Indian stock markets traded in green for whole day and finally settled at all-time closing highs on Tuesday, as declining COVID-19 infections prompted more parts of the country to open businesses, with sentiment aided by upbeat broader markets. Traders took support with report that after making a late entry, the south-west monsoon has progressed steadily and, in the first fortnight, covered almost two-thirds of the country, which is almost 15 days ahead of schedule. Sentiments remained positive with SBI Research’s report that if there is no third wave of Covid-19 pandemic, the fiscal position of the Centre and the states will be much better than budgeted for FY22 and the states may garner Rs 60,000 crore more in tax collections at Rs 8.27 lakh crore this fiscal year than they have budgeted. Some optimism also came in with Federation of Indian Export Organisations (FIEO) stating that the order book position of exporters are healthy and the growth story will continue to be a mixed one as outbound shipments of both value added goods and raw material will contribute to push the overall exports of the country. It said India has started on a good note in 2021 and exports figures so far have been encouraging.
However, key gauges cut some gains in final hour of trade, as the government report stating that India's retail inflation shot up to six-month high of 6.3 per cent in May, after easing to a three-month low of 4.23 per cent in April. Inflation, based on Consumer Price Index (CPI), has breached the Reserve Bank of India's (RBI) target range for the first time after five months. Some concern also came as SBI Ecowrap report suggested that the space for monetary accommodation is over, as the economy battles yet again to come out of the Covid-induced slowdown, and the Reserve Bank of India (RBI) will face multiple challenges in terms of boosting India's growth rate and stabilising the rupee. Also, Foreign Institutional Investors (FII) were net sellers of domestic stocks on Monday, pulling out Rs 503 crore. Meanwhile, amidst both support to as well as calls for a review of its new norms for appointing auditors by financial institutions, the Reserve Bank has stuck to its stance but has clarified certain doubts in the industry on the tenure and eligibility criteria among others.
On the global front, Asian markets ended mostly higher on Tuesday as traders returned from a long weekend to play catch-up with global markets. Investors await the outcome of a two-day policy meeting of the Federal Reserve starting later in the day for indications of the central bank's view on recent inflation rises. European markets were trading higher amid hopes for a swift and lasting economic recovery from the coronavirus pandemic. Back home, on the sectoral front, cement industry stocks were in focus as ICRA in its report stated that the second wave of Covid-19 has adversely impacted domestic cement production - the all India production declined 35 percent month-on-month in April 2021 and was lower by 4 percent compared to April 2019.
Finally, the BSE Sensex rose 221.52 points or 0.42% to 52,773.05, while the CNX Nifty was up by 57.40 points or 0.36% to 15,869.25.
The BSE Sensex touched high and low of 52,869.51 and 52,671.29, respectively and there were 15 stocks advancing against 15 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 0.60%, while Small cap index was up by 0.44%.
The top gaining sectoral indices on the BSE were Realty up by 1.55%, Consumer Discretionary up by 0.99%, Bankex up by 0.91%, FMCG up by 0.79% and Industrials up by 0.44%, while Healthcare down by 0.71%, Power down by 0.53%, Metal down by 0.45%, Utilities down by 0.44% and PSU down by 0.10% were the top losing indices on BSE.
The top gainers on the Sensex were Asian Paints up by 3.18%, Axis Bank up by 1.97%, ICICI Bank up by 1.57%, Hindustan Unilever up by 1.11% and Indusind Bank up by 0.91%. On the flip side, Bajaj Finserv down by 1.11%, Dr. Reddys Lab down by 0.82%, Titan Company down by 0.68%, Sun Pharma down by 0.60% and Bajaj Finance down by 0.54% were the top losers.
Meanwhile, SBI Research in its latest report has said that if there is no third wave of Covid-19 pandemic, the fiscal position of the Centre and the states will be much better than budgeted for FY22 and the states may garner Rs 60,000 crore more in tax collections at Rs 8.27 lakh crore this fiscal year than they have budgeted. The report bases its optimism on GST collection so far this fiscal, which has been the best ever in spite of the fact that the two months bore the maximum brunt of the second wave -- with April setting a record Rs 1.41 lakh crore and May collection a tad low at Rs 1.03 lakh crore.
The report also said overall government finances do not look overstretched as GST collections have continued to maintain pace so far and the additional fiscal impact arising from free vaccination and more food supplies will only be around Rs 28,512 crore. The states, even amidst the lockdowns, have budgeted for a 31 per cent GST revenue growth this fiscal at Rs 6,38,007 crore, according to the SBI Research. In FY19, the same had jumped 46 per cent, on base effect to Rs 4,90,136 crore from Rs 3,34,849 crore, which in FY20 declined 0.4 per cent to Rs 4,88,230 crore and was flat in FY21 at Rs 4,88,015 crore.
According to the report, for FY22, the states have budgeted for a compensation cess of Rs 1.28 lakh crore and combining their estimates for SGST and cess, the states are sticking more or less to the 14 per cent revenue growth rate projections. But the Centre has budgeted only Rs 1 lakh crore for FY22 as GST compensation cess and has said it will borrow an additional Rs 1.58 lakh crore to pay the states and has pegged the total compensation for the states this fiscal at Rs 2.7 lakh crore.
The CNX Nifty traded in a range of 15,901.60 and 15,842.40 and there were 25 stocks advancing against 25 stocks declining on the index.
The top gainers on Nifty were Asian Paints up by 2.88%, HDFC Life Insurance up by 1.78%, Axis Bank up by 1.66%, ICICI Bank up by 1.46% and Hindustan Unilever up by 1.24%. On the flip side, Divi's Lab down by 1.57%, Adani Ports and SEZ down by 1.56%, Coal India down by 1.41%, Tata Motors down by 1.11% and Bajaj Finserv down by 1.06% were the top losers.
European markets were trading higher, UK’s FTSE 100 increased 21.88 points or 0.31% to 7,168.56, France’s CAC rose 26.39 points or 0.4% to 6,642.74 and Germany’s DAX was up by 77.52 points or 0.49% to 15,751.16.
Asian markets ended mostly higher on Tuesday tracking a strong finish on the Nasdaq overnight, even as investors eyeing this week's Federal Reserve meeting with fear of rising interest rates. Japanese shares ended up after the Bank of Japan said it will consider extending the September deadline for its pandemic-relief programs to support a fragile economic recovery. However, Chinese shares declined as tensions between Beijing and the West soured investor sentiment after Group of Seven leaders called for Hong Kong to keep a high degree of autonomy.
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