Sensex, Nifty trade higher with marginal gains amid rising WPI inflation

Indian equity benchmarks were trading in green with limited gains in early afternoon deals, amid rising WPI inflation along with mixed cues from other Asian markets. Besides, selling in IT and TECK stocks impacted domestic sentiments. Traders got worried after inflation based on wholesale price index (WPI) accelerated in the month of May 2024 to 2.61% from 1.26% in April 2024, due to increase in prices of food articles, minerals, basic metals, computer, electronic & optical products and electrical equipments. The Component wise, primary articles index, having weight of 22.62%, increased 0.54% to 187.7 (provisional) in May 2024 from 186.7 (provisional) for the month of April 2024, on the back of rise in prices of food articles and minerals.

On the global front, Asian markets were trading mixed, after the Bank of Japan delayed its normalization of policy as policymakers decided to unveil a detailed plan for reducing its bond purchase programme at its upcoming meeting in July. At the June meeting, the policy board governed by Ueda Kazuo, decided to conduct purchases of Japanese government bonds, CP, and corporate bonds in accordance with the decision made at the March meeting but voted 8-1 to cut its purchases thereafter to ensure that long-term interest rates would be formed more freely in financial markets.

The BSE Sensex is currently trading at 76924.21, up by 113.31 points or 0.15% after trading in a range of 76549.05 and 77001.70. 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 by 0.99%, while Small cap index was up by 1.11%.

The top gaining sectoral indices on the BSE were Industrials up by 1.59%, Capital Goods up by 1.46%, Auto up by 1.13%, Consumer Durables up by 1.03% and Consumer discretionary up by 0.95%, while IT down by 0.53% and TECK down by 0.40% were the losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.61%, HDFC Bank up by 0.80%, Bajaj Finance up by 0.58%, Reliance Industries up by 0.56% and JSW Steel up by 0.51%. On the flip side, TCS down by 1.07%, Tech Mahindra down by 1.05%, HCL Tech. down by 0.84%, Wipro down by 0.67% and Larsen & Toubro down by 0.57% were the top losers.

Meanwhile, rating agency ICRA in its latest report has said that backed by healthy demand prospects for the cement sector, large cement companies are looking to increase their capacity and maintain market share through organic and inorganic expansions. ICRA estimates that the market share of the top five cement companies (UltraTech Cement, Adani Group, Shree Cement, Dalmia Cement (Bharat) and Nuvoco Vistas Corporation) witnessed a steep rise to 54% as of December 2023 from 45% as of March 2015, and expects it to further increase to 55% by March 2025, resulting in consolidation in the cement industry.

ICRA said while organic growth is expected to continue in the medium-term, cement companies are also preferring the inorganic route to boost capacities rapidly, leading to consolidation in the industry. Except the ACC and Ambuja acquisitions by the Adani Group, other mergers and acquisitions (M&As) were largely owing to the cash flow-starved nature of the acquired entity or the group's financial stress.

According to the report, bulk of the cement produced within a region is usually consumed internally and the excess transported to adjacent regions. The consolidation, taking place across India, is primarily led by the eastern and the western regions. The share of the top five cement companies in the eastern and the western regions is estimated to increase to 76-79 per cent in FY2025 from 54 per cent in FY2015. While the southern region is highly fragmented with only 40 per cent share held by the top five cement players in FY2015. This may go up to 50 per cent by FY2025. The northern and central regions were highly consolidated in the past (65-75 per cent in FY2015) and are expected to remain in the range of 75-85 per cent by FY2025. 

The CNX Nifty is currently trading at 23443.55, up by 44.65 points or 0.19% after trading in a range of 23334.25 and 23469.45. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.67%, Adani Ports & SEZ up by 1.68%, Shriram Finance up by 1.61%, BPCL up by 1.28% and Eicher Motors up by 0.96%. On the flip side, TCS down by 1.09%, Tech Mahindra down by 0.93%, HCL Tech. down by 0.84%, Wipro down by 0.77% and NTPC down by 0.68% were the top losers.

Asian markets were trading mixed; KOSPI increased 3.53 points or 0.13% to 2,758.42, Nikkei 225 surged 94.09 points or 0.24% to 38,814.56, Taiwan Weighted added 192.68 points or 0.86% to 22,504.72 and Shanghai Composite strengthened 3.71 points or 0.12% to 3,032.63, while Hang Seng declined 100.68 points or 0.56% to 18,011.95, Jakarta Composite plunged 67.38 points or 1% to 6,764.18 and Straits Times fell 17.86 points or 0.54% to 3,306.67.