Key gauges end higher on Wednesday

Indian equity benchmarks ended higher on Wednesday after three days of decline, supported by favourable global cues such as strong US job data and signs of easing US-China trade tensions. Buying in blue-chips Eternal, Bharti Airtel and Tech Mahindra also added optimism to markets recovery. 

Some of the important factors in today’s trade:

Domestic economic conditions will continue to be supportive for growth: Moody's Ratings in its report on the banking sector has said India's domestic economic conditions will continue to be supportive for growth, which will help banks preserve their asset quality and maintain system wide nonperforming loan (NPL) ratio 2-3 per cent in over next 12 months. 

RBI MPC meeting starts: The Reserve Bank's rate-setting panel started its three-day brainstorming on monetary policy as expectations are high of a 25 bps or even a jumbo 50 bps rate cut to fuel economic growth amid uncertainties created by Trump's tariff moves. The decision of the Monetary Policy Committee (MPC) will be announced on Friday.

India services growth steady in May 2025: A monthly report said the Indian services growth broadly steadied in May and was underpinned by healthy demand conditions, new client wins and greater staffing capacity. The seasonally adjusted HSBC India Services PMI Business Activity Index was at 58.8 in May, marginally up from April's 58.7 and signalled another sharp rate of expansion. 

Rupee falls against US Dollar: Indian rupee depreciated for the second consecutive session and settled for the day lower against the US dollar, dragged down by risk-averse sentiments and foreign fund outflows. Local unit remained under pressure on geopolitical tensions between Russia-Ukraine and elevated crude oil prices.

Positive global cues: European markets were trading in green as investors braced for a 25-basis point rate cut from the European Central Bank when it meets on Thursday. Asian markets settled higher on Wednesday after new data showed the U.S. labor market is holding up in the face of tariff uncertainty. 

Finally, the BSE Sensex rose 260.74 points or 0.32% to 80,998.25 and the CNX Nifty was up by 77.70 points or 0.32% to 24,620.20.

The BSE Sensex touched high and low of 81,087.29 and 80,705.18 respectively. There were 18 stocks advancing against 12 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.76%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were Telecom up by 1.35%, Utilities up by 0.99%, TECK up by 0.75%, Energy up by 0.69% and Basic Materials up by 0.56%, while Realty down by 0.77% and Bankex down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Eternal up by 3.32%, Bharti Airtel up by 1.82%, Tech Mahindra up by 1.25%, Reliance Industries up by 1.23% and Bharat Electronics up by 1.22%. On the flip side, Bajaj Finserv down by 1.66%, Trent down by 1.35%, Axis Bank down by 0.90%, TCS down by 0.72% and Titan Company down by 0.60% were the top losers.

Meanwhile, the Organisation for Economic Co-operation and Development (OECD) in its latest 'Economic Outlook' has projected India’s economic growth at 6.3% in FY2025-26 and 6.4% in FY2026-27. As per the report, India projected to continue to experience strong and broadly stable economic growth. Besides, inflation is projected to remain largely benign.

It said private consumption will gradually strengthen, driven by rising real incomes that are helped by moderate inflation, recent tax cuts and a strengthening of the labour market. Investment will be supported by declining interest rates and substantial public capital spending, but higher US tariffs will weigh on exports. Inflation will remain contained at around 4% as economic activity grows around trend. 

With inflation firmly within the target range, it said monetary policy is gradually expected to become more accommodative. Better targeting of energy and fertiliser subsidies, and an overhaul of tax expenditures, could enhance spending efficiency and free resources for other policy priorities. It highlighted that policy rate reductions are expected to cease by end-2025.

It further warned that the risk of increased trade tensions, including the imposition of higher US tariffs on Indian exports, could dampen external demand and harm export-oriented sectors such as textiles, chemicals, and pharmaceuticals. Trade tensions may also discourage private investment in tradable sectors.

The CNX Nifty traded in a range of 24,644.25 and 24,530.45. There were 32 stocks advancing against 18 stocks declining on the index.   

The top gainers on Nifty were Eternal up by 3.21%, JIO Financial Services up by 2.36%, Indusind Bank up by 1.79%, Tata Motors up by 1.78% and Bharti Airtel up by 1.72%. On the flip side, Bajaj Finserv down by 1.63%, Trent down by 1.43%, Eicher Motors down by 1.01%, Shriram Finance down by 0.96% and Axis Bank down by 0.83% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 15.75 points or 0.18% to 8,802.77, France’s CAC rose 50.72 points or 0.65% to 7,814.56 and Germany’s DAX gained 146.86 points or 0.61% to 24,238.48.

Asian markets settled higher on Wednesday tracking Wall Street’s gains overnight. Meanwhile, expectations of progress in US-China trade negotiations also supported market sentiments. Chinese and Hong Kong shares gained underpinned by expectations of more Chinese stimulus. Japanese shares rose as the yen weakened, boosting the outlook for exporters. Seoul shares and its currency Won strengthened as liberal presidential candidate Lee Jae-myung's election victory raised hopes of swift economic stimulus, market reforms and easing policy uncertainty.