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Bulls remained in control on Dalal Street for the second day running and comfortable ended the day with gains of over a percent on Friday, led by strong buying support in IT, TECK and Capital Goods stocks amid a positive trend in global equities. Markets made optimistic start and stayed in green for whole day as traders got encouragement with economic research think-tank Centre for Monitoring Indian Economy (CMIE) has estimated that labour participation rate (LPR) was higher in rural India during the period January to April 2022. LPR, defined as the number of persons of the labour force employed as a percentage of working age population, is 40.9 in rural India as compared to 37.4 in urban India during the period January to April 2022. Some support also came with a private report that the Reserve Bank will opt for a larger, 0.50 per cent, hike in key rates at its next monetary policy review in June to protect medium term economic stability in face of the uncomfortable inflation situation. Besides, the government has waived late fees for two months till June for delayed filing of GST returns for financial year 2021-22 by small taxpayers registered under the composition scheme.

Key gauges extended gains in late afternoon deals, amid a private report stating that India’s economy maintained its momentum in April as a wider reopening from the pandemic kept rising prices from depressing demand for the time being. Activity in the services sector as well as factories gained last month, while the three-month weighted averages of monthly changes in indicators from exports to credit demand suggested enduring strength. Sentiments remained positive as the government relaxed norms for ministries and department to utilise unspent amounts in the subsequent quarter in the same financial year in a bid to push public expenditure. Traders overlooked SBI’s statement that upcoming release of official data for economic performance is likely to register a 2.7 per cent growth for the January-March period, and the FY22 growth is expected to be 8.5 per cent. Meanwhile, Commerce and Industry Minister Piyush Goyal said the way things are progressing between the two negotiating teams, a free trade agreement (FTA) between India and the UK could be ready by Diwali without the need for an interim early harvest agreement.

On the global front, European markets were trading higher with strong earnings from U.S. retailers and expectations that the Federal Reserve may become less aggressive in tightening rates later in the year helping underpin sentiment. The focus now shifts to the U.S. April core PCE price index due later in the day that could provide clues as to how the inflation outlook is shaping up. Asian markets settled higher on Friday, as investors took comfort from the latest FOMC minutes suggesting that the Fed wants to slow the tightening cycle in the second half of the year following half-percentage-point rate hikes in June and July.

Back home, stocks related to dairy sector were in focus as report by Crisil Ratings stated that India's organised dairy sector is likely to achieve 11-12 per cent revenue growth this financial year, the second straight year of double-digit growth, mainly driven by healthy demand for value-added products (VAP). Sugar industry stocks were in watch with a private report that India sugar prices are likely to remain firm despite New Delhi's move to cap exports as stockpiles are set to fall to the lowest level in five years amid record shipments and robust local demand.

Finally, the BSE Sensex rose 632.13 points or 1.17% to 54,884.66 and the CNX Nifty was up by 182.30 points or 1.13% to 16,352.45.  

The BSE Sensex touched high and low of 54,936.63 and 54,449.34, respectively. There were 22 stocks advancing against 7 stocks declining, while 1 stock remain unchanged on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.69%, while Small cap index was up by 1.20%.

The top gaining sectoral indices on the BSE were IT up by 2.38%, TECK up by 1.84%, Capital Goods up by 1.69%, Industrials up by 1.58% and Auto up by 1.50%, while Oil & Gas down by 0.88%, Energy down by 0.54%, Metal down by 0.48% and Utilities down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 4.10%, Indusind Bank up by 3.23%, Wipro up by 2.98%, Bajaj Finance up by 2.98% and Mahindra & Mahindra up by 2.67%. On the flip side, NTPC down by 2.43%, Bharti Airtel down by 1.24%, Power Grid Corporation down by 0.97%, Tata Steel down by 0.81% and Reliance Industries down by 0.47% were the top losers.

Meanwhile, in a bid to push public expenditure, the government has relaxed norms for ministries and department to utilise unspent amounts in the subsequent quarter in the same financial year. Ministries or departments are now permitted to utilise the unspent balances from Quarterly Expenditure Plan (QEP) for the first and second quarter within a financial year under intimation to the Budget Division for cash management purposes. Unspent balances from QEP-2 and QEP-3 may be utilised in QEP-3 and QEP-4 respectively only after formal and prior approval of the Expenditure Secretary has been obtained.

According to an office memorandum issued by the Budget Division of the Finance Ministry, ‘Ministry/Department should not under any circumstance presume prior approval of Expenditure Secretary. This has to be formally obtained prior to utilising the unspent balances. Seeking post facto approval is not an option’. No more than 33 per cent and 15 per cent of expenditure of the Budget Estimates during a financial year would be permissible in the last quarter and last month of the financial year, respectively. It also advised all Financial Advisers to ensure that Monthly Expenditure Plan or Quarterly Expenditure Plan (MEP/QEP) tracking of sanctions and concurrent expenditure against Budget provisions are available.

The government has laid emphasis on capital expenditure to push growth hit by the pandemic. It is expected that the increase in public spending would crowd in private investment. Finance Minister Nirmala Sitharaman raised capital expenditure (capex) by 35.4 per cent for the financial year 2022-23 to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy. The capex last year was Rs 5.5 lakh crore. The spending on building multimodal logistics parks, metro systems, highways, and trains is expected to create demand for the private sector as all the projects are to be implemented through contractors.

The CNX Nifty traded in a range of 16,370.60 and 16,221.95. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Apollo Hospital up by 5.11%, Tech Mahindra up by 4.21%, HDFC Life Insurance up by 3.36%, Indusind Bank up by 3.16% and Wipro up by 3.14%. On the flip side, ONGC down by 5.53%, NTPC down by 2.76%, Power Grid Corp down by 1.28%, Bharti Airtel down by 1.25% and Tata Steel down by 0.86% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 4.13 points or 0.05% to 7,569.05, France’s CAC increased 53.03 points or 0.83% to 6,463.61 and Germany’s DAX increased 98.79 points or 0.69% to 14,330.08.

Asian markets settled higher on Friday tracking Wall Street gains overnight after a string of better-than-expected earnings results from retailers. Meanwhile, investors also took comfort from the latest US Federal Reserve minutes suggesting that the Fed wants to slow the tightening cycle in the second half of the year following half-percentage-point rate hikes in June and July. Economic readings in the US sent mixed cues, with initial jobless claims falling more than expected last week, while revised first-quarter GDP print in United States suggesting a contraction of 1.5 percent YoY. Chinese and Hong Kong shares gained as Chinese tech firms got a boost from better-than-expected first-quarter revenue growth from Alibaba and Baidu, while hopes for improving Sino-US ties and more government stimulus also supporting market sentiments. Moreover, Japanese shares rose after data showed the Tokyo core consumer price index (CPI) grew 1.9% year-on-year in May 2022.

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