43% were the top losers. 

Meanwhile, the business activity in India expanded robustly in the month of May, aided by rise in aggregate exports, the steepest expansion in private sector jobs since September 2006 and a notable improvement in business confidence. Although the manufacturing industry continued to lead growth of both sales and output, it was the service economy that was responsible for the latest acceleration in overall economic expansion.

The headline HSBC Flash India Composite Output Index - a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors - rose from a final reading of 61.5 in April to 61.7 in May, which indicated the third-strongest rate of expansion in close to 14 years.

The survey further noted that the HSBC Flash India Manufacturing PMI - a single-figure snapshot of factory business conditions calculated from measures of new orders, output, employment, supplier delivery times and stocks of purchases - slipped from 58.8 in April to 58.4 in May, showing the weakest improvement in the health of the sector for three months but one that remained strong by historical standards.

The survey highlighted further signs of strength in new export orders across both the manufacturing and service sectors. At the composite level, international sales expanded at the fastest rate since the inception of the series in September 2014.  On the price front, a faster increase in input costs pushed prices charged for Indian goods and services higher.

The CNX Nifty traded in a range of 22,993.60 and 22,577.45. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 8.19%, Adani Ports & SEZ up by 4.80%, Mahindra & Mahindra up by 3.53%, Eicher Motors up by 3.40% and Axis Bank up by 3.37%. On the flip side, Sun Pharma down by 2.71%, Power Grid Corporation down by 2.07%, Hindalco down by 1.25%, Coal India down by 0.94% and NTPC down by 0.44% were the top losers.

European markets were trading mostly higher; France’s CAC rose 15.37 points or 0.19% to 8,107.48 and Germany’s DAX gained 53.21 points or 0.28% to 18,733.41, while UK’s FTSE 100 decreased 0.14 points or 0% to 8,370.19.

Asian markets ended mixed on Thursday amid Japanese shares led gains as strong financial results from AI chip giant Nvidia boosted technology shares, even as the minutes of recent US Fed meeting showed officials were disappointed in recent inflation data and discussed potential further rate hikes if inflation surged. However, South Korean shares closed marginally lower as the Bank of Korea held its benchmark policy rate unchanged for an 11th straight time amid sticky inflation. Chinese shares declined after China announced immediate military drills around Taiwan days after new president takes office.