Post Session: Quick Review

After closing in red for two days of the week, Indian equity markets held firm trade on Wednesday’s session and ended with gains of over a percent, as investors braced for RBI's interest rate decision due on tomorrow. Besides, U.S. recession fears faded away. Recovery in global markets also provided much needed support to Indian markets. There were no losing sectoral indices on the BSE. Sector wise, Oil & Gas and Metal sectors’ stocks ended with hefty gains. The broader indices, BSE Mid cap index and Small cap index concluded with gains of over two percent.

Markets made positive start and extended their gains following the broadly positive cues from Wall Street overnight as well as firm trade in Asian counterparts. Some support came as a Labour Ministry report showed that retail inflation for industrial workers slipped to 3.67 per cent in June from 3.86 per cent in the previous month this year mainly due to lower prices of certain food items. It said year-on-year inflation for the month of June 2024 moderated to 3.67 per cent as compared to 5.57 per cent in June 2023. Traders took note of S&P Global Ratings’ statement that India stands out both on growth and external fronts amongst the South Asian countries, and the trajectory of government's fiscal deficit will decide on the direction of sovereign ratings. Indices continued their firm trade in afternoon session amid a private report stating that India's central bank could cut interest rates by 100 basis points in a monetary easing cycle that is likely to start in December as inflation eases towards its 4% target. Traders took a note of report that the Union Minister of Labour & Employment and Youth Affairs & Sports, Mansukh Mandaviya has suggested expeditious implementation of the Employment-Linked Incentive (ELI) Scheme announced in Union Budget 2024-25 in a mission mode, in order to bolster employment generation. The Minister also emphasized the importance of a robust mechanism to ensure that the benefits of the ELI Scheme reach the true beneficiaries. In late afternoon session, markets added more points as investors continued to hunt for fundamentally strong stocks.

On the global front, European markets were trading higher as a slew of upbeat corporate earnings lifted sentiment, although gains were tempered after heavyweight Novo Nordisk missed estimates for its second-quarter operating profit. All Asian markets ended higher with Japanese shares reversing early losses after a central bank official played down the prospect of an immediate hike in interest rates. Back home, Minister of State for Finance Pankaj Chaudhary has said that banks have written off loans worth Rs 9.90 trillion in the last five financial years.

The BSE Sensex ended at 79,468.01, up by 874.94 points or 1.11% after trading in a range of 79,106.20 and 79,639.20. There were 25 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index gained 2.63%, while Small cap index was up by 2.39%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 3.75%, Metal up by 3.44%, Energy up by 3.32%, PSU up by 3.30% and Capital Goods was up by 2.89%, while there were no losing sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Adani Ports up by 3.47%, Power Grid up by 3.20%, Tata Steel up by 2.66%, JSW Steel up by 2.61% and Infosys up by 2.22%. On the flip side, Indusind Bank down by 2.33%, Bharti Airtel down by 0.40%, Hindustan Unilever down by 0.33%, Tech Mahindra down by 0.27% and Titan Company down by 0.24% were the top losers. (Provisional)

Meanwhile, expressing optimism over India’s growth path, S&P Global Ratings has said India stands out both on growth and external fronts amongst the South Asian countries, and the trajectory of government's fiscal deficit will decide on the direction of sovereign ratings. S&P Director, Sovereign and International Public Finance Ratings (Asia-Pacific), Andrew Wood has said the rating agency sees a lot of promise in India's economic growth story even though the global economic growth outlook remains somewhat challenging. He said ‘We could raise the rating if India's fiscal deficit narrows meaningfully such that change in net general government deficit falls below 7 per cent of GDP on a structural basis’. He said in the geography of South Asia, India stands out both on growth and external fronts.

He added ‘India is a net external creditor economy which is a core support for its investment grade rating. We see a lot of promise in India's economic growth story even in a somewhat challenging global economic growth outlook’. The Budget for 2024-25 has announced targeting a central government fiscal deficit of 4.9 per cent of GDP in the current fiscal, lower than 5.1 per cent targeted earlier. He said ‘This is good news at the margin but combined with local government deficit, general government deficit is likely to remain above 7 per cent of GDP at least for current fiscal. So the trajectory for this metrics over the next few years will remain an important one for the directionality of India's ratings’.

In May, S&P Global Ratings had upped India's sovereign rating outlook to positive from stable on robust growth prospects for next three years and public spending, and raised hopes for an upgrade in two years provided the government continues reforms and policies to keep fiscal deficit under check. While retaining India's sovereign rating at the lowest investment grade of 'BBB-', S&P said it expects broad continuity in economic reforms and fiscal policies, irrespective of the election outcome.

The CNX Nifty ended at 24,297.50, up by 304.95 points or 1.27% after trading in a range of 24,184.90 and 24,337.70. There were 42 stocks advancing against 8 stocks declining on the index. (Provisional)

The top gainers on Nifty were ONGC up by 7.51%, Coal India up by 6.39%, Adani Enterprises up by 3.69%, Adani Ports up by 3.33% and Power Grid up by 3.32%. On the flip side, Indusind Bank down by 2.60%, Eicher Motors down by 1.22%, Tech Mahindra down by 0.66%, Britannia down by 0.30% and Titan Company down by 0.27% were the top losers. (Provisional)

European markets were trading higher; UK’s FTSE 100 increased 59.57 points or 0.74% to 8,086.26, France’s CAC rose 95.07 points or 1.32% to 7,225.11 and Germany’s DAX was up by 184.27 points or 1.05% to 17,538.59. 

Asian markets settled higher on Wednesday tracking Wall Street gains overnight after key companies like Caterpillar and Uber Technologies reported solid earnings and Federal Reserve officials reassured markets that the US is not headed for a recession. Japanese shares gained after Bank of Japan Deputy Governor Shinichi Uchida sent a strong dovish signal in the wake of historic financial market volatility in Japan by pledging to refrain from hiking interest rates when the markets are unstable, while the yen depreciated to the 147-yen level after earlier trading in a 144-yen band. Moreover, Chinese shares marginally rose despite mixed trade data. Data showed that Chinese imports in July grew faster-than-expected, while exports missed forecasts. Meanwhile investors are eyeing on China's inflation figures later this week.