Markets manage to trade well above neutral lines

Indian equity markets managed to trade well above the neutral lines in late afternoon session. Markets participants were optimistic due to easing trade tensions between the United States and the European Union, as Trump said that he would delay imposing 50 percent tariffs on imports from the EU until July 9, backing of this threat to impose tariffs on goods from the European Union as soon as 1 June. Besides, investors took a sigh of bliss after the Reserve Bank of India announced a record Rs 2.69 lakh crore dividend to the government for FY25, 27.4 per cent higher than 2023-24. Meanwhile, early arrival of monsoon has raised optimisms of healthy kharif crop and improved rural demand.

On the global front, Asian equity markets were trading mostly in red as U.S. President Donald Trump threatened to roll out 25 percent tariffs by the end of next month on smartphones made by Apple, Samsung Electronics Co. and other companies, if they are not manufactured in the U.S. European equity markets were trading in green.

The BSE Sensex is currently trading at 82139.00, up by 417.92 points or 0.51% after trading in a range of 81867.23 and 82492.24. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.54%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Auto up by 1.03%, Industrials up by 1.00%, IT up by 0.97%, Realty up by 0.96% and Capital Goods up by 0.94%. Meanwhile, there were no losers on BSE sectoral index.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.26%, Trent up by 1.74%, Tata Motors up by 1.64%, Larsen & Toubro up by 1.48% and Tech Mahindra up by 1.39%. On the flip side, Eternal down by 4.65%, Ultratech Cement down by 0.66%, Sun Pharma Industries down by 0.66%, Power Grid Corporation down by 0.64% and Kotak Mahindra Bank down by 0.59% were the top losers.

Meanwhile, Moody's Ratings in its latest report has said that growing cement demand will fuel consolidation in the cement sector, where large players are acquiring smaller regional players as they rush to increase production capacity to match the rising consumption. It said over the past five years, the cement sector in India has witnessed significant industry consolidation and top 10 producers in the country have acquired around 140 million metric tonnes per annum (MMTPA) of domestic cement capacity, valued at around Rs 890 billion ($10.5 billion), from smaller regional players. 

The report said large companies with a pan-India presence such as UltraTech and Ambuja will continue to engage in M&A (merger and acquisition) to acquire smaller regional producers with weaker capacity utilisation and lower profitability. It said given the presence of a large number of smaller cement producers, numbering over 70, companies in South India are more exposed to industry consolidation compared with those domiciled in other parts of the country. South India, with an installed capacity of more than 200 MMTPA, comprising states of Telangana, Tamil Nadu, Kerala, Karnataka and Andhra Pradesh, is the largest cement-producing region in the country followed by the north and east, each with a capacity of around 150 MMTPA.

According to report, cement demand in India is expected to grow substantially through the end of the decade with a consumption growth of 6 to 7 per cent CAGR, supported by tailwinds such as rising housing needs and government-led infrastructure spending. This will force the industry to expand capacity by a third in the next five years to cater to growing demand. Larger players with a pan-India presence will likely acquire smaller regional producers with weaker capacity utilisation and lower profitability. It noted that ongoing industry consolidation combined with steady demand growth will keep capacity utilisation stable for the incumbents. It added that the industry capacity will likely expand by a third in the next five years as leading companies increase capacity to cater to growing demand.

The CNX Nifty is currently trading at 25003.60, up by 150.45 points or 0.61% after trading in a range of 24900.50 and 25079.20. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.25%, Mahindra & Mahindra up by 2.13%, JSW Steel up by 2.10%, Hindalco up by 1.92% and Trent up by 1.70%. On the flip side, Eternal down by 4.60%, Ultratech Cement down by 0.65%, Sun Pharma Industries down by 0.62%, Power Grid Corporation down by 0.59% and Kotak Mahindra Bank down by 0.56% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 318.93 points or 1.37% to 23,282.33, Taiwan Weighted lost 115.67 points or 0.54% to 21,536.57, Jakarta Composite plunged 39.5 points or 0.55% to 7,174.66, Straits Times fell 4.09 points or 0.11% to 3,878.33 and Shanghai Composite weakened 1.53 points or 0.05% to 3,346.84, while KOSPI increased 52.31 points or 1.98% to 2,644.40 and Nikkei 225 surged 371.06 points or 0.99% to 37,531.53.

European markets were trading in green; France’s CAC rose 94.41 points or 1.22% to 7,828.81 and Germany’s DAX gained 385.65 points or 1.63% to 24,015.23.