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Snapping four-day falling streak, Indian equity benchmarks finished a choppy session higher by over half percent on Friday on renewed buying interest from foreign funds and firm global trends.  Key gauges made optimistic start and stayed in green for most part of the day, as sentiments got some support with the government data showed India's overall exports, merchandise and services combined, rose to $64.91 billion in June 2022, registering a year-on-year growth of 22.95 per cent. For the April-June 2022 period, the overall exports stood at $189.93 billion, exhibiting a positive growth of 25.16 per cent over the same period last year. Some support also came as Crisil Ratings in its latest report stated that securitisation volumes increased by 70 per cent to Rs 35,000 crore in the April-June quarter of FY23 (Q1FY23) and the credit growth at non-banks may take the number to the pre-pandemic highs of Rs 1.9 lakh crore in FY23. It noted that the volumes were high in first quarter of FY23 primarily due to increase in economic activity, while the high growth came on the back of a low base.

However, markets trimmed most of their initial gains in afternoon deals, as some concern came with the Finance Ministry in its monthly economic review report has said that India's current account deficit is likely to deteriorate in the current fiscal (FY23) on account of costlier imports and tepid merchandise exports. The review also said that global headwinds would continue to pose a downside risk to growth as crude oil and edibles, which have driven inflation in India, remain major imported components in the consumption basket. But, markets soon gained traction to close higher, as optimism remained among traders with the Ministry of Finance said in its latest Monthly Economic Review report that India's services sector has witnessed a broad-based recovery in sales revenues in both nominal and real terms during the January-March 2022 quarter 2022. The Information technology (IT) companies maintained strong growth while non-IT service companies continued to recover from the slump caused by the lockdown.

On the global front, Asian markets settled mixed on Friday, after official data showed China eked out GDP growth of 0.4% in the second quarter from a year ago, missing expectations as the economy struggled to shake off the impact of Covid controls. European markets were trading higher after two Federal Reserve officials backed another 0.75-percentage-point interest rate increase at the U.S. central bank's meeting later this month, helping ease worries about more aggressive rate hikes. Back home, banking stocks were in focus as Fitch Ratings said mounting repayment pressure for some borrowers, particularly micro, small and medium-sized enterprises, amid India's interest rate hikes will test banks' loan underwriting quality. There were some reaction in stocks related to advertising industry with a private report that the Indian advertising market will remain the fastest-growing in the world over the next two years. There will be some earnings announcements too to keep the markets buzzing.

Finally, the BSE Sensex rose 344.63 points or 0.65% to 53,760.78 and the CNX Nifty was up by 110.55 points or 0.69% to 16,049.20. 

The BSE Sensex touched high and low of 53,811.37 and 53,361.62, 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 0.84%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Auto up by 2.34%, Consumer Durables up by 1.56%, FMCG up by 1.48%, Capital Goods up by 1.47%, Telecom up by 1.35% while, Metal down by 0.99%, IT down by 0.17%, Utilities down by 0.16%, Power down by 0.08% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.87%, Titan Company up by 2.84%, Maruti Suzuki up by 2.55%, Larsen & Toubro up by 2.34% and HDFC up by 2.19%. On the flip side, Tata Steel down by 2.70%, Power Grid Corporation down by 2.54%, HCL Technologies down by 2.28%, Wipro down by 1.93% and Dr. Reddy's Lab down by 0.84% were the top losers.

Meanwhile, Fitch Ratings has said mounting repayment pressure for some borrowers, particularly micro, small and medium-sized enterprises, amid India's interest rate hikes will test banks' loan underwriting quality. However, it stated asset-quality risks from higher rates should generally be moderate for most banks.

It underlined that higher rates will also affect securities valuations and could make it harder for banks to raise fresh capital, particularly at state banks, although wider net interest margins (NIM) will have offsetting positive credit effects.

It mentioned ‘We expect rates to rise further, reaching 5.90 per cent by end-2022 and 6.15 per cent by end-2023, then remaining at this level through 2024’.it added banks have been quick to pass on higher rates through loan portfolios, which are mainly floating in nature but have been slower in raising deposit rates. Moreover, it said this trend should support higher NIM, but the lack of competition for deposits may point to relatively muted demand for new credit. The Reserve Bank of India (RBI) raised policy interest rates by 50 bps to 4.90 per cent in June.

The CNX Nifty traded in a range of 16,066.95 and 15,927.30. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Tata Consumer Product up by 3.27%, Titan Company up by 2.89%, Hindustan Unilever up by 2.89%, Tata Motors up by 2.51% and Larsen & Toubro up by 2.42%. On the flip side, Tata Steel down by 2.64%, Power Grid Corporation down by 2.63%, HCL Technologies down by 2.23%, Wipro down by 1.98% and JSW Steel down by 1.28% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 52.59 points or 0.75% to 7,092.40, France’s CAC increased 28.64 points or 0.48% to 5,944.05 and Germany’s DAX increased 190.28 points or 1.52% to 12,709.94.

Asian markets settled mixed on Friday after two US Fed officials played down the expectations for a 100-bps rate hike at the US central bank's July meeting. Meanwhile, rising US interest rates have continued to push the dollar higher against other major currencies. A key measure of US wholesale prices increased more than expected in June and new claims for unemployed benefits hit an eight-month high last week, fueled fears of a potential recession. Chinese shares declined sharply after data showed GDP grew 0.4 percent year-on-year in the second quarter against expectations for 1 percent growth.

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