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After 4-day winning run, stock market bulls took a breather on Tuesday with benchmark indices ending flat, erasing all of the morning gains. Key indices staged a gap up opening, as better-than-expected GDP numbers supported the market sentiments. Amid the coronavirus pandemic, India's GDP grew at 1.6% in the January-March quarter of the fiscal year 2020-21, higher than the street forecast, but witnessed a contraction of 7.3% for the entire fiscal year. Even then, the figure beat the CSO's estimate of 8% contraction. Some optimism also came with Chief Economic Adviser K V Subramanian’s statement that the overall impact of the second wave of Covid-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. Besides, the output of eight core sectors jumped by 56.1% mainly due to low base effect and uptick in production of natural gas, refinery products, steel, cement and electricity.

However, owing to selling pressure in metal, basic materials and banking shares at higher levels on account of profit-booking led to correction in the markets. Sentiments got hit, after India's manufacturing sector activity witnessed a significant loss of growth momentum in May due to the intensification of the COVID-19 crisis and its detrimental impact on demand. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI), fell to 50.8 in May, down from 55.5 in April, as companies observed the slowest rises in new work and output in ten months amid the intensification of the COVID-19 crisis. Traders remained cautious with a FICCI's Business Confidence Survey stating that the business sentiment in the country has been deeply impacted due to the second wave of coronavirus infections. It said that the overall business confidence index has nosedived and stood at 51.5 in the current round after reporting a decadal high value of 74.2 in the previous survey round. Some concern also came as the Organisation for Economic Co-operation and Development (OECD) cut its growth projection for India for FY22 to 9.9 per cent from 12.6 per cent estimated in March, as the second wave of coronavirus infections has paused economic recovery in Asia's third largest economy.

On the global front, Asian markets ended mostly higher on Tuesday, even as surveys showed factory activity continued to expand in key Asian economies in May, thanks to an ongoing recovery in global demand. European markets were trading higher as investors digest the latest set of factory activity and inflation data. A survey showed Euro zone manufacturing activity expanded at a record pace in May despite supple bottlenecks. IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) rose to a new record high of 63.1 in May from April's 62.9. This was up from a prelim 62.8. Besides, Eurostat said inflation in the region hit its highest level since October 2018 as COVID-19 restrictions across Europe were scaled back. Back home, on the sectoral front, stocks related to pharma sector were in focus as the government has given approval to four waitlisted firms under the Production Linked Incentive (PLI) scheme for domestic manufacturing of bulk drugs.

Finally, the BSE Sensex fell 2.56 points to 51,934.88, while the CNX Nifty was down by 7.95 points or 0.05% to 15,574.85.    

The BSE Sensex touched high and low of 52,228.65 and 51,808.88, respectively and there were 14 stocks advancing against 16 stocks declining on the index.   

 The broader indices ended mixed; the BSE Mid cap index rose 0.01%, while Small cap index was down by 0.31%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.71%, Energy up by 0.70%, PSU up by 0.38%, Consumer Durables up by 0.25% and Industrials up by 0.25%, while Metal down by 1.63%, Basic Materials down by 1.09%, Bankex down by 0.55%, Realty down by 0.52% and Consumer Discretionary down by 0.38% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.52%, Bajaj Finance up by 2.93%, SBI up by 1.97%, HDFC up by 1.01% and Bajaj Auto up by 0.97%. On the flip side, ICICI Bank down by 1.80%, Ultratech Cement down by 1.63%, Asian Paints down by 1.51%, Axis Bank down by 0.69% and ITC down by 0.65% were the top losers.  

Meanwhile, emphasising the need for another fiscal package, a FICCI's Business Confidence Survey has said that the business sentiment in the country has been deeply impacted due to the second wave of coronavirus infections. It said that the overall business confidence index has nosedived and stood at 51.5 in the current round after reporting a decadal high value of 74.2 in the previous survey round. There was a ‘sharp deterioration’ in the optimism level of corporate India vis-a-vis the previous survey.

According to the survey, worsening current conditions, as well as muted expectations about the near-term prospects on the back of a sweeping second wave of coronavirus infections, pulled down the overall index value by over 20 points. With household income being severely impacted and past savings are already drawn down during the first wave of infections, demand conditions are expected to remain weak for longer this time around.

On the fiscal side, it said companies unanimously felt the need for another fiscal package, focusing majorly on addressing the demand side. It also suggested that demand boosting measures such as direct income support to rural as well as urban poor, income tax reductions for the middle class, and temporary reductions in indirect taxes must be urgently considered.

The CNX Nifty traded in a range of 15,660.75 and 15,528.30 and there were 19 stocks advancing against 31 stocks declining on the index.      

The top gainers on Nifty were Adani Ports &SEZ up by 3.83%, ONGC up by 3.43%, Bajaj Finance up by 2.61%, SBI up by 1.93% and HDFC up by 1.06%. On the flip side, JSW Steel down by 2.24%, Tata Steel down by 2.22%, ICICI Bank down by 1.82%, Asian Paints down by 1.77% and Ultratech Cement down by 1.54% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 89.63 points or 1.28% to 7,112.24, France’s CAC rose 55.48 points or 0.86% to 6,502.65 and Germany’s DAX was up by 216.93 points or 1.41% to 15,638.06.

Asian markets ended mostly higher on Tuesday after surveys showed factory activity continued to expand in key Asian economies in May. Caixin’s China manufacturing Purchasing Managers' Index rose to 52.0 in May, the highest level since December and inching up from 51.9 in April. South Korea's PMI stood at 53.7 in May, slowing from April but extending growth into an eighth straight month. While, Japan PMI Manufacturing was finalized at 53.0 in May, down from April’s 53.6. Chinese shares ended marginally higher, supported by Beijing’s latest three-child policy after recent data showed population growth slipping to its slowest rate since the 1950s. However, Japanese shares edged lower as investors awaited US factory activity numbers that will be released on Tuesday, and payrolls data due on Friday for further clues on the outlook for the American economy.

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