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Indian equity benchmarks traded volatile and settled marginally in the green on the day of monthly expiry of May month contracts. Markets made a cautious start, as rating agency Crisil in its research report said higher input prices and disruptions to the rural economy have resulted in price pressures and inflation is back to haunt us. The report by Crisil said it sees upside risks to its 5 per cent estimate on consumer price inflation in FY21 because of this. Besides, India recorded over 211,000 new Covid infections, while deaths from the disease rose by 3,842. The country's total cases now stand at 27.36 million. However, benchmarks moved higher in noon deal as traders took some support with private report that the government may at the beginning of the unlock phase announce another stimulus package for the most hit sectors such as small business and self-employed, with the world's worst pandemic outbreak scarring nascent economic recovery.

However, key indices erased all the gains to turn negative in late afternoon session, as traders got anxious with Reserve Bank of India’s statement that the second wave of COVID-19 pandemic has triggered revision of growth projections for the current financial year with consensus gravitating towards its earlier forecast of 10.5 per cent. Reserve Bank’s projection 10.5 per cent for the year 2021-22 -- 26.2 per cent in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in Q4. But, markets managed to end session in green terrain, taking support from report that amid the second wave of COVID-19 pandemic, CII President Uday Kotak has ‘strongly’ recommended the government to consider another fiscal package to support the lower end of the society as well as small and medium businesses. Traders took a note of report that the shortfall in GST compensation payable to states in the current fiscal is estimated at Rs 2.69 lakh crore, of which Rs 1.58 lakh crore would have to be borrowed this year. The Centre expects to collect over Rs 1.11 lakh crore through cess on luxury, demerit and sin goods which will be given to the states to compensate them for the shortfall in revenue arising out of GST implementation.

On the global front, Asian markets ended mixed on Thursday, while European markets were trading mostly in red, as traders look ahead to Friday's closely watched inflation reading, which could directly affect the current levels of stimulus. Back home, on the sectoral front, two and three-wheeler industry stocks were in focus as ratings agency ICRA said the electric two and three-wheelers volume are expected to account for 8-10 per cent and 30 per cent of new vehicle sales in the country by 2025, respectively, owing to low operating cost and attractive subsidy support, among others. Hotel industry stocks were in limelight as the Hotel Association of India (HAI), the apex body for hotels, has appealed to Prime Minister Shri Narendra Modi for immediate intervention to provide relief to the hospitality industry which is on the verge of collapse.

Finally, the BSE Sensex rose 97.70 points or 0.19% to 51,115.22, while the CNX Nifty was up by 36.40 points or 0.24% to 15,337.85.      

The BSE Sensex touched high and low of 51,282.90 and 50,891.66, respectively and there were 19 stocks advancing against 11 stocks declining on the index.    

The broader indices ended in green; the BSE Mid cap index rose 0.54%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were Bankex up by 1.19%, Consumer Durables up by 1.05%, Power up by 0.89%, Utilities up by 0.88% and IT up by 0.82%, while Realty down by 1.13%, Telecom down by 0.65%, Oil & Gas down by 0.17% and Healthcare down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.84%, Kotak Mahindra Bank up by 2.16%, Axis Bank up by 2.07%, Bajaj Auto up by 1.92% and Ultratech Cement up by 1.52%. On the flip side, HDFC down by 2.38%, Bajaj Finance down by 1.53%, ONGC down by 1.28%, Bharti Airtel down by 1.11% and Hindustan Unilever down by 1.08% were the top losers. 

Meanwhile, rating agency Crisil in its research report has said that higher input prices and disruptions to the rural economy have resulted in price pressures and inflation is back to haunt us. It sees upside risks to its 5 percent estimate on consumer price inflation in FY21 because of this.  It can be noted that the RBI is required to maintain the crucial number at 4 percent in the medium term, with a 2 percentage point leeway on either side as part of its inflation target. It said a surge in inflation worries had led it to desist from introducing rate cuts during much of FY21, despite the over 7.6 percent contraction in the economy.

Crisil said data collection was disrupted in April and May 2020 because of the national lockdown, and last year's base will not reflect accurate trends. Therefore, it has focused on sequential price trends on a seasonally adjusted basis. When viewed thus, both WPI (wholesale price index) and CPI indices continued to increase on-month in April 2021. It also stated that input costs are rising because of a surge in global commodities, which are raising manufacturing costs and hence fanning domestic inflation.

The report further said WPI inflation has surged in double digits in April on-year for items directly linked to these commodities and added that crude-linked inflation has risen the sharpest, partly led by the base effect too. Producers are currently bearing a higher burden of rising input costs than consumers. However, it said as demand revives, these costs can get increasingly passed on to consumers.

The CNX Nifty traded in a range of 15,384.55 and 15,272.50 and there were 34 stocks advancing against 16 stocks declining on the index.      

The top gainers on Nifty were Shree Cement up by 4.12%, SBI up by 3.13%, Bajaj Auto up by 2.22%, Kotak Mahindra Bank up by 2.08% and Tech Mahindra up by 2.03%. On the flip side, HDFC down by 2.67%, ONGC down by 1.50%, Indian Oil Corporation down by 1.43%, Bajaj Finance down by 1.41% and Bharti Airtel down by 1.11% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 53.23 points or 0.34% to 15,397.49 and UK’s FTSE 100 fell 10.74 points or 0.15% to 7,016.19, while France’s CAC increased 26.72 points or 0.42% to 6,418.32.

Asian markets ended mixed on Thursday as traders look ahead closely watched US inflation reading due Friday, which could directly affect the current levels of stimulus. Meanwhile, several US Federal officials indicated that Federal Reserve remains committed to monetary policy support to sustain economic activities. Japanese shares declined amidst continuing worries about corona virus cases with a possible extension of Covid-19 restrictions. Although, Chinese shares gained moderately after data showed profits at industrial firms grew 57 percent year-on-year in April. Strong yuan and positive signs on Sino-US relations also boosted up Chinese shares.

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