Market Commentary - End-Session
Market marches higher: Nifty breaches 24,100 as IT, financials advance As on : 01-Jul-24  17:14

Monday's market saw a measured rise, closing the day with the Nifty50 above 24,100. IT and financial services led the charge. Global stocks advanced amid hopes of a potential Fed rate cut in September. This optimism stemmed from lower-than-expected US inflation data (PCE). Investors are looking ahead to US jobs data and the Fed Chair's speech for further clues on interest rates.

In the barometer index, the S&P BSE Sensex was up 443.46 points or 0.56% to 79,476.19. The Nifty 50 index added 131.35 points or 0.55% to 24,141.95. Both these indices attained record closing high levels today.

Bajaj Finance (up 2.24%), TCS (up 1.75%), Infosys (up 1.46%), HDFC Bank (up 1.26%) and ICICI Bank (up 1.03%) boosted the indices.

The broader market outperformed the frontline indices. The S&P BSE Mid-Cap index gained 1.11% and the S&P BSE Small-Cap index advanced 1.58%. Both the indices hit record high levels today.

The market breadth was strong. On the BSE, 2,656 shares rose and 1,346 shares fell. A total of 144 shares were unchanged.

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, rose 0.21% to 13.83.

Economy:

The seasonally adjusted HSBC India Manufacturing Purchasing Managers? Index (PMI) increased to 58.3 in June from 57.5 in May, thus indicating a sharper improvement in business conditions.

Further, the combined Index of Eight Core Industries (ICI) increased by 6.3% (provisional) in May, 2024 as compared to the Index in May, 2023. The production of Electricity, Coal, Steel, Natural Gas and Refinery Products recorded positive growth in May 2024.

Moreover, the India's fiscal deficit between April-May stood at around 3% of the overall target for FY25, at Rs 50,615 crore, down from 11.8% of the budget estimate in the corresponding period last year, according to the data released by the Controller General of Accounts.

The fiscal deficit stood at Rs 16.54 trillion in FY24, against the budgetary target of Rs 17.86 trillion. Aided by higher-than-expected tax receipts, the Union government contained the fiscal deficit at 5.6% of the gross domestic product (GDP) in 2023-24 (FY24), compared with the Revised Estimates of 5.8%.

The Centre has set an FY25 fiscal deficit target of 5.1%, or Rs 16.85 trillion, in order to achieve a fiscal deficit of 4.5% of GDP by FY26.

Meanwhile, India's foreign exchange reserves rose by $816 million to $653.71 billion in the week ending June 21st, reversing a decline from the previous week. This increase was driven by a rise in gold reserves ($988 million) while special drawing rights (SDRs) fell slightly ($57 million).

Numbers to Track:

The yield on India's 10-year benchmark federal rose 0.14% to 7.017 as compared with previous close 7.008.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 83.4500, compared with its close of 83.3400 during the previous trading session.

MCX Gold futures for 5 August 2024 settlement rose 0.09% to Rs 71,650.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.23% to 105.63.

The United States 10-year bond yield gained 1.74% to 4.418.

In the commodities market, Brent crude for September 2024 settlement gained 23 cents or 0.27% to $85.23 a barrel.

Global Markets:

Dow Jones Futures were up 82 points, indicating a positive opening in the US stocks today.

Markets in Europe and Asia advanced on Monday as traders pondered the US rates outlook.

In the Europe, the far-right secured a slightly smaller portion of the vote during the initial phase of France's unexpected snap election than anticipated by certain polls. According to exit polls, Marine Le Pen's eurosceptic National Rally was the leading party in the first round of the French election but received a lesser number of votes than predicted by several analysts.

This surprising electoral outcome has caused disruptions in the markets, especially as both the far-right and the second-place left-wing coalition have promised significant increases in spending. This occurs amidst France facing a high budget deficit, leading the EU to suggest disciplinary actions.

Japan's economy contracted more than expected in the first quarter of 2024, shrinking 2.9% year-on-year. This decline was primarily driven by a decrease in consumer spending amid stagnant wages and persistent inflation.

Meanwhile, China presented a mixed picture. According to a private survey (Caixin PMI), China's manufacturing activity in June grew more than anticipated, reaching 51.8, compared to the prior month?s reading of 51.7. This is in contrast to an official government PMI survey released on Sunday, which indicated a contraction in the manufacturing sector for the second consecutive month in June. China's manufacturing PMI came in at 49.5 in June 2024, unchanged from May.

It's important to note that these surveys cover different segments of the Chinese economy. The Caixin survey focuses on smaller, private businesses in southern China, while the official survey leans towards larger, state-run businesses in the north. This difference in focus may contribute to the contrasting results.

US stocks closed slightly lower on Friday after initial gains, as investors weighed mixed economic signals. The S&P 500 dipped 0.41%, and the Nasdaq Composite fell 0.71%. Both indexes reached new intraday highs earlier but retreated later. The Dow Jones Industrial Average shed a modest 0.12%.

Positive economic data painted a conflicting picture. The Commerce Department reported that US inflation in May slowed to its lowest annual rate in over three years. The core personal consumption expenditures price index, excluding volatile food and energy prices, rose just 0.1% in June and 2.6% year-over-year. However, consumer sentiment remained strong. The University of Michigan consumer sentiment index for June exceeded expectations, rising to 68.2 from a preliminary reading of 65.6. Additionally, the one-year inflation outlook dropped to 3% from 3.3% expected in May.

Auto Sales Impact:

Maruti Suzuki India rose 0.62%. The company informed that its total sales increased 12.42% to 1,79,228 units in June 2024 as against 1,59,418 units sold in June 2023.

Eicher Motors shed 0.59%. The vehicles manufacturer?s unlisted subsidiary, VE Commercial Vehicles (VECV) reported 10.55% year on year increase in commercial vehicles (CV) sales to 7,424 units in June 2024.

Atul Auto hit an upper circuit of 20% after the commercial vehicle maker recorded sales of 2,628 units in June 2024, registering a growth of 107.42% as compared with the sales of 1,267 units recorded in June 2023.

Ashok Leyland declined 1.22% after the company said that its total vehicle sales fell 1.84% to 14,940 units in June 2024 from 15,221 units in June 2023.

SML Isuzu rallied 2.89% after the vehicle manufacturer said that it has sold 1,764 units in June 2024, registering a jump of 37.9% from 1,279 units sold in the same period last year.

Bajaj Auto rose 0.31%. The company?s total sales in the month of June 2024 added up to 3,58,477 units, higher by 5% as compared with the sales figure of 3,40,981 units recorded in June 2023

Escorts Kubota shed 0.34%. The tractor manufacturer said that its agri machinery business division sales fell 2.60% to 9,593 units in June 2024 as against 9,850 units sold in June 2023.

Mahindra & Mahindra (M&M) rose 0.19%. The company announced that its overall auto sales for the month of June 2024 stood at 69,397 vehicles, registering a growth of 11.16% as against 62,429 vehicles sold in June 2023.

Steel Strips Wheels (SSWL) jumped 4.72% after the company?s net turnover rose marginally to Rs 358.11 crore in June 2024 as against Rs 355.83 crore recorded in June 2023.

Stocks in Spotlight:

Ion Exchange (India) soared 15.38% after Nippon India Mutual Fund, a leading asset manager in India, increased its stake in the company. According to a disclosure filing, Nippon India acquired an additional 0.2881% stake in Ion Exchange through open market purchases between 12 June 2023 and 26 June 2024. This brings their total holding in the company to 5.1709%.

Rane Holdings hit upper circuit of 20% at Rs 1,605.75 after the firm said it will acquire balance 51% stake from the joint venture partner NSK in Rane NSK Steering Systems. Rane NSK Steering Systems is a joint venture between Rane Holdings and NSK, Japan. Post-acquisition, the company will become a wholly-owned subsidiary of Rane Holdings and named as Rane Steering Systems (RSSL). RSSL will continue the existing technology license and supply agreements with NSK Steering & Control, Inc.

Larsen & Toubro shed 0.61%. The EPC major announced that its vertical, L&T Energy Hydrocarbon (LTEH) has secured a significant order from the Oil & Natural Gas Corporation (ONGC) for the eighth phase of pipeline replacement project (PRPVIII Group B) off India's west coast.

Asian Paints rose 0.34%. The company announced that the installed capacity of the Mysuru plant has been doubled to 6,00,000 KL per annum in order to meet the medium-term capacity requirements of the company with an investment of Rs 1,305 crore.

Bharat Electronics (BEL) rose 0.56%. The compnay has signed a contract valued at Rs 3,172 crore with Armoured Vehicles Nigam (AVNL) on 28 June 2024 at AVNL Headquarters in Chennai.

Wockhardt hit an upper circuit 20% upper circuit after the company's experimental antibiotic, Zaynich, successfully treated a US cancer patient with a chronic thigh infection caused by extremely resistant bacteria.

Transformers and Rectifiers (India) hit an upper circuit of 5%, NCC gained 1.31%, Power Grid Corporation of India shed 0.38% and Adani Energy Solutions rose 0.08% after Transformers And Rectifiers (India) received multiple orders aggregating to Rs 148.55 crore.

Indian Renewable Energy Development Agency (IREDA) advanced 2.89% after the company?s loan sanctions stood Rs 9,136 crore in the June quarter, steeply higher than Rs 1,893 crore in the June quarter of last year.

Manorama Industries rallied 3.03% after the company announced the commencement of commercial production from its new fractionation plant which has a capacity of 25,000-tonnes per annum (TPA).

Sumit Woods hit an upper circuit of 5% after the company announced that it has been selected as the developer to redevelop the Dattani Trade Center Co-operative Society Premises situated at Borivali, Mumbai.

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