Markets wipe out initial gains to trade flat in early deals; IT stocks up 2%

Indian equity benchmarks made positive start on Friday ahead of manufacturing and services PMI Flash data to be released later in the day. Soon, markets trimmed most of their gains and are trading flat in early deals as global bond yields surged on hawkish Fed comments. Initially, markets took some support with foreign fund inflows. Foreign institutional investors (FIIs) were net buyers for the fourth straight day on Thursday. FIIs net bought stocks worth Rs 415.30 crore on June 20. Traders also took encouragement as RBI Governor Shaktikanta Das said that the Indian financial system is in a much stronger position, characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders. However, some cautiousness crept in as a report by the United Nations Conference on Trade and Development (UNCTAD) said Foreign Direct Investment (FDI) flows to India plummeted by 43 per cent in 2023 to $28 billion amid a global decline of 2 per cent. 

On the global front, most of the Asian markets are trading lower, following the mixed cues from Wall Street overnight, as the markets struggle for direction as traders digest mixed economic data from the region and the US. Optimism about an interest rate cut by the US Fed this year helped keep investor sentiment somewhat positive, but rising geopolitical tensions in Europe and the Middle East weighed on the markets. Besides, overall consumer prices in Japan were up 2.8 percent on year in May.

Back home, Information Technology (IT) stocks remained in focus after U.S. IT firm Accenture forecast annual revenue growth above expectations. Accenture in its results narrowed their guidance band for financial year 2024 to 1.5% to 2.5% from their earlier guidance of 1% to 3% in constant currency terms. The company also reported a 26% surge in its new bookings to over $20 billion in constant currency terms. In stock specific development, Bharti Airtel climbed after acquiring additional stake in Indus Towers.

The BSE Sensex is currently trading at 77453.19, down by 25.74 points or 0.03% after trading in a range of 77424.87 and 77808.45. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.41%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were IT up by 2.14%, TECK up by 1.90%, Telecom up by 1.51%, Healthcare up by 0.74% and PSU up by 0.39%, while Realty down by 0.47%, Bankex down by 0.44%, Basic Materials down by 0.43%, FMCG down by 0.27% and Auto down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.45%, Bharti Airtel up by 1.88%, Tech Mahindra up by 1.66%, TCS up by 1.55% and Wipro up by 1.38%. On the flip side, Tata Steel down by 1.45%, HDFC Bank down by 1.20%, Hindustan Unilever down by 1.10%, Reliance Industries down by 0.86% and Kotak Mahindra Bank down by 0.80% were the top losers.

Meanwhile, expressing optimism over Indian financial system, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said it is in a ‘much stronger position’, characterised by robust capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-banking lenders. Underscoring the imperative of fostering a future-ready ethos within the financial sector, Das also stressed the critical role of timely supervisory intervention in mitigating systemic risks. 

He added ‘I would like to compliment the banks and other financial sector entities for such a stellar performance in the year which has just ended on March 31. There is absolutely no room for complacency because the world is changing, challenges are coming, complexities are growing, and problems can originate from any corner of the financial system within the country, or the world because of something which may be completely unrelated to you and me.’ 

He highlighted the pivotal role of AI and machine learning in fraud prevention and operational efficiencies, underscoring the need for secure technological integrations aligned with business goals. Das stated 'AI and ML can enhance predictive analytics and enable banks and NBFCs to identify potential risks and trends more accurately. These technologies can improve fraud detection by recognising unusual patterns and transactions in realtime. Thus, they can protect the institutions and their customers from financial crimes and frauds.'

He further added ‘Operational efficiency can be improved through automation of routine tasks, which reduces human error and frees up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume and repetitive tasks, such as data entry and transaction processing, more quickly and accurately than humans.’ Looking ahead, Governor Das outlined RBI's commitment to regulatory stability, emphasizing a thematic and activity-based supervisory approach.

The CNX Nifty is currently trading at 23581.75, up by 14.75 points or 0.06% after trading in a range of 23574.10 and 23667.10. There were 28 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were LTIMindtree up by 2.52%, Infosys up by 2.24%, Bharti Airtel up by 1.95%, Tech Mahindra up by 1.67% and TCS up by 1.59%. On the flip side, Tata Steel down by 1.54%, HDFC Bank down by 1.21%, Adani Enterprises down by 1.13%, Hindustan Unilever down by 1.04% and Tata Motors down by 0.84% were the top losers.

Asian markets are trading mostly in red; Hang Seng slipped 313.76 points or 1.71% to 18,021.56, Taiwan Weighted lost 149.89 points or 0.64% to 23,256.21, KOSPI dropped 23.42 points or 0.83% to 2,784.21, Nikkei 225 fell 17.03 points or 0.04% to 38,615.99 and Shanghai Composite was down by 11.87 points or 0.4% to 2,993.57. On the other hand, Jakarta Composite rose 115 points or 1.69% to 6,934.32 and Straits Times was up by 7.7 points or 0.23% to 3,307.70.