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Indian equity benchmarks staged a smart recovery from intraday low levels on Monday to end the day’s trade in the green led by strong buying interest in index heavyweights NTPC, Titan Company, SBI and Hindustan Unilever. The benchmarks made a gap down opening, as traders got anxious with Care Ratings’ report that the credit growth for current financial year (FY22) is likely to remain in low double-digit on the back of muted economic activity. The slowdown in economy can further delay anticipated pick-up in credit growth apart from the likely impact on asset quality. Sentiments remained down-beat as private report projected real GDP growth of 8.7 per cent in FY22, down from 11.1 per cent it had forecast earlier. However, it revised up the FY23 forecast from 4 per cent to 5.4 per cent. Some pessimism also came with a private report stated that hiring across sectors declined in May, though the tech industry job market rebounded from the pandemic-induced downturn as many technology companies have been on full expansion mode. There was a 2 percent decline in the overall number of new job posts in May on the SCIKEY Market Network, a job site, including in sectors like banking with a dip of 12 percent, retail 16 percent, and FMCG 12 percent, while there was a growth of 5 percent in the insurance sector.

But the markets clawed back above the day’s low in late afternoon session and closed in the green, taking support from Chief Economic Advisor (CEA) K V Subramanian stating that the government is open to coming out with more measures to boost the economy which has been hit by the second wave of the coronavirus pandemic. Some support came with a UN report stated that India received $64 billion in Foreign Direct Investment in 2020, the fifth largest recipient of inflows in the world, It also said that the COVID-19 second wave in the country weighs heavily on the country's overall economic activities but its strong fundamentals provide optimism for the medium term. Traders also got some relief with RBI Deputy Governor M K Jain has said that both the central bank and the government have taken steps to mitigate its impact. He also said that the domestic banking system is strong, as per the preliminary data for the quarter ended March 2021. The data suggest that in terms of CRAR that has been improved upon. Besides, foreign portfolio investors (FPIs) pumped in a net Rs 13,667 crore so far in June as Indian markets continued to remain attractive to overseas investors.

On the global front, Asian markets ended mostly lower on Monday on fears about early tapering after a Fed official said inflation risks may warrant higher interest rates by 2022, a year sooner than his colleagues' projections. European markets were trading higher as investors awaited a speech by ECB President Christine Lagarde before the European Parliament for directional cues. Back home, on the sectoral front, leather industry’s stocks were in watch as the Council for Leather Exports (CLE) said the country's export of leather, its products and footwear has jumped to $641.72 million in April-May 2021 from $146.79 million in the corresponding period last year. There was some buzz in oil & gas sector stocks as the commerce and industry ministry floated a draft cabinet note seeking inter-ministerial views on a proposal to allow up to 100 percent foreign investment under automatic route in oil and gas PSUs, which have an 'in-principle' approval for disinvestment.

Finally, the BSE Sensex rose 230.01 points or 0.44% to 52,574.46, while the CNX Nifty was up by 63.15 points or 0.40% to 15,746.50.

The BSE Sensex touched high and low of 52,629.18 and 51,740.19, respectively and there were 22 stocks advancing against 8 stocks declining on the index.     

The broader indices ended in green; the BSE Mid cap index rose 0.82%, while Small cap index was up by 0.83%.

The top gaining sectoral indices on the BSE were Power up by 2.55%, Realty up by 2.37%, Utilities up by 1.89%, Oil & Gas up by 1.18% and Finance up by 0.86%, while Auto down by 0.51%, IT down by 0.28% and TECK down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.87%, Titan Company up by 1.87%, SBI up by 1.64%, Hindustan Unilever up by 1.42% and Ultratech Cement up by 1.31%. On the flip side, Maruti Suzuki down by 0.82%, TCS down by 0.74%, Tech Mahindra down by 0.71%, Mahindra & Mahindra down by 0.63% and Larsen & Toubro down by 0.59% were the top losers.

Meanwhile, Care Ratings has said that the credit growth for current financial year (FY22) is likely to remain in low double-digit on the back of muted economic activity. The slowdown in economy can further delay anticipated pick-up in credit growth apart from the likely impact on asset quality.

However, it said the sector's medium-term prospects look promising with diminished corporate stress and increased provisioning levels across banks. The bank credit growth rate has been marginally lower when compared with previous fortnight and remained largely stable compared to period ended March.

It stated this can be ascribed to risk aversion and regional lockdown imposed by states this year to curb the spread of coronavirus amid the second wave of pandemic that started in April and continued in May. However, many states have declared relaxation in lockdown or imposed partial lockdown in June. The result of this on bank credit will be known after reviewing the additions in bank credit by June-end.

The CNX Nifty traded in a range of 15,765.15 and 15,505.65 and there were 36 stocks advancing against 13 stocks declining, while 1 stock remained unchanged on the index. 

The top gainers on Nifty were Adani Ports & SEZ up by 5.13%, NTPC up by 3.96%, Titan Company up by 1.79%, SBI up by 1.50% and Bajaj Finserv up by 1.35%. On the flip side, UPL down by 4.38%, Wipro down by 1.16%, Tata Motors down by 1.01%, Maruti Suzuki down by 1.00% and Tech Mahindra down by 0.83% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 9.45 points or 0.13% to 7,026.92, France’s CAC rose 17.46 points or 0.27% to 6,586.62 and Germany’s DAX was up by 86.10 points or 0.56% to 15,534.14.

Asian markets ended mostly lower on Monday. Japanese shares dropped as the safe-haven yen firmed up following possible rate hikes sooner and faster. St. Louis Fed President James Bullard said he sees an initial interest rate increase happening in 2022. However, Chinese shares settled higher as the country's central bank PBoC kept its benchmark lending rates unchanged, as widely expected. The one-year Loan Prime Rate (LPR) was maintained at 3.85% and the five-year LPR was also unchanged at 4.65%.

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