Post Session: Quick Review

Indian equity markets failed to continue fresh record closing highs on Friday’s trade and ended with minor cuts.  Most part of the day, Nifty managed to trade above its crucial 24,000 mark, while Sensex traded above 79,000 level. For the fourth consecutive day, markets scaled new high levels. In first half of the session, markets showed some stability. However, in afternoon session, indices unable held gains amid volatility.  Traders were seen piling up positions in Oil & Gas, Realty and Metal sectors’ stocks while selling was witnessed in Banking sector’s stocks. 

Markets made positive start and remained in green amid firm cues from global markets. Traders took support as the Reserve Bank of India (RBI) in its Financial Stability Report (FSR) has said 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. Further, Foreign fund inflows also aided domestic sentiments. Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 7,658.77 crore on June 27. 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.  However, markets hit negative territory in afternoon session and further turned volatile, as traders were cautious ahead of HSBC Manufacturing PMI Final data. In late afternoon session, markets touched their day’s low levels. 

On the global front, European markets were trading mostly in green as investors reacted to stronger-than-expected U.K. GDP figures and awaited a key U.S. inflation reading later in the day for clues on when interest rates may be cut. Asian markets ended mostly in green amid 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, India has imposed anti-dumping duties on three Chinese products, including hydraulic rock breakers and tin plates. The duties aim to counteract the adverse effects of cheap imports on local manufacturers.

The BSE Sensex ended at 79,032.73, down by 210.45 points or 0.27% after trading in a range of 78,905.89 and 79,671.58. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional) 

The broader indices ended in green; the BSE Mid cap index gained 0.41%, while Small cap index was up by 0.56%. (Provisional)

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 was 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 was down by 0.26% were the top losing indices on BSE.  (Provisional)   

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 2.55%, 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. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) in its Financial Stability Report (FSR) has said 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.

It said that as of the end of March 2024, the capital to risk-weighted assets ratio (CRAR) and the common equity tier 1 (CET1) ratio for scheduled commercial banks (SCBs) were 16.8 per cent and 13.9 per cent, respectively. These ratios are important indicators of a bank’s financial health, showing how much capital it has relative to its risks. Moreover, it noted a significant improvement in the quality of assets held by banks. The gross non-performing assets (GNPA) ratio fell to a multi-year low of 2.8 per cent, while the net non-performing assets (NNPA) ratio dropped to 0.6 per cent by the end of March 2024. This indicates that banks are effectively managing their bad loans, reducing the risks of defaults.

It also included macro stress tests for credit risk, which are used to assess how well banks can handle potential financial shocks. These tests project that banks will be able to meet minimum capital requirements even under adverse conditions. Specifically, the system-level CRAR is projected to be 16.1 per cent under a baseline scenario, 14.4 percent under a medium stress scenario, and 13.0 per cent under a severe stress scenario by March 2025.

Besides, it highlighted the health of non-banking financial companies (NBFCs) in India. As of the end of March 2024, NBFCs had a CRAR of 26.6 per cent, a GNPA ratio of 4.0 per cent, and a return on assets (RoA) of 3.3 percent. These figures demonstrate that NBFCs are well-capitalized, managing their non-performing assets effectively, and achieving good returns on their investments.  However, it mentioned that the global economy is currently facing significant risks stemming from ongoing geopolitical tensions, high levels of public debt, and slow progress in reducing inflation.

The CNX Nifty ended at 24,010.60, down by 33.90 points or 0.14% after trading in a range of 23,985.80 and 24,174.00. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddy's Lab up by 2.67%, ONGC up by 2.50%, Reliance Industries up by 2.28%, SBI Life Insuran up by 1.95% and Tata Motors up by 1.82%. On the flip side, Indusind Bank down by 2.55%, Bharti Airtel down by 2.15%, Axis Bank down by 1.84%, ICICI Bank down by 1.66% and Kotak Mahindra Bank down by 1.53% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 47.62 points or 0.58% to 8,227.30 and Germany’s DAX was up by 127.19 points or 0.69% to 18,337.74. On the flip side, France’s CAC was down by 25.21 points or 0.34% to 7,505.51.

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.