Benchmarks end higher; auto stocks shine

The BSE Mid cap index rose 1.40%, while Small cap index was up by 1.18%

Indian benchmark indices ended nearly one percent higher in the highly volatile session on Thursday, led by gains in Auto, Consumer Discretionary and IT stocks despite fears of rising rates and recession across the globe. Indian markets opened on a positive note, as sentiments got a boost with Prime Minister Narendra Modi’s statement that the government expects the Indian economy to grow by 7.5 per cent this year. Modi also said the value of the Indian digital economy will reach $1 trillion by 2025. Traders remained energized with RBI data showing that the country's foreign exchange reserves in nominal terms, including valuation effects, rose by $30.3 billion in 2021-22 fiscal against $99.2 billion expansion in FY2020-21. Traders took note of a private report that sowing of kharif crops like soyabean, paddy, cotton has picked up in the country amid an advancing monsoon.

However, during the afternoon session markets trimmed all of their gains to trade with minor cuts, as traders turned cautious with the Reserve Bank stating that India witnessed a current account deficit of 1.2 per cent of GDP in 2021-22 against a surplus of 0.9 per cent in FY2020-21 due to a wider trade deficit. Some pessimism also came with Sebi data showed that Investment in the Indian capital markets through participatory notes (P-notes) dropped to Rs 86,706 crore till May-end from the preceding month. But, selling proved short-lived as key gauges bounced back in afternoon deals to close higher taking support from a private reports stating that the corporate profit to Gross Domestic Product (GDP) ratio rebounded to a decade high of 4.3 per cent and 4.5 per cent for the Nifty-500 universe and listed India companies, respectively. The recovery was driven by the expansion in the economy, after a Covid-led contraction in 2021, while corporate profit rose at a faster rate of 48 per cent year-on-year for the Nifty 500 companies.

On the global front, European markets were trading mostly in green even as data showed business activity in the eurozone slid to its lowest level in 16 months in June. Besides, S&P Global said the flash June composite purchasing managers index - which combines data from the currency bloc's service and manufacturing sectors - slumped to 51.9 from 54.8 in May. Asian markets ended mixed on Thursday after Federal Reserve Chair Jerome Powell said he believed the U.S. economy is strong enough to handle coming interest-rate hikes, but acknowledged that a recession could happen.

Back home, telecom stocks were in focus as the government removed spectrum usage charge ahead of the 5G airwave auction in a move that will enable companies save costs in spectrum purchase. Stocks related to aviation sector were in focus as Directorate General of Civil Aviation (DGCA) in its latest data has stated that domestic air passenger traffic saw a strong recovery in demand as Indian carriers flew 1.20 crore passengers on the local routes in May 2022, logging nearly five-fold year-on-year volume growth. Domestic air passenger traffic in May 2021 stood at a meager 21-lakh.

Finally, the BSE Sensex rose 443.19 points or 0.86% to 52,265.72 and the CNX Nifty was up by 143.35 points or 0.93% to 15,556.65.

The BSE Sensex touched high and low of 52,516.79 and 51,632.85, respectively. There were 27 stock advancing against 3 stocks declining on the index.  

The broader indices ended in green; the BSE Mid cap index rose 1.40%, while Small cap index was up by 1.18%.

The top gaining sectoral indices on the BSE were Auto up by 4.42%, Consumer Discretionary up by 2.40%, IT up by 1.87%, TECK up by 1.85% and Telecom up by 1.81%, while Energy down by 0.47% and Oil & Gas down by 0.29% were the few losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 6.33%, Mahindra & Mahindra up by 4.41%, Asian Paints up by 3.39%, Bharti Airtel up by 2.96% and TCS up by 2.70%. On the flip side, Reliance Industries down by 1.62%, NTPC down by 0.94% and Power Grid Corporation down by 0.90% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its latest report has showed that India witnessed a current account deficit (CAD) of 1.2 per cent of Gross Domestic Product (GDP) in fiscal year 2021-22 (FY22) against a surplus of 0.9 per cent in FY2020-21 due to a wider trade deficit. Current account deficit occurs when the value of goods and services imported and other payments exceeds the value of export of goods and services and other receipts by a country in a particular period.

The central bank said the trade deficit widened to $189.5 billion in FY22 from $102.2 billion a year ago, which resulted in slippage in the number which is considered a key representation of a country's external strength.

The Balance of Payments data suggested that goods imports stood at $618.6 billion in FY22 as against $398.5 billion in the year-ago period, leading to the widening of the trade deficit. Besides, for the January-March 2022 quarter (Q4FY22), the CAD narrowed on a sequential basis to $13.4 billion or 1.5 per cent of GDP against $22.2 billion or 2.6 per cent of GDP in the December 2021 quarter.

The CNX Nifty traded in a range of 15,628.45 and 15,367.50. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 6.65%, Hero MotoCorp up by 6.08%, Eicher Motors up by 5.87%, Mahindra & Mahindra up by 4.49% and Bajaj Auto up by 3.97%. On the flip side, Reliance Industries down by 1.46%, Power Grid Corp down by 1.19%, Coal India down by 1.12%, NTPC down by 1.05% and Grasim Industries down by 0.53% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 12.62 points or 0.18% to 7,101.84 and France’s CAC increased 4.20 points or 0.07% to 5,920.83, while Germany’s DAX decreased 96.41 points or 0.73% to 13,047.87.

Asian markets ended mixed on Thursday after US Federal Reserve Chair Jerome Powell said he believed the world's largest economy is strong enough to handle coming interest-rate hikes, but also noted that a recession is certainly a possibility. Chinese shares gained as Chinese tech companies and automakers jumped on Beijing’s policy support. Reports showing that Beijing is considering extending a purchase tax exemption for new energy vehicles in a bid to boost the auto sector. Additionally, Chinese President Xi Jinping signaled support to the country’s leading payment and fintech firms in the latest indication that Beijing is easing its regulatory crackdown on the sector. Meanwhile, Japanese shares ended almost flat as data showed Japanese factory output grew at its slowest rate in three months.

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