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Benchmarks end marginally higher on Wednesday
Apr-24-2024

Indian equity benchmarks ended marginally higher on Wednesday driven by gains in select heavyweights including JSW Steel, Tata Steel and Power Grid, amid broadly positive global cues. Markets made a positive start and extended gains as the day progressed, as traders took some support with a private report that India's GDP growth is likely to average 7% from 2024-25 to 2029-30. Some support also came with report stating that the government is formulating action plans for as many as 20 agricultural products including banana, mangoes, potato and baby corn with a view to further boost export of these commodities. Traders took note of an article in the Reserve Bank of India's (RBI) monthly bulletin released that to achieve its developmental goals over the next three decades, the Indian economy must grow at a rate of 8-10 per annum over the next decade to reap the demographic dividend that started accruing from 2018 and, as calculations show, will last till 2055.

However, markets trimmed some gains in late afternoon deals, as traders turned cautious with the Reserve Bank of India’s (RBI) latest bulletin stating that extreme weather events along with prolonged geopolitical tensions could pose a risk to India’s inflation trajectory, even as growth in the South Asian nation exhibits an uptrend. It said food price pressures have been interrupting the ongoing disinflation process even as shocks from adverse climate events and geopolitical tensions add uncertainties to the outlook. Some concern also came as the country's agriculture exports declined by 8.8 per cent to $43.7 billion during April-February period of 2023-24 fiscal due to factors like the Red Sea crisis, Russia-Ukraine war, and domestic restrictions imposed on critical items like rice, wheat, sugar and onion. According to the data of the commerce ministry, the exports stood at $47.9 billion in April-February 2022-23.

On the global front, European markets were trading higher though the upside remained capped after an ECB policymaker said that a possible June rate cut might not be followed by more. Asian markets settled higher on Wednesday, following the broadly positive cues from global markets, as data showing a slowdown in U.S. manufacturing activity in the month of April raised hopes the US Fed will start thinking of cutting interest rates soon. Traders also continued to pick up stocks at relatively reduced levels after the recent sell-off.

Finally, the BSE Sensex rose 114.49 points or 0.16% to 73,852.94 and the CNX Nifty was up by 34.40 points or 0.15% points to 22,402.40.

The BSE Sensex touched high and low of 74,121.61 and 73,788.61 respectively. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.92%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Metal up by 2.83%, Basic Materials up by 1.62%, PSU up by 1.20%, Industrials up by 1.13% and Healthcare up by 1.03%, while Telecom down by 1.40%, TECK down by 0.82% and IT down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 3.72%, Tata Steel up by 2.73%, Power Grid Corporation up by 1.75%, Kotak Mahindra Bank up by 1.64% and Ultratech Cement up by 1.48%. On the flip side, Tech Mahindra down by 1.17%, TCS down by 1.11%, Maruti Suzuki down by 0.72%, Infosys down by 0.68% and Reliance Industries down by 0.61% were the top losers.

Meanwhile, in order to achieve developmental goals over the next three decades, an article released in the Reserve Bank of India's (RBI) monthly bulletin showed that the Indian economy must grow at a rate of 8-10% per annum over the next decade to reap the demographic dividend that started accruing from 2018 and, as calculations show, will last till 2055. In the article themed, 'State of the economy', RBI said conditions in India are shaping up for an extension of the trend upshift that took the average real GDP growth above 8 per cent during 2021-24. So far, the deepening of capital is powering the step-up in the country's growth trajectory, led by sustained public investment, and supported by productivity improvements. It said ‘More recently, a resurgence of private investment has become visible, according to the Asian Development Bank (ADB), which is shifting its investment strategy to expand space for private capital’.

The credit quality of Indian corporates has strengthened on the back of deleveraged balance sheets, sustained domestic demand and public capital expenditure - rating upgrades have continued to surpass downgrades. For India to harness its favourable demographics and achieve the escape velocity required to breach the low-middle-income barrier, the article argued that the developmental strategy over the next few decades must centre around extracting the maximum possible contribution of its young and rising labour force to the growth of Growth Value Added. It emphasised raising the employability of its youth. It said ‘Raising employability--the set of skills that makes a person more likely to gain employment in a chosen occupation to benefit the person, the workforce, the community and the economy--with a focus on the formalisation of employment opportunities for the youth and women should continue to be the hallmark of the strategy’.

With the working age population set to expand at the rate of about 9.7 million per annum during 2021-31 and 4.2 million per annum during 2031-41, India's growth will largely hinge on the quality of the workforce it produces. While labour quality has grown slowly in past years, i.e., at the rate of 0.7 per cent per annum between 1980 and 2021, there is growing evidence that the growth rate of aggregate labour quality has improved since 2017-18. The growth in aggregate labour quality can be attributed to its services sector. Also, an important development that favours India's growth ambitions is the evolution of inflation dynamics in recent figures. Starting in January this year, the softening of headline inflation is providing a tailwind to growth impulses, the article argued. In India, consumer price index (CPI) inflation was 4.9 per cent in March after averaging 5.1 per cent in the preceding two months, following the recent peak of 5.7 per cent in December 2023. It said ‘With 4 per cent inflation finally being sighted, there is greater confidence now that the descent of inflation to the target is imminent’.

The CNX Nifty traded in a range of 22,476.45 and 22,384.00. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.96%, Cipla up by 3.92%, JSW Steel up by 3.87%, Tata Steel up by 2.82% and Power Grid Corporation up by 1.66%. On the flip side, Tata Consumer Product down by 5.48%, Grasim Industries down by 1.27%, Bajaj Auto down by 1.16%, Tech Mahindra down by 1.07% and HDFC Life Insurance down by 1.06% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 44.46 points or 0.55% to 8,089.27, France’s CAC rose 33.06 points or 0.41% to 8,138.84 and Germany’s DAX gained 53.54 points or 0.3% to 18,191.19.

Asian markets settled higher on Wednesday, buoyed by the tech rally ahead to key US mega cap earnings report due this week. Subdued trend in dollar, gold, crude oil and treasury bond yield notes also encouraged equity investments. Technical buying after the steep losses so far this month on wary over higher for longer interest rates and Middle east tensions. Intensified bets over Chinese corporate governance reforms, and dip in Hong Kong inflation rate also lifted investor sentiments. Nikkei soared with chip related stocks after upbeat earnings from Texas instruments. 34-year low local currency yen and optimism over accommodative monetary policy by BoJ also lifted Japanese stocks further. 

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,044.82

22.84

0.75

Hang Seng

17,201.27

372.34

2.16

Jakarta Composite

7,174.53

63.72

0.89

KLSE Composite

1,561.64

2.05

0.13

Nikkei 225

38,460.08

907.92

2.36

Straits Times

3,293.13

20.41

0.62

KOSPI Composite

2,675.75

52.73

1.97

Taiwan Weighted

20,131.74

532.46

2.64
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