Indian stock markets have recovered all their losses and ended flat with a positive bias on Monday, due to strength in index heavyweights such as Reliance Industries, Bajaj Finance and ONGC amid positive cues from global markets. Markets, after opening on a negative note had extended losses in the first half, as some cautiousness came in as the GST Council, at its single-agenda meeting, decided to retain the GST on Covid-19 vaccines at 5 per cent. However, it temporarily slashed the tax rates on most supplies and also exempted drugs for treating the black fungus. Sentiments remained down-beat as Former RBI Governor D Subbarao expressed concerns over ‘extreme unevenness’ in economic recovery and ‘sharpening inequalities’ between upper-income segments and lower-income households in the country, cautioning that the trend will hit growth prospects going forward. Terming the uneven recovery ‘morally wrong and politically corrosive’ he said liquidity in the domestic market and foreign fund inflows are leading to soaring prices of stocks and other assets despite disruptions due to the Covid pandemic.
Benchmarks remained subdued in afternoon trade, as the wholesale price-based (WPI) inflation accelerated to a record high of 12.94 per cent in May, on rising prices of crude oil and manufactured goods. Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent. This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49 per cent. But, markets rebounded sharply in the second half, as overseas investors pumped in a net Rs 13,424 crore so far in June as risk-on sentiment improved with declining Covid-19 cases and hopes of early opening of economy. Depositories data showed that foreign portfolio investors (FPIs) invested Rs 15,520 crore in equities during June 1-11. Traders took note of the government data showing that the Index of Industrial Production (IIP) stood at 126.6 points in April this year. The IIP was at 54 points in April 2020 and 126.5 points in April 2019. As per the partial data, IIP growth works out to be 134 per cent in April 2021 over the same month last year, mainly due to the low base effect.
On the global front, Asian markets settled mostly higher on Monday, following the broadly positive cues from Wall Street. The markets are supported by energy and technology stocks in particular. Meanwhile, investors seem reluctant to make significant moves ahead of the U.S. Federal Reserve's monetary policy meeting scheduled for Tuesday and Wednesday for cues about global economic recovery. European markets were trading higher, as European Central Bank President's comments on continuance of stimulus till economic recovery proved sustainable supported the rally, despite the impending review of Federal Funds Rate by U.S FOMC later in the week. Market sentiment was also supported as Eurozone Industrial Production for April recorded 39.3 percent growth as against the forecast of 37.4 percent. Back home, Adani group stocks were in focus following the action taken against three FPI accounts owning Adani Group shares by NSDL.
Finally, the BSE Sensex rose 76.77 points or 0.15% to 52,551.53, while the CNX Nifty was up by 12.50 points or 0.08% to 15,811.85.
The BSE Sensex touched high and low of 52,590.92 and 51,936.31, respectively and there were 14 stocks advancing against 16 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index fell 0.68%, while Small cap index was down by 0.16%.
The top gaining sectoral indices on the BSE were Energy up by 0.81%, IT up by 0.46%, TECK up by 0.39%, Consumer Durables up by 0.38% and Oil & Gas up by 0.37%, while Power down by 1.98%, Realty down by 1.55%, Industrials down by 1.07%, Utilities down by 0.96%, Capital Goods down by 0.48% were the top losing indices on BSE.
The top gainers on the Sensex were Reliance Industries up by 1.46%, Bajaj Finance up by 1.23%, ONGC up by 1.05%, Infosys up by 1.01% and Power Grid up by 0.97%. On the flip side, Kotak Mahindra Bank down by 1.51%, HDFC down by 0.76%, Sun Pharma down by 0.59%, Bajaj Auto down by 0.57% and NTPC down by 0.51% were the top losers.
Meanwhile, Former RBI Governor D Subbarao has expressed concerns over ‘extreme unevenness’ in economic recovery and ‘sharpening inequalities’ between upper-income segments and lower-income households in the country, cautioning that the trend will hit growth prospects going forward. Terming the uneven recovery ‘morally wrong and politically corrosive’ he said liquidity in the domestic market and foreign fund inflows are leading to soaring prices of stocks and other assets despite disruptions due to the Covid pandemic.
The ex-central bank governor further said that earlier expectations of a sharp economic recovery this year have been dashed by the new pandemic wave. He noted that the economy contracted last year, for the first time in four decades, by as much as 7.3 percent. That was less deep than we had first feared but still deep enough to have caused distress to millions of families in the informal sector. He added that there was the expectation of a sharp recovery this year but those expectations are now tempered by the impact of the second wave.
The former RBI chief further said the RBI too reduced its growth forecast for the current fiscal by one percentage point, from 10.5 percent to 9.5 percent, and added that even 9.5 percent growth might seem impressive but note that this is coming on a very low base of last year. He said ‘even if we clock this growth rate, the output during this fiscal 2021/22 will still be less than the output two years ago before the pandemic hit us. Compare that with China which never fell below its pre-pandemic level and the US which is expected to recover to its pre-pandemic level this year.’
The CNX Nifty traded in a range of 15,823.05 and 15,606.50 and there were 25 stocks advancing against 25 stocks declining on the index.
The top gainers on Nifty were Divis Lab up by 1.46%, Tata Motors up by 1.45%, Reliance Industries up by 1.44%, Wipro up by 1.41% and Bajaj Finance up by 1.29%. On the flip side, Adani Ports &SEZ down by 9.26%, Coal India down by 2.12%, Kotak Mahindra Bank down by 1.51%, HDFC down by 0.772% and NTPC down by 0.7622% were the top losers.
European markets were trading higher; UK’s FTSE 100 increased 36.91 points or 0.52% to 7,170.97, France’s CAC rose 22.40 points or 0.34% to 6,623.06 and Germany’s DAX was up by 49.12 points or 0.31% to 15,742.39.
Asian markets settled mostly higher on Monday tracking weekend's solid finish on Wall Street, while investors remained cautious ahead of the US Federal Reserve's monetary policy meeting scheduled for Tuesday and Wednesday for more cues about economic recovery and monetary policy. The market sentiment improved further after the G7 summit ended with a pledge to continue to support economies with investment until pandemic subsidies. Japanese shares ended with solid gains after the Japanese government lifted the Corona-virus state of emergency in Olympics city Tokyo and downgraded it to quasi-emergency state in three prefectures. Meanwhile, markets in Taiwan, China and Hong Kong were closed for the Dragon Boat Festival.
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