Sensex, Nifty end with marginal gains

Indian equity benchmarks snapped their losing run and ended marginally higher in the volatile session on Friday, on value-buying in Utilities, Realty and Power stocks.  Markets made a gap-up opening and stayed in green for most part of the trade, as traders took support with report stating that the southwest monsoon set in over the Kerala coast and parts of the Northeast earlier than the forecast, marking the start of its four-month journey over India. An early and timely onset of monsoon is also a good sign for 2024 kharif crop production. Some support also came as the Reserve Bank of India (RBI), in its annual report, projected Indian economy to grow at 7 percent in the current financial year with risks evenly balanced. Further, the report said India' GDP has expanded at a robust pace in 2023-24, with real GDP growth accelerating to 7.6 percent from 7 percent in the previous year - the third successive year of 7 percent or above growth.  

However, markets trimmed some of their initial gains in late morning trade as market participants remained cautious ahead of India’s gross domestic product (GDP) data for Q4FY24 and the results of the Lok Sabha polls. Traders remained cautious with a private report stating that India's economy is expected to have grown at a slower pace in the January-March quarter than the previous three months, dampened by a moderation in manufacturing and urban spending, but the street see economic momentum remaining strong in Asia's third-largest economy. Some concern also came as the Reserve Bank's annual report showed that the number of frauds in the banking sector went up to 36,075 in 2023-24 year-on-year, but the amount involved reduced by 46.7 per cent to Rs 13,930 crore. However, markets extended gains in late afternoon deals but failed to hold momentum and settled marginally higher.   

On the global front, European markets were trading mostly in red after data showed Eurozone inflation rose for the first time this year, reaching 2.6 percent year-on-year in May and adding to worries about slowly the European Central Bank will cut interest rates. Asian markets ended mostly down on Friday after official surveys showed a weakening in Chinese factory and non-manufacturing activities in a surprise hit to the growth outlook. The official manufacturing PMI fell from 50.4 to 49.5 in May, slipping into contraction after two months of expansion. The non-manufacturing PMI ticked down slightly from 51.2 to 51.1. 

Finally, the BSE Sensex rose 75.71 points or 0.10% to 73,961.31, and the CNX Nifty was up by 42.05 points or 0.19% points to 22,530.70.   

The BSE Sensex touched high and low of 74,478.89 and 73,765.15 respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.06%, while Small cap index was up by 0.76%.

The top gaining sectoral indices on the BSE were Utilities up by 2.10%, Realty up by 2.02%, Power up by 1.80%, Metal up by 1.28% and Telecom up by 1.18%, while IT down by 0.99%, TECK down by 0.84%, Healthcare down by 0.55%, Auto down by 0.32% and FMCG down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.80%, Bajaj Finance up by 1.32%, HDFC Bank up by 1.07%, Power Grid Corporation up by 0.96% and Indusind Bank up by 0.92%. On the flip side, Nestle down by 2.08%, TCS down by 1.77%, Maruti Suzuki down by 1.51%, Infosys down by 1.37% and Axis Bank down by 0.82% were the top losers.

Meanwhile, Moody's Ratings in its latest report has said that capital requirements will remain high for Indian corporates as they go in for capacity expansion and inorganic growth spending. Moody's estimates that 16 of the 23 rated companies will require $70-100 billion of funding annually in the next two years for growth spending, refinancing requirements and shareholder payments. It said while improving domestic liquidity and companies' internal cash flows can cover a large portion of their capital needs, offshore funding will remain an important funding channel. It noted that capacity expansion, inorganic growth spending, refinancing and working capital needs, along with shareholder payments, will keep capital requirements high for nonfinancial corporates in India. 

According to the report, capital spending by non-financial corporates will remain high as they expand their capacities to cater to the strong consumption growth expected in the country, at a time when their capacity utilization is already high. Expectations of strong consumption growth are driven by India's growing population, rising disposable incomes and favourable demographic trends, including a young population and rising urbanisation. The government's ongoing infrastructure spending also results in a multiplier effect on demand across industrial sectors including steel, cement, automobiles and oil and gas.

It further said even though the government is unlikely to achieve its target of raising the share of manufacturing activity to 25 per cent of gross domestic product (GDP) by FY24-25 from 13 per cent in FY22-23, assuming that the target is achieved by the end of the decade, the manufacturing sector's contribution to nominal GDP will rise to around $1.7 trillion in 2029-30 from $440 billion in 2022-23. This is based on assumption of average annual real GDP growth of 6.5 per cent over the same period. 

The CNX Nifty traded in a range of 22,653.75 and 22,465.10. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 6.94%, Adani Ports & SEZ up by 4.01%, Shriram Finance up by 3.57%, Coal India up by 2.04% and Tata Steel up by 2.01%. On the flip side, Divi's Lab down by 2.38%, Nestle down by 2.08%, LTIMindtree down by 1.64%, Dr. Reddy's Laboratories down by 1.56% and Maruti Suzuki down by 1.37% were the top losers.

European markets were trading mostly in red; France’s CAC fell 0.15 points or 0% to 7,978.36 and Germany’s DAX lost 15.74 points or 0.09% to 18,481.05, while UK’s FTSE 100 increased 34.07 points or 0.41% to 8,265.12.

Asian markets ended mostly down on Friday after Chinese shares declined following the release of sluggish PMI data from China. Chinese official manufacturing PMI fell from 50.4 to 49.5 in May, slipping into contraction after two months of expansion, while the non-manufacturing PMI ticked down slightly from 51.2 to 51.1. Market sentiments weakened further by Wall Street’s fall overnight, even as the latest US GDP data showed the world's largest economy grew at a slower pace of 1.3% against the projected 1.6% in the January-March quarter revived hopes for Fed rate cuts this year. Moreover, hawkish comments by Fed officials also put pressure on sentiments. However, Japanese shares gained as the yen declined after data showed Japan's industrial output unexpectedly fell in April and the nation's jobless rate was unchanged. The Nikkei financial news outlet said Japan is preparing to put nearly 100 trillion yen more public money into active investing. Seoul shares ended flat after the release of mixed economic data. Data showed that South Korea's industrial output rebounded in April following a sharp fall a month earlier, but retail sales and investment declined for the second consecutive month.