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Indian equity benchmarks ended higher by over half percent on Friday, tracking gains in index heavyweights Reliance Industries, Mahindra & Mahindra, HDFC Bank and HDFC amid positive cues from global markets. Further, decline in daily COVID-19 caseload too bolstered investor sentiment. Markets made optimistic start and traded in green for whole day as traders took some support with a private report that the government is hopeful of a speedy launch of single-dose COVID-19 vaccine Sputnik Light in India and all stakeholders, including the Russian manufacturer and its Indian partners, have been directed to fast-track the application and regulatory approval procedures for the jab to boost the country's vaccination drive. Sentiments remained positive with the Reserve Bank stating that it will ensure that system-level liquidity remains comfortable during 2021-22 in alignment with the stance of monetary policy, and monetary transmission continues unimpeded while maintaining financial stability.

Indian bourses continued their firm trade in second half of the session, taking support from report that the size of the Reserve Bank of India’s (RBI) balance sheet, which is reflective of activities carried out by it in pursuance of currency issue function as well as monetary policy and reserve management, has increased by Rs 3,72,876.43 crore, i.e., 6.99 percent from Rs 53,34,792.70 crore as on June 30, 2020 to Rs 57,07,669.13 crore as on March 31, 2021. The increase on the asset side was mainly due to increase in foreign and domestic investments by 11.48 percent and 13.75 percent, respectively. Meanwhile, with an aim to boost export potential of India’s agricultural and processed food products during the COVID-19 pandemic, the Agricultural and Processed Food Products Export Development Authority (APEDA) has organised the second virtual trade fair (VTF) for horticultural produce.

On the global front, Asian markets ended mostly on a firm note on Friday, while European markets were trading higher, after reports said U.S. President Joe Biden will seek $6 trillion in federal spending plans for 2022. Biden is expected to unveil his first full budget later in the day. Investors also wait for an update on the personal-consumption expenditures price index, the Federal Reserve's preferred gauge of inflation, amid concerns that a higher-than-expected figure could force the U.S. Federal Reserve to tighten its monetary policy. Back home, on the sectoral front, banking stocks were in focus as Reserve Bank of India (RBI) asked banks to closely monitor their bad loans and prepare themselves for higher provisioning in the wake of second COVID wave and the Supreme Court order lifting the ban on classification of non-performing assets. Also, RBI data showed financial frauds reported by banks decreased by 15 percent in numbers and by 25 percent in total value terms compared to the previous financial year. There was be some reaction in realty sector stocks as ratings agency Crisil said although the market is growing in 2021-22, a full recovery in the residential realty sector is expected only in 2024. According to it, the country’s housing market is expected to grow by 5-10 per cent in the current fiscal year.

Finally, the BSE Sensex rose 307.66 points or 0.60% to 51,422.88, while the CNX Nifty was up by 97.80 points or 0.64% to 15,435.65.        

The BSE Sensex touched high and low of 51,529.32 and 51,258.69, respectively and there were 13 stocks advancing against 17 stocks declining on the index.     

The broader indices ended in red; the BSE Mid cap index fell 0.12%, while Small cap index was down by 0.48%.

The top gaining sectoral indices on the BSE were Energy up by 4.35%, Oil & Gas up by 1.17%, Telecom up by 0.49%, Metal up by 0.47% and Auto up by 0.25%, while Healthcare down by 1.06%, Power down by 1.05%, Utilities down by 0.83%, Consumer Durables down by 0.77% and Capital Goods down by 0.53% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 5.90%, Mahindra & Mahindra up by 2.13%, HDFC Bank up by 1.47%, HDFC up by 1.37% and Kotak Mahindra Bank up by 1.23%. On the flip side, Sun Pharma down by 4.30%, Bajaj Finserv down by 1.66%, Nestle down by 1.49%, ICICI Bank down by 1.46% and Axis Bank down by 1.37% were the top losers.

Meanwhile, amid uncertainties arising out of the second wave of COVID-19, Reserve Bank of India (RBI) in its annual report has said that a durable revival of private consumption and investment would be critical for sustaining economic growth post-pandemic. Typically, it said, post-crisis recoveries are led more by consumption than investment. However, it said investment-led recoveries can be more sustainable and can also lift consumption in parts by better job creation. In either case, private demand plays a pivotal role.

Observing that 2020-21 has left a scar on the economy, it said in the midst of the second wave as 2021-22 commences, pervasive despair is being lifted by cautious optimism built up by vaccination drives. The second wave of the pandemic has prompted revision of growth projections for the current fiscal and the consensus appears to be gravitating towards RBI's forecast of 10.5 per cent.  RBI cautioned that the pandemic is the biggest risk to this outlook. Yet, upsides also stem from the capex push by the government, rising capacity utilisation and the turnaround in capital goods imports.

The report further said that the waiver of compound interest on all loan accounts which opted for moratorium during March-August 2020 may put stress on the financial health of banks. However, the apex bank expressed confidence that banks are better positioned than before in managing stress in balance sheets in view of higher capital buffers, improvement in recoveries and a return to profitability.

The CNX Nifty traded in a range of 15,469.65 and 15,394.75 and there were 27 stocks advancing against 23 stocks declining on the index.      

The top gainers on Nifty were Reliance Industries up by 5.99%, Adani Ports &SEZ up by 3.41%, Grasim Industries up by 3.38%, Mahindra & Mahindra up by 2.22% and Coal India up by 1.76%. On the flip side, Sun Pharma down by 3.84%, Shree Cement down by 1.66%, Bajaj Finserv down by 1.38%, Dr. Reddys Lab down by 1.31% and Bajaj Finance down by 1.17% were the top losers. 

European markets were trading higher;  UK’s FTSE 100 increased 18.60 points or 0.26% to 7,038.27, France’s CAC increased 38.57 points or 0.6% to 6,474.28 and Germany’s DAX increased 88.68 points or 0.58% to 15,495.41.

Asian markets ended mostly on a firm note on Friday, tracking gains on Wall Street overnight as improved US economic data fuels optimism about the US economic recovery, while US Treasury Secretary Janet Yellen said the above-normal inflation will last through 2021. Data showed that the number of Americans filing new claims for unemployment benefits dropped to the lowest since mid-March 2020, and beating estimates. Japanese shares jumped by tracking progress in the country’s vaccination drive, which lifted risk appetite on prospects of a quick economic recovery. Meanwhile, the Japanese government plans to extend the Covid-19 state of emergency covering Tokyo and eight other prefectures for three weeks until June 20. However, Chinese shares declined amid lingering worries about policy tightening and Sino-US tensions. The US Senate advanced a sweeping package of legislation intended to boost the country's ability to compete better with Chinese technology.

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