Markets halt record-hitting rally to close with losses on Friday

Indian equity benchmarks settled lower on Friday, taking a breather from a record-hitting spree, as investors booked profit in Banking, Telecom and TECK stocks despite a positive trend in global equities. Markets made a positive start and remained in green in first half, as traders took support with the Reserve Bank of India (RBI) in its Financial Stability Report (FSR) stating that India’s economy and its financial system are both strong and resilient. This stability is supported by strong macroeconomic fundamentals and a sound financial system. The RBI points out that with healthier balance sheets, banks and financial institutions in India are actively supporting economic activities through consistent credit expansion. Some support also came as Commerce and Industry Minister Piyush Goyal held meetings with export promotion councils as well as industry associations to discuss strategies to enhance global market outreach, further boost India's exports by focusing on key sectors, and addressing trade barriers. Further, foreign fund inflows helped domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 7,658.77 crore on June 27. 

However, markets erased most of their initial gains and turned volatile in afternoon deals as traders got cautious with the RBI governor Shaktikanta Das in his foreword in the bi-annual financial stability report (FSR) stating that Indian financial institutions have strong balance sheets, low levels of impairments and strong capital buffers, but the Reserve Bank of India (RBI) remains watchful of the emerging risks, including those from cyber hazards, climate change and global spillovers.  Some concern also came as a private report stated that India's security establishment is advocating a cautious approach to any unhindered and blanket approval to the FDI proposals from China given the history of corporate behaviour of Chinese companies in the country.  Markets gained some positive momentum in late afternoon deals but failed to hold gains and closed the trading session in red territory.  

On the global front, European markets were trading mostly in green as the latest data from the Office for National Statistics showed the British economy recovered more than initially estimated in the first quarter. Gross domestic product grew 0.7 percent from the fourth quarter, when the economy shrank 0.3 percent. In the initial estimate, the rate of expansion was 0.6 percent. Asian markets settled mostly higher on Friday as traders awaited a key U.S. inflation reading later in the day that could influence the Federal Reserve's decision on when to begin cutting interest rates. Back home, stocks related to pharma sector remained in watch with Pharmexcil Director General Udaya Bhaskar’s statement that as many as 15 blockbuster drugs whose revenues worth $112 billion will be off-patented during 2023 to 2029 and the Indian pharma industry will have a growth opportunity of $10 billion in the form of generics (including complex). 

Finally, the BSE Sensex fell 210.45 points or 0.27% to 79,032.73, and the CNX Nifty was down by 33.90 points or 0.14% points to 24,010.60.

The BSE Sensex touched high and low of 79,671.58 and 78,905.89 respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended 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 Energy up by 1.64%, Oil & Gas up by 1.52%, Healthcare up by 0.93%, Metal up by 0.70% and Realty up by 0.63%, while Bankex down by 1.04%, Telecom down by 0.65%, TECK down by 0.42%, Capital Goods down by 0.42% and Industrials down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.31%, Tata Motors up by 1.86%, Asian Paints up by 1.31%, Nestle up by 0.98% and Titan Company up by 0.62%. On the flip side, Indusind Bank down by 2.61%, Axis Bank down by 2.05%, Bharti Airtel down by 1.80%, ICICI Bank down by 1.60% and Kotak Mahindra Bank down by 1.41% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), with the approval of the Government of India, has introduced a revised Framework on Currency Swap Arrangement for SAARC (South Asian Association for Regional Cooperation) countries, covering the period from 2024 to 2027. A currency swap between two countries is an agreement or contract to exchange currencies with predetermined terms and conditions.

The SAARC Currency Swap Facility originally began on November 15, 2012. Its primary goal was to offer financial support for short-term foreign exchange requirements or balance of payment issues among SAARC nations. The revised framework for 2024-2027 introduces a new INR Swap Window, which includes various concessions for swap support in Indian Rupees. The total amount available under this facility is Rs 250 billion.

This move aims to enhance financial cooperation among SAARC countries by providing them with easier access to Indian Rupees.

In addition to the INR Swap Window, the RBI will also continue to offer swap arrangements in US Dollars and Euros through a separate US Dollar/Euro Swap Window. The overall amount available under this facility is USD 2 billion. This ensures that SAARC countries have access to multiple currencies for their short-term financial needs.

The CNX Nifty traded in a range of 24,174.00 and 23,985.80. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy's Lab up by 2.63%, ONGC up by 2.56%, Reliance Industries up by 2.19%, Hero MotoCorp up by 1.91% and SBI Life Insurance up by 1.88%. On the flip side, Axis Bank down by 1.95%, ICICI Bank down by 1.86%, Bharti Airtel down by 1.82%, Kotak Mahindra Bank down by 1.51% and Indusind Bank down by 1.48% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 47.26 points or 0.58% to 8,226.94 and Germany’s DAX gained 118.65 points or 0.65% to 18,329.20, while France’s CAC fell 20.36 points or 0.27% to 7,510.36.

Asian markets settled mostly higher on Friday tracking the broadly positive cues from Wall Street overnight with expectations that the US Fed will cut interest rates this year.  Meanwhile investors were awaiting a key US inflation reading later in the day, that could provide further clues on the interest rate cut timeline this year. Japanese shares rose by gains in technology sector, despite selling among key semiconductor shares following disappointing guidance from memory-chip maker Micron Technology. Seoul shares gained even as industrial output falling in May.