Post Session: Quick Review

Indian equity markets witnessed volatility in Thursday’s trade and ended with gains of around a percent amid weekly F&O expiry. The volatility occurred in day ahead of Reserve Bank of India’s interest rate decision due on June 07. Investors are hoping that the central bank is likely to maintain the status quo on repo rate at 6.50%. As for broader indices, the BSE Mid cap index ended with gains of above two percent, while Small cap index ended with the gains of above three percent. 

Markets made optimistic start and extended their gains to touch day’s high levels following the firm cues from wall Street overnight as well as broadly positive cued from Asian counterparts. 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). Sentiments remained up-beat with report stating that maintaining consistency in attracting foreign investment inflows, India has received a total foreign direct investment (FDI) inflow of $70.9 billion in the financial year 2023-24. India received the highest FDI of $6 billion in October 2023 followed by $5.9 billion in January 2024. However, in afternoon session, indices come off from day’s high levels but continued to trade in green. Traders overlooked Fitch Ratings’ statement that the BJP losing its outright majority and relying on allies to form a government could pose challenges for the more ambitious elements of reform agenda like land and labour. Fitch however expected policy continuity to persist despite a slimmer majority. Markets remained in green in late afternoon session as investors continued to hunt for fundamentally strong stocks.

On the global front, European markets were trading higher boosted by the continued rally in technology shares and an anticipated interest rate cut from the European Central Bank on Thursday. Asian markets ended mostly in green 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. Back home, Moody's Ratings in its latest report has said that the BJP-led National Democratic Alliance's (NDA) slim majority in Lok Sabha may delay more far-reaching economic and fiscal reforms that could impede progress on fiscal consolidation.

The BSE Sensex ended at 75,177.10, up by 794.86 points or 1.07% after trading in a range of 74,474.94 and 75,297.73. There were 23 stocks advancing against 7 stocks declining on the index. (Provisional) 

The broader indices ended in green; the BSE Mid cap index gained 2.31%, while Small cap index was up by 3.07%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 4.82%, PSU up by 3.87%, Industrials up by 3.76%, Capital Goods up by 3.50% and Power was up by 2.99%, while there were no losing sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Tech Mahindra up by 4.54%, HCL Tech up by 4.13%, SBI up by 3.59%, Infosys up by 3.02% and NTPC up by 2.92%. On the flip side, Hindustan Unilever down by 1.84%, Asian Paints down by 1.77%, Mahindra & Mahindra down by 1.48%, Indusind Bank down by 1.31% and Nestle down by 1.20% were the top losers. (Provisional)

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 ended at 22821.40, up by 201.05 points or 0.89% after trading in a range of 22642.60 and 22910.15. There were 38 stocks advancing against 12 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 4.43%, HCL Tech up by 4.00%, Shriram Finance up by 3.71%, SBI Life up by 3.48% and SBI up by 3.44%. On the flip side, Hindalco down by 2.55%, Hero MotoCorp down by 2.20%, Hindustan Unilever down by 2.04%, Asian Paints down by 1.92% and Mahindra & Mahindra down by 1.50% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 25.48 points or 0.31% to 8,272.43, France’s CAC rose 29.01 points or 0.36% to 8,035.58 and Germany’s DAX was up by 130.36 points or 0.7% to 18,706.30.

Asian markets settled mostly higher on Thursday after a gain in US technology stocks and with growing expectations for an earlier-than-expected start to the US Federal Reserve's policy easing cycle after multiple reports signalled slowing growth in the United States. Investors are awaiting this week’s US jobs report to gauge the Federal Reserve's next moves on interest rates. Japanese shares gained on tracking Wall street’s gains overnight, even with caution ahead of global central bank meetings. Meanwhile, South Korean market is closed for the Memorial Day holiday.