Domestic markets trade higher with notable gains in early deals

Indian equity benchmarks start the Thursday’s session on optimistic note, following the firm cues from wall Street overnight as well as broadly positive cued from Asian counterparts amid optimism about the outlook for U.S. interest rates after a report showed US private sector job growth slowed by more than expected in the month of May. Treasury yields also extended the recent downward trend. Domestic markets are trading higher with notable gains on over half a percent each in early deals a day after they posted their best one-day jump in over three years as Prime Minister Narendra Modi was set to return for a third term. Some optimism come as India Ratings and Research (Ind-Ra) projects that India's current account balance (CAB) will achieve a surplus of approximately $6 billion (0.6 per cent of GDP) in the fourth quarter of the fiscal year 2024 (Q4FY24). 

On the sectoral front, metal sector stocks are in focus as Icra revised its projection for domestic steel demand growth to 9-10% for the fiscal year 2025, citing robust government spending and strong demand from steel-consuming sectors. In stock specific development, BHEL zoomed on securing thermal power project from Adani Power. The contract involves the supply of equipment (boiler, turbine, generator) and supervision of erection and commissioning for a 2x800 megawatt power project based on Supercritical Technology.

The BSE Sensex is currently trading at 74778.98, up by 396.74 points or 0.53% after trading in a range of 74526.06 and 75078.70. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 2.13%, while Small cap index was up by 2.58%.

The top gaining sectoral indices on the BSE were Realty up by 4.48%, PSU up by 4.37%, Power up by 3.67%, Utilities up by 3.54% and Industrials up by 3.25%, while FMCG down by 0.56% and Healthcare down by 0.20% were the only losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.52%, SBI up by 3.39%, Tata Steel up by 2.42%, HCL Technologies up by 2.24% and Tech Mahindra up by 2.14%. On the flip side, Hindustan Unilever down by 2.19%, Nestle down by 1.79%, Sun Pharma Inds. down by 1.25%, Asian Paints down by 0.83% and Kotak Mahindra Bank down by 0.79% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has anticipated that India's current account balance (CAB) will achieve a surplus of around $6 billion (0.6 per cent of GDP) in the fourth quarter of the fiscal year 2024 (Q4FY24). This marks the first surplus since the first quarter of fiscal year 2022 (1QFY22), a significant turnaround from the previous quarter's deficit of $10.5 billion (1.2 per cent of GDP). Despite this positive quarter, the overall CAB for FY24 is expected to remain in deficit at 0.6 per cent of GDP, the lowest since FY17, excluding the pandemic-affected FY21.

It said the global economic environment, though still uncertain, is showing signs of improvement for 2024. Easing inflationary pressures and robust economic growth in the US and several emerging markets contribute to a brighter outlook. The global manufacturing Purchasing Managers' Index (PMI) has been expanding for three consecutive months, reaching 50.3 in April 2024, with consistent growth in the US and emerging economies, except for the European region.

Ind-Ra forecasts a sharp increase in merchandise exports to about $112 billion in 1QFY25, an 8 per cent year-on-year (YoY) rise, the fastest in seven quarters, partly due to a favorable base effect. Merchandise imports are expected to reach $169 billion in the same period, up 6 per cent YoY, resulting in a goods trade deficit of $57 billion. Services exports, although resilient, are anticipated to see slower growth due to a high base effect and weakening demand in IT/ITES, with a services trade surplus increasing by 6.5 per cent YoY to $38 billion. Consequently, the CAB is expected to register a marginal deficit in 1QFY25.

The CNX Nifty is currently trading at 22735.15, up by 114.80 points or 0.51% after trading in a range of 22642.60 and 22799.50. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were NTPC up by 4.12%, Coal India up by 4.10%, ONGC up by 3.80%, Shriram Finance up by 3.45% and SBI up by 3.36%. On the flip side, Hero MotoCorp down by 2.77%, Hindustan Unilever down by 2.18%, Hindalco down by 2.07%, Divi's Lab down by 2.03% and Nestle down by 1.65% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted jumped 453.05 points or 2.07% to 21,937.93, Nikkei 225 surged 204.38 points or 0.53% to 38,694.55, Hang Seng advanced 108.26 points or 0.58% to 18,533.22, Straits Times added 15.53 points or 0.46% to 3,345.54 and Jakarta Composite was up by 7.44 points or 0.11% to 6,955.11, while Shanghai Composite was down by 2.47 points or 0.08% to 3,062.93.