Post Session: Quick Review

After two sluggish consecutive days, Indian equity markets soared to new heights on Friday trade with Nifty and Sensex settling above the psychological 24500 and 80,500 levels, respectively. Since morning markets held the gains in the custody, as traders were braced for India’s Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out later in a day. Sector wise, IT stocks witnessed healthy buying after TCS announced its June quarter earnings. Globally traders took support after inflation readings for June in the U.S. came in at the lowest level in about three years. 

Markets made positive start on Friday even after Reserve Bank of India Governor Shaktikanta Das said that India’s retail inflation is expected to be close to 5% in June, in line with the surveys conducted by the apex bank. Traders took note of report that India and Russia have taken a significant step towards strengthening their economic ties by agreeing to establish a national currency settlement system. Investors overlooked latest data released by the Reserve Bank of India (RBI) showed that deposit growth of commercial banks further slowed down to 10.64 per cent for the fortnight ending June 28. Credit growth also declined during the period. In late morning trade, indices spiked up to trade higher amid value buying by investors. Sentiments remained optimistic, as the International Monetary Fund (IMF) reiterated that it expects the Federal Reserve to begin cutting interest rates later this year. Traders overlooked the Reserve Bank of India (RBI) Governor, Shaktikanta Das’ statement that it was too early to talk about a cut in policy rates given the uncertain global economic environment and a persistently high home consumer inflation, which has trended above the central bank's legally mandated target. Markets continued their gaining momentum till the end of the session. 

On the global front, European markets were trading higher amid expectations that the U.S. Federal Reserve and European Central Bank could move to cut rates in September. Asian markets ended mixed as investors reacted to surprisingly soft U.S. inflation data, mixed Chinese trade figures and comments from several Federal Reserve officials on the rate trajectory. Back home, NITI Aayog member Arvind Virmani has said that the India’s gross domestic product (GDP) will grow around 7 per cent in the current fiscal year (FY25) and is on track to maintain a similar growth rate for several years.

The BSE Sensex ended at 80,519.34, up by 622.00 points or 0.78% after trading in a range of 79,843.39 and 80,893.51. There were 19 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.22%, while Small cap index was down by 0.13%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 4.32%, TECK up by 3.29%, FMCG up by 0.24%, Oil & Gas up by 0.14% and Energy was up by 0.13%, while Realty down by 1.56%, Power down by 0.86%, Industrials down by 0.59%, Capital Goods down by 0.57% and Auto was down by 0.53% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 6.61%, Infosys up by 3.41%, HCL Tech up by 3.34%, Tech Mahindra up by 3.07% and Axis Bank up by 1.40%. On the flip side, Maruti Suzuki down by 1.00%, Asian Paints down by 0.99%, Titan Company down by 0.81%, Kotak Mahindra Bank down by 0.77% and Bharti Airtel down by 0.51% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said the question of change of stance on interest rate is quite premature given the gap between current inflation and 4 per cent target. He added ‘when we move towards 4 per cent CPI (retail inflation) on a sustained basis is when we will get the confidence to think about a change in stance’. He said inflation journey is progressing as per expectations, but added that it is the last mile of the journey towards 4 per cent, which will be the most difficult or sticky.

RBI had said in its June bi-monthly report, Consumer Price Index (CPI)-based retail inflation has been projected at 4.5 per cent with quarter-wise projections at 4.9 per cent in Q1 (April-June), 3.8 per cent in Q2, 4.6 per cent in Q3, and 4.5 per cent in Q4. The RBI, which has been mandated to ensure inflation remains at 4 per cent (with margin of 2 per cent on either side), mainly factors in CPI while arriving at its monetary policy. 

He had said headline inflation softened further during March-April, though persisting food inflation pressures offset the gains of disinflation in core and deflation in the fuel groups. Despite some moderation, pulses and vegetables inflation remained firmly in double digits. Vegetable prices are experiencing a summer uptick following a shallow winter season correction. The deflationary trend in fuel was driven primarily by the LPG price cuts in early March. Core inflation softened for the 11th consecutive month since June 2023. Services inflation moderated to a historic low and goods inflation remained contained.

Regarding gross domestic product (GDP), Das said many drivers of growth are playing out their role and momentum of growth was very strong in fourth quarter of last financial year which continues to be strong in the first quarter. The June policy also revised upwards the GDP growth projection for the current fiscal to 7.2 per cent from 7 per cent on rising private consumption and revival of demand in rural areas. When the projected GDP growth of 7.2 per cent for 2024-25 materialises, it will be the fourth consecutive year with growth at or above 7 per cent.

The CNX Nifty ended at 24,502.15, up by 186.20 points or 0.77% after trading in a range of 24,331.15 and 24,592.20. There were 34 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were TCS up by 6.63%, Wipro up by 4.88%, Infosys up by 3.57%, HCL Tech up by 3.19% and LTIMindtree up by 3.05%. On the flip side, Maruti Suzuki down by 1.20%, Divi's Lab down by 0.94%, Coal India down by 0.77%, Asian Paints down by 0.76% and BPCL down by 0.67% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 17.03 points or 0.21% to 8,240.37, France’s CAC rose 41.06 points or 0.54% to 7,668.19 and Germany’s DAX was up by 32.66 points or 0.18% to 18,567.22. 

Asian markets settled mixed on Friday as a surprisingly soft US inflation data fuelled bets for a September rate cut, while former President Donald Trump leading in new 2024 election poll that showed only 24% of voters think Biden is mentally sharp. Chinese shares gained marginally after the release of mixed trade data. China's exports rose 8.6% year-on-year by value in June, while imports dropped 2.3%, customs data revealed. Hong Kong shares jumped after Chinese securities regulator announced fresh curbs on short-selling to bolster market sentiment. Meanwhile investors were awaiting next week's Third Plenum meeting. Japanese shares declined as the yen strengthened with speculation that Japanese authorities may have again intervened in forex markets to prop up the ailing currency.