Post Session: Quick Review

Indian equity markets extend their previous session’s losses and ended lower with notable cut on Thursday amid cautiousness ahead of monthly F&O Expiry. Traders maintained risk adverse approach ahead of gross domestic product (GDP) data for Q4FY24 is scheduled to be released on May 31. Investors were anxious ahead of next week’s general election results. A level of pressure was seen in metal and IT sectors’ stock. The broader indices, the BSE Mid cap index and Small cap index ended with cut of over a percent. 

Markets made negative start and extended their losses tracking overnight sell-off on Wall Street coupled with weakness in Asian counterparts, as bond yields continued to spike amid uncertainty about the US Fed's interest-rate moves ahead of key inflation data later in the week. Besides, foreign fund outflows dented sentiments in the domestic markets. Foreign institutional investors (FIIs) offloaded shares worth Rs 5,841.84 crore on May 29. As per a private report, FIIs selling now topped the Rs 40,000 crore mark in May, the highest in any month since January 2023. Traders overlooked Finance Minister Nirmala Sitharaman’s statement that S&P Global Ratings' revision of its outlook on India from 'stable' to 'positive' is a welcome development. She said this reflects India's solid growth performance and a promising economic outlook for the coming years. The minister noted that it has been possible due to the series of macroeconomic reforms undertaken since 2014, along with substantial outlay for capex, fiscal discipline, and decisive and visionary leadership. In afternoon session, indices remained in red zone despite credit rating agency, India Ratings and Research’s (Ind-Ra) latest report has said that the expected mammoth dividend transfer by the Reserve Bank of India (RBI) to the central government and subsequent spending by the latter, is likely to reduce the ongoing pressure on the banking system deposit accretion and overall rates in the system, a few days after the RBI approving the transfer of Rs 2,10,874 crore as surplus to the government for the accounting year 2023-24. In late afternoon session, markets touched day’s low levels but managed to trim some losses. Sentiments remained downbeat as foreign direct investment (FDI) equity inflows in India declined 3.49 per cent to $44.42 billion in 2023-24 due to lower infusion in sectors such as services, computer hardware and software, telecom, auto and pharma.

On the global front, European markets were trading mostly in green supported by healthcare stocks, as investors await more economic data from the euro zone that will provide insights in the European Central Bank's interest rate path. Asian markets ended mostly lower as the dollar and U.S. bond yields continued to surge on bets that global interest rates will stay higher for longer. Traders also looked ahead to the release of key inflation readings from the euro zone and the U.S. for additional clues on the future path of monetary policy. Back home, Joint Secretary, Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade (DPIIT), Surendra Ahirwar, has asserted that the cold chain sector in India, a vital component of the logistics ecosystem, is set to witness significant growth and innovation in the coming years.

The BSE Sensex ended at 73,885.60, down by 617.30 points or 0.83% after trading in a range of 73,668.73 and 74,493.55. There were 7 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 1.21%, while Small cap index was down by 1.33%. (Provisional)

The sole gaining sectoral index on the BSE Bankex was up by 0.53%, while Metal down by 2.67%, Basic Materials down by 2.05%, Consumer Durables down by 2.05%, IT down by 1.97% and Healthcare was down by 1.64% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 1.28%, Axis Bank up by 1.00%, HDFC Bank up by 0.74%, SBI up by 0.61% and Bharti Airtel up by 0.40%. On the flip side, Tata Steel down by 5.22%, Tech Mahindra down by 3.15%, Power Grid down by 2.83%, Bajaj Finserv down by 2.80% and Wipro down by 2.72% were the top losers. (Provisional)

Meanwhile, in an optimistic move, S&P Global Ratings, after a gap of about 10 years, has upped India’s outlook to positive from stable on robust growth prospects for next three years and rising quality of Government spend. It also raised hopes for an upgrade in two years provided the government continues reforms and policies to keep fiscal deficit under check. Retaining India’s sovereign rating at the lowest investment grade of ‘BBB-’, S&P said it expects broad continuity in economic reforms and fiscal policies, irrespective of the election outcome. Results of the ongoing general elections will be announced on June 4. Last in 2014, S&P had upped India’s outlook to stable from negative.

It said ‘Our positive outlook on India is predicated on its robust economic growth, pronounced improvement in the quality of government spending, and political commitment to fiscal consolidation. We believe these factors are coalescing to benefit credit metrics’. Irrespective of the June 2024 general election results, S&P expects the incoming government to carry on economic reforms to support the ‘growth vigor’, continued infrastructure investment drive, and commitment to fiscal consolidation.

The rating agency also said ‘We expect sound economic fundamentals to underpin the growth momentum over the next two to three years. Regardless of the election outcome, we expect broad continuity in economic reforms and fiscal policies’. It said the composition of government spending has been transformed, with an increasing share going to infrastructure. This will ease bottlenecks to put the country on a higher growth trajectory. It said India’s robust economic expansion is having a constructive impact on its credit metrics.

The positive outlook reflects S&P’s view that continued policy stability, deepening economic reforms, and high infrastructure investment will sustain long-term growth prospects. S&P noted that the Indian economy has staged a ‘remarkable comeback’ from the COVID-19 pandemic. It forecasts India’s real GDP growth at 6.8 per cent this year, which compares favourably with emerging market peers amid a broad global slowdown. The agency estimates real GDP growth in the past three years to have averaged 8.1 per cent annually, the highest in the Asia-Pacific region.

The CNX Nifty ended at 22,488.65, down by 216.05 points or 0.95% after trading in a range of 22,417.00 and 22,705.75. There were 6 stocks advancing against 44 stocks declining on the index. (Provisional)

The top gainers on Nifty were ICICI Bank up by 1.06%, Axis Bank up by 0.71%, HDFC Bank up by 0.43%, SBI up by 0.39% and Kotak Mahindra Bank up by 0.13%. On the flip side, Tata Steel down by 5.80%, Tech Mahindra down by 3.54%, Power Grid down by 3.46%, Titan Company down by 3.21% and Wipro down by 3.07% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 14.79 points or 0.18% to 8,197.86, France’s CAC rose 12.34 points or 0.16% to 7,947.37. On the flip side, Germany’s DAX was down by 6.64 points or 0.04% to 18,466.65.

Asian markets closed mostly down on Thursday tracking Wall Street’s overnight falls and as the US dollar and bond yields continued to surge with caution ahead to the release of key inflation readings from the euro zone and the United States. Market sentiments weakened further as Israel’s national security adviser, Tzachi Hanegbi said the continuing war on Gaza is likely to last through the end of the year. Chinese shares declined as the International Monetary Fund upgraded the country's 2024, 2025 GDP growth forecasts, even though it expected slower growth in the years ahead. Japanese shares settled down, while Yen gained after BoJ board member Seiji Adachi emphasized reducing bond buying in several stages so that long-term yields better serve as a market signal. Hong Kong shares fell ahead of the release of China's official Purchasing Managers Index data for May, while Seoul shares dropped ahead of industrial production figures due on Friday.