Markets continue record closing run on Wednesday

Indian equity benchmarks continued their record closing run on Wednesday, supported by a buying in heavyweight stocks such as Reliance Industries, Bharti Airtel and Ultratech Cement. Markets made cautious start and traded slightly in red in early morning deals as traders were cautious with private report stating that a sluggish monsoon leading to subpar kharif sowing could queer the pitch further for food inflation, which already remains elevated. However, key gauges soon gained momentum and gradually climbed throughout the session, as traders found support with Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that India is at the threshold of a major structural shift in its growth trajectory. He added that India is moving ahead towards 8 per cent GDP growth in a sustained manner, adding that the average growth India recorded in the last three years is 8.3 per cent.

Markets extended gains in late afternoon deals and closed near the day's high, taking support from Reserve Bank of India’s data showing that India’s financial position with the rest of the world improved over the year. The country increased its overseas assets more than it increased its foreign liabilities, largely due to a rise in reserve assets. During the financial year 2023-24, the net claims of non-residents on India decreased by $5.5 billion. This happened because India’s external financial assets grew by $109.8 billion, which was more than the increase in its external financial liabilities, which grew by $104.3 billion.  Some optimism also came with report that the FMCG sector in India is set to grow at a sustained rate of 7-9% in 2024, bolstered by proactive government initiatives aimed at stimulating consumption and creating job opportunities. The industry has shown remarkable resilience and adaptability, supported by robust government backing and significant digital transformation efforts, positioning it to navigate through uncertainties and emerge stronger. 

On the global front, European markets were trading mostly in green despite results of a closely watched survey that showed German consumer confidence is set to deteriorate in July as the economy struggles to gain momentum. Asian markets settled higher on Wednesday as a rebound in tech stocks helped offset hawkish comments from Federal Reserve officials. Amid much uncertainty about the interest-rate outlook, investors braced for the release of key U.S. inflation reading, for directional cues. Back home, stocks related to Textile sector remained in limelight after Textiles Minister Giriraj Singh said the government has approved over Rs 10,000 crore production linked incentive (PLI) scheme for textiles and now considering to extend it to the garments sector with a view to boosting domestic manufacturing and exports.

The top gainers on the Sensex were Reliance Industries up by 4.09%, Bharti Airtel up by 3.07%, Ultratech Cement up by 2.78%, ICICI Bank up by 1.60% and Sun Pharma up by 1.37%. On the flip side, Mahindra & Mahindra down by 2.02%, Tata Steel down by 1.79%, Tech Mahindra down by 1.10%, JSW Steel down by 1.07% and Titan Company down by 0.86% were the top losers.

Meanwhile, CRISIL Ratings in its latest report has said that the revenue of private defence companies is set to grow by 20 per cent during the current financial year 2024-25. It stated that the revenue of the 25 private aerospace and defence companies will surge by 20 per cent to approximately Rs 13,500 crore during the current fiscal year. The surge is propelled by higher government spending and concerted efforts by the government to encourage private participation in the defence sector.

It highlighted that the operating margin of private defence companies is likely to rise by 50-60 basis points on sustained revenue growth, economies of scale, and better fixed cost absorption, and should remain stable over the medium term, aided by price escalation clauses in contracts. India’s defence sector is generally dominated by the public sector; however, the revenue share of private players has been on the rise recently. The liberalisation of defence equipment manufacturing by the government and increasing transparency in bidding guidelines have helped private entities secure more orders in domestic and overseas markets, enhanced development and production capabilities of these players have also aided growth over the years.

Jayashree Nandakumar, Director, CRISIL Ratings, said ‘The order books of aerospace and defence companies rated by CRISIL have swelled over the past few fiscals on the back of strong government impetus, including the Atmanirbhar Bharat initiative, the Defence Acquisition Policy, and the Defence Production and Export Promotion Strategy, which favour indigenisation and exports. Order book to operating income is expected to improve to around 4.5 times in fiscal 2025 to approx. Rs 50,000-51,000 crore, from 3.5 times in fiscal 2023, driving revenue growth.’

The CNX Nifty traded in a range of 23,889.90 and 23,670.45. There were 26 stocks advancing against 23 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Reliance Industries up by 3.88%, Bharti Airtel up by 3.33%, Ultratech Cement up by 2.84%, Grasim Industries up by 1.51% and Britannia Industries up by 1.49%. On the flip side, Apollo Hospital down by 2.52%, Mahindra & Mahindra down by 1.81%, Bajaj Auto down by 1.76%, Tata Steel down by 1.64% and Hindalco down by 1.56% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 5.49 points or 0.07% to 8,253.28 and Germany’s DAX gained 21.68 points or 0.12% to 18,199.30, while France’s CAC fell 41.4 points or 0.54% to 7,620.90.