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Snapping 3-day losing run, Indian equity benchmarks made a sharp recovery and ended with gains of around a percent on Thursday led by buying in Metal, Banking and Basic Materials stocks. Benchmarks made positive start, as traders took support with a private report that India’s economy is expected to have grown at 9.2 per cent in the fiscal ended March 2022, after having contracted by 7.3 per cent in the previous financial year, aided by resilience in the rural economy, uptick in bank credit and rising GST collections.

However, key gauges erased initial gains and soon slipped into red terrain in morning deals, as traders turned cautious with continued selling by foreign investors. Provisional data available on the NSE showed that foreign institutional investors (FIIs) have net sold shares worth Rs 1,803.06 crore on May 25. Some concern also came as research and ratings agency CRISIL in its latest study has said increased cost of solar modules and steel combined with higher logistics cost will impact 5 giga watt (GW) solar capacity under implementation in the private sector. Adding to the pessimism, a private report stated that the current price situation leaves hardly any scope for rationalisation of GST rates on goods and services.

But, markets witnessed healthy short covering towards the closing hours that helped key indices to end higher. Some support came as real estate developers in the national capital region said the central government's move to ease prices of iron, steel and cement will provide a significant relief to builders as well as homebuyers. Traders overlooked report that Moody’s Investors Service slashed India's economic growth projection to 8.8 percent for 2022 from 9.1 percent earlier, citing high inflation. It stated the rise in crude oil, food, and fertilizer prices will weigh on household finances and spending in the months ahead. Rate hike to prevent energy and food inflation from becoming more generalized will slow the demand recovery's momentum.

On the global front, European markets were trading higher as investors reacted favorably to the latest Federal Reserve meeting minutes, indicating large rate hikes now while allowing Fed officials room for flexibility later in the year. Asian markets settled mostly lower on Thursday amid worries that tightening global financial conditions will weigh on economic growth. Meanwhile, market participants looked ahead to the release of key U.S. GDP, labor and housing market data later in the day for further clues about the outlook for the world's largest economy.

Back home, power stocks were in focus with a private report that the Ministry of Power notified that it is working on a scheme to liquidate the past dues of power distribution companies (discoms) to provide relief to the entire value chain in the power sector which has been reeling under the pressure of non-payment. Paper industry’s stocks were in watch as Indian Paper Manufacturers Association (IPMA) said exports of paper and paperboard from India jumped nearly 80 per cent in FY 2021-22, touching a record Rs 13,963 crore. There was some reaction in jewelry industry stocks as the RBI came up with norms for facilitating physical import of gold through India International Bullion Exchange IFSC (IIBX) or similar authorised exchange by Qualified Jewellers in India.

Finally, the BSE Sensex rose 503.27 points or 0.94% to 54,252.53 and the CNX Nifty was up by 144.35 points or 0.90% to 16,170.15. 

The BSE Sensex touched high and low of 54,346.22 and 53,425.25, respectively. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.44%, while Small cap index was up by 0.78%.

The top gaining sectoral indices on the BSE were Metal up by 3.35%, Bankex up by 2.15%, Basic Materials up by 1.76%, Realty up by 1.43%, PSU up by 1.42% while, FMCG down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 5.27%, SBI up by 3.26%, HDFC Bank up by 2.96%, Axis Bank up by 2.82% and Nestle India up by 2.28%. On the flip side, Sun Pharma down by 1.16%, Reliance Industries down by 0.91%, Hindustan Unilever down by 0.83%, Larsen & Toubro down by 0.67% and Dr. Reddy's Laboratories down by 0.21% were the top losers.

Meanwhile, strongly defending the government's decision to control wheat and sugar exports, Commerce and Industry Minister Piyush Goyal has said that the steps were necessary keeping in mind the domestic requirements and a need to keep hoarders and speculators in check who could have exploited vulnerable poor nations by selling them the commodities at higher prices. Goyal said a lot of misconceptions are doing the rounds on this issue.

Goyal said India traditionally has never been an exporter of grains and was rather importing initially, till the Green Revolution happened. He said ‘Still, for the last many years we were only producing for our own consumption, and it was only two years ago that we began to export after a surplus production, that too of a nominal quantity. Also, most of our wheat went to poor countries. Unfortunately, there was a climate problem last year due to which our wheat production fell sharply and we had to draw from our food security reserves'. He said ‘at the same time, we saw that the speed at which wheat was going out, we had to intervene to regulate the wheat export and we also thought we must check middlemen who could procure from India and then sell at high prices to poor countries. We are still ready to help vulnerable countries if the WTO regulations allow that’. He highlighted that ‘we have to take care of our food security requirements as it was this reserve that helped us ensure food availability for our poor people during the COVID-19 pandemic’.

He further said ‘in sugar too India's total export was 10 million tonnes and we have said that we will continue to look at that level but we would ensure that speculators and hoarders are put under check’. He said ‘different countries at different points of time have to take extraordinary measures to safeguard the interest of their people’. About India deciding to import oil from Russia, he said the government has made it very clear that the quantity of oil imported from Russia was only a fraction of what was being bought by Europe and that the decision did not violate any of the sanction conditions.

The CNX Nifty traded in a range of 16,204.45 and 15,903.70. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 5.08%, Apollo Hospital up by 4.96%, JSW Steel up by 4.52%, SBI up by 3.41% and HDFC Bank up by 3.03%. On the flip side, UPL down by 2.02%, Divi's Lab down by 1.83%, Sun Pharma down by 1.03%, Reliance Industries down by 0.88% and ONGC down by 0.69% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 9.85 points or 0.13% to 7,532.60, France’s CAC increased 37.54 points or 0.6% to 6,336.18 and Germany’s DAX increased 67.92 points or 0.48% to 14,075.85.

Asian markets settled mostly lower on Thursday amid global economic growth concerns. Minutes from the Federal Reserve's latest meeting showed broad support among Fed members to raise interest rates by a cumulative 100 basis points over the next two meetings to cool surging inflation. Further, worries over surging inflation and prolonged Covid-19 curbs in China also adding pressure on market sentiments. Seoul shares declined marginally as South Korea’s central bank hiked interest rates for a second consecutive meeting to wrestle consumer inflation down from 13-year highs. However, Chinese shares gained in spite of downbeat remarks on the economic outlook by Premier Li Keqiang. Chinese Premier Li Keqiang said the nation’s economy is in some respects faring worse than in 2020 when the pandemic first emerged, urging efforts to reduce a soaring unemployment rate. Meanwhile, Indonesian market is closed for Ascension Day holiday.

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