Key gauges give up day's gains to end flat

Indian equity benchmarks gave up day’s gains and ended flat on Tuesday as investors remained on sidelines ahead of the India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out tomorrow. After making slightly positive start, markets turned cautious amid a private report stated that India consumer inflation likely snapped a four-month downward trend in May due to rapidly rising food costs, suggesting the Reserve Bank of India is still several months away from cutting interest rates. But markets soon gained traction and traded higher for most part of the session, as traders took support with data showing that foreign institutional investors (FIIs) extended their buying on the second day on June 10 as they bought Indian equities worth Rs 2,572.38 crore.  Some support also came as Finance Ministry announced the release of an additional installment of tax devolution to states for June 2024, in a move to support state finances and spur economic development. The total amount released to states for June now stands at Rs 1,39,750 crore.

Sentiments remained optimistic in afternoon deals, taking support from Industry body Confederation of Indian Industry’s statement that continuity in policy reforms under the leadership of Prime Minister Narendra Modi is likely to drive India towards the goal of becoming a developed nation. Traders took note of private report that India is expected to sustain a potential growth rate of 6.5 per cent -7 per cent year-on-year (Y-o-Y) between 2025-26 and 2029-30. However, the benchmark indices gave up gains towards end of the trading session and ended flat on profit booking in the absence of fresh triggers. Weak global cues further weighed on domestic market sentiment.  

On the global front, European markets were trading lower as the latest employment data from the U.K. painted a mixed picture of the economy. The U.K. unemployment rate ticked up to 4.4 percent from 4.3 percent in the three months to April, the highest rate since September 2021 but wage growth jumped to 5.9 percent, raising concerns that higher wages can feed into consumer prices and potentially stall the central bank's progress with inflation. Asian markets ended mostly lower on Tuesday as investor focus shifted to Wednesday's U.S. consumer price data and the Federal Reserve interest-rate decision. 

Finally, the BSE Sensex fell 33.49 points or 0.04% to 76,456.59, and the CNX Nifty was up by 5.65 points or 0.02% points to 23,264.85.   

The BSE Sensex touched high and low of 76,860.53 and 76,296.44 respectively. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.74%, while Small cap index was up by 0.95%.

The top gaining sectoral indices on the BSE were Telecom up by 1.93%, Oil & Gas up by 1.84%, Industrials up by 1.42%, Capital Goods up by 1.39% and PSU up by 1.19%, while FMCG down by 0.27%, Bankex down by 0.26%, Healthcare down by 0.22%, Metal down by 0.09% and Consumer Durables down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.64%, Tata Motors up by 1.26%, Maruti Suzuki up by 1.14%, Mahindra & Mahindra up by 0.93% and Ultratech Cement up by 0.92%. On the flip side, Kotak Mahindra Bank down by 1.44%, Asian Paints down by 1.18%, ITC down by 0.95%, Reliance Industries down by 0.92% and Sun Pharma down by 0.86% were the top losers.

Meanwhile, Former NITI Aayog Vice Chairman Rajiv Kumar has said that prime Minister Narendra Modi led-NDA government in its third term must tackle the problem of unemployment in the country, especially in the unorganised sector and in small and medium enterprises (SMEs). He also emphasised that the government now must finalise the four labour codes as it has been delayed beyond expectations. According to a recent International Labour Organisation (ILO) report, the share of unemployed youths in India's total unemployed population was nearly 83 per cent in 2022. Therefore, he said the large corporations have done very well and, and also those who are highly skilled have done well. But at the lower end, people are without jobs and firms are struggling to expand their capacity.  

According to Kumar, one of the important things about generating employment is one to further ease the conditions of work for the SMEs. There is still a lot of regulatory and compliance burden that SMEs face. So they have to be tackled along with the state governments. On the four labour codes he said ‘it has been a long time since they have been in the making, and I think they should be now finalised and made into statutes.’

Former NITI Aayog Vice Chairman also stressed on giving more attention on skilling of youth, especially to apprenticeship development, saying schooling and the education system in India is lagging behind the demand. He noted ‘our apprenticeship program needs a far bigger push than we have now and access to high quality education should be ensured because ultimately, these are the factors which will determine the employability and employment generation potential for our economy’.

The CNX Nifty traded in a range of 23,389.45 and 23,206.65. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were ONGC up by 5.69%, Tata Motors up by 1.75%, Larsen & Toubro up by 1.59%, Adani Ports & SEZ up by 1.59% and Maruti Suzuki up by 1.20%. On the flip side, Kotak Mahindra Bank down by 1.30%, Divi's Lab down by 1.27%, ITC down by 0.95%, Reliance Industries down by 0.94% and Dr. Reddy's Lab down by 0.90% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 61.85 points or 0.75% to 8,166.63, France’s CAC fell 67.76 points or 0.86% to 7,826.22 and Germany’s DAX lost 102.77 points or 0.56% to 18,392.12.

Asian markets ended mostly lower on Tuesday as investors were cautiously awaiting key US inflation data and the outcome of the US Federal Reserve's policy meeting, and US central bank is widely expected to leave interest rates unchanged. Market sentiments fell further by fresh political uncertainty after gains by the far right in voting for the European Parliament on Sunday prompted a bruised French President Emmanuel Macron to call a snap national election. Moreover, Chinese shares declined as trading resumed after a long holiday weekend. However, Japanese shares gained by tracking overnight gains on Wall Street, while a weaker yen also continued to support Japanese equities. At the upcoming meeting, the Bank of Japan is widely expected to keep its short-term interest rate unchanged at 0.0% - 0.1%.