Benchmarks trade in green in morning deals

In a volatile session, Indian equity benchmarks eared initial losses and were trading in green in morning deals, on the back of positive domestic cues, amid formation of new government and inline RBI monetary policy. Some support came with a labour ministry’s statement that retail inflation for industrial workers eased to 3.87 per cent in April compared to 4.2 per cent in March this year. Traders also took support with a private report stating that India stands out in the Asian growth narrative, with the RBI's projection of a 7.2 per cent growth rate for 2025 reflecting strong domestic economic fundamentals.  However, gains remain capped as some concern came with report stating that after having net sold stocks worth Rs 42,200 crore in the month of May, foreign institutional investors (FIIs) so far in June have net sold shares to the tune of Rs 13,718 crore. On the global front, Asian markets are trading mixed as traders heavily pared back on bets for Federal Reserve rate cuts this year given a still-tight U.S. labour market. 

The BSE Sensex is currently trading at 76784.37, up by 91.01 points or 0.12% after trading in a range of 76442.51 and 77079.04. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.67%, while Small cap index was up by 1.01%.

The top gaining sectoral indices on the BSE were Utilities up by 2.36%, Power up by 1.71%, Telecom up by 1.45%, PSU up by 1.42% and Realty up by 1.21%, while IT down by 1.63% and TECK down by 1.07% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 4.07%, Ultratech Cement up by 3.65%, NTPC up by 1.89%, Axis Bank up by 1.58% and Nestle up by 1.09%. On the flip side, Tech Mahindra down by 2.79%, HCL Technologies down by 1.96%, Infosys down by 1.94%, Wipro down by 1.83% and Mahindra & Mahindra down by 0.97% were the top losers.

Meanwhile, rating agency Icra has said the domestic commercial vehicle (CV) industry’s uptrend to be arrested in FY25, with a decline of 4-7% in wholesale volumes. This follows a muted YoY growth of 1% and 3% for wholesale and retail sales, respectively, in FY24. The healthy growth witnessed in H1 FY24 tapered due to a slower Q4 FY24, which saw a decline of 4% in wholesale volumes due to factors such as implementation of the Model Code of Conduct and perceived slowdown in infrastructure activities ahead of General Elections. 

It expects the operating profit margins (OPM) of the domestic CV OEMs to contract marginally in FY25 to 8.5%-9.5% on the back of lower volumes and higher competitive pricing pressures. The OPM is estimated to have improved by 250-300 bps in FY24, as the industry volumes were at a five-year high.  In addition, lower discounting by the OEMs and benign commodity prices aided in the margin expansion in FY24. Going forward, capex and investments for the industry are likely to increase to Rs 59 billion in FY25 against Rs 37 billion in FY24. These will be mainly towards product development, technology upgradation and maintenance-related capex.

Moreover, it stated domestic light commercial vehicles (LCV) (trucks) wholesale volumes are likely to decline by 5-8% in FY25 due to factors such as a high base effect, sustained slowdown in e-commerce, and cannibalisation from e3Ws. The segment witnessed a mild decline of 3% on a YoY basis in FY24, owing to the above factors in addition to a deficit rainfall impacting the rural economy. The scrappage of older Government vehicles is expected to drive replacement demand for the bus segment from state road transport undertakings (SRTUs) in FY25, supporting a growth of 2-5% on an overall basis. The segment volumes gained considerable traction in FY24 and exceeded the pre-Covid levels.

The CNX Nifty is currently trading at 23339.35, up by 49.20 points or 0.21% after trading in a range of 23233.05 and 23411.90. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Power Grid Corporation up by 4.23%, Ultratech Cement up by 3.78%, Grasim Industries up by 3.19%, Cipla up by 2.30% and Hero MotoCorp up by 2.10%. On the flip side, Tech Mahindra down by 2.74%, LTIMindtree down by 2.05%, Infosys down by 2.01%, HCL Technologies down by 1.92% and Wipro down by 1.72% were the top losers.

Asian markets are trading mixed; Jakarta Composite gained 18.13 points or 0.26% to 6,916.08 and Nikkei 225 surged 358.61 points or 0.93% to 39,042.54. On the other hand, Straits Times fell 9.76 points or 0.29% to 3,321.01 and KOSPI dropped 8.71 points or 0.32% to 2,713.96.