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Markets manage to end higher amid volatility
May-30-2023

Indian equity benchmarks, despite facing volatility throughout the day, managed to end higher on Tuesday, helped by foreign fund inflows. Foreign Institutional Investors (FIIs) were net buyers on Monday as they bought equities worth Rs 1,758.16 crore, according to exchange data.  After making a cautious start, markets inched higher as traders took encouragement with the National Sample Survey Office (NSSO) showing that the unemployment rate for persons aged 15 years and above in urban areas declined to 6.8 per cent during January-March 2023 from 8.2 per cent a year ago. Traders also took support with a private report stating that India has emerged as a key source country for Foreign Direct Investment (FDI) in Dubai, one of the wealthiest of the seven emirates in the United Arab Emirates. It ranked among the top five source countries for announced FDI projects and estimated FDI capital.

However, markets trimmed most of their initial gains and traded flat in afternoon deals as traders turned cautious with the Department for Promotion of Industry and Internal Trade (DPIIT) data showing that foreign direct investment (FDI) into India declined by 22 per cent to $46 billion in 2022-23, dragged by lower inflows in computer hardware and software, and automobile industry. The FDI inflows stood at $58.77 billion during 2021-22. But, markets regained some traction in late afternoon deals, taking support from a private report stating that the RBI may cut key benchmark policy rate in the fourth quarter of the current calendar year as a mix of factors will allow the central bank to shift focus and adopt a more accommodative policy stance sooner. Adding to the optimism, the Reserve Bank of India in its annual report said that on the back of sound macroeconomic policies and softer commodity prices, India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures. 

On the global front, European markets were trading mostly in red as investors waited for the passage of the U.S. debt ceiling deal before June 5. Asian markets settled mixed on Tuesday as concerns that China's economic recovery is losing steam and signs of rising tensions between Washington and Beijing offset investor optimism over the agreement of a deal to raise the U.S. debt ceiling and avert default in the world's largest economy. Investors were also wary that proposed spending cuts in the debt ceiling deal could weigh on U.S. economic growth. Voting on the bill is set to start later this week in the House and the Senate.

Finally, the BSE Sensex surged 122.75 points or 0.20% to 62,969.13 and the CNX Nifty was up by 35.20 points or 0.19% to 18,633.85.  

The BSE Sensex touched high and low of 63,036.12 and 62,737.40, respectively. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.16%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Bankex up by 0.36%, Financial Services up by 0.38%, IT up by 0.24%, TECK up by 0.19% and FMCG up by 0.13%, while Metal down by 1.32%, Oil & Gas down by 0.33%, Telecom down by 0.31%, Consumer Durables down by 0.28% and Energy down by 0.24% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.31%, Bajaj Finserv up by 1.08%, Kotak Mahindra Bank up by 1.06%, Bajaj Finance up by 1.02% and Axis Bank up by 0.90%. On the flip side, Tech Mahindra down by 1.27%, Tata Steel down by 1.15%, Sun Pharma down by 0.92%, Nestle down by 0.70% and Larsen & Toubro down by 0.61% were the top losers.

Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT) in its data showed that foreign direct investment (FDI) into India declined by 22 per cent to $46 billion in 2022-23, as compared to $58.77 billion during 2021-22. The fall in FDI was mainly due to lower inflows in computer hardware and software, and automobile industry. Total FDI inflows, which include equity inflows, re-invested earnings and other capital, declined by 16 per cent to $70.97 billion in the last fiscal as against $84.83 billion in 2021-22.

The data showed that during April-March 2022-23, Singapore emerged as the top investor with $17.2 billion FDI. It was followed by Mauritius ($6.13 billion), the US ($6 billion), the UAE ($3.35 billion), the Netherlands ($2.5 billion), Japan ($1.8 billion), UK ($1.73 billion), Cyprus ($1.27 billion), Cayman island ($772 million), and Germany ($$547 million). The FDI inflows have contracted in 2022-23 from Mauritius, the US, the Netherlands, the Cayman Islands, and Germany. 

Though the computer software and hardware sector attracted the highest inflows of $9.4 billion during the last financial year, these inflows are down as compared to $14.5 billion in 202122. Similarly, FDI in the automobile industry dipped significantly to $1.9 billion in 2022-23 as compared to about $7 billion in 2021-22. The other sectors which recorded dip in the inflows in the last fiscal include construction (infrastructure) activities, and metallurgical industries. However, the inflows have recorded growth in sectors including services ($8.7 billion), trading ($4.8 billion), telecommunications ($713 million), pharma ($8.7 billion), 2 billion), and chemicals ($1.85 billion). 

State-wise, though Maharashtra received the highest inflows of $14.8 billion during the last financial year, the inflows are down as compared to $15.44 billion in 2021-22. Similarly, the overseas inflows in Karnataka plunged to $10.42 billion in 2022-23 as against $22 billion in 2021-22. Other states/UTs where FDI dipped in 2022-23 include Delhi, Tamil Nadu, Haryana, Telangana, and West Bengal. On the other hand, FDI in Gujarat has increased to $4.71 billion in 2022-23 as against $2.7 billion in 2021-22. FDI has also reported positive growth in Rajasthan. The FDI equity inflows declined in January, February and March in the last fiscal.

The CNX Nifty traded in a range of 18,662.45 and 18,575.50. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were ITC up by 2.35%, HDFC Life Insurance up by 1.72% Bajaj Finserv up by 1.13%, Kotak Mahindra Bank up by 0.97% and Bajaj Finance up by 0.95%. On the flip side, Hindalco down by 1.49%, Adani Enterprises down by 1.46%, Tata Steel down by 1.38%, Tech Mahindra down by 1.28% and Dr Reddy's Laboratories down by 1.03% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 39.63 points or 0.52% to 7,587.57 and France’s CAC fell 28.14 points or 0.39% to 7,275.67, while Germany’s DAX gained 85.57 points or 0.54% to 16,038.30.

Asian markets settled mixed on Tuesday ahead of the vote on the tentative US debt ceiling deal to avert a default, while concerns over rising tensions between the United States and China and uneven recovery in the world’s second largest economy also adding pressure on market sentiments. Meanwhile, Japanese shares rose amid US non-farm payroll data due later in the week. Chinese and Hong Kong shares gained marginally even with caution ahead of China's May manufacturing data.

Asian Indices          

Last Trade            

Change in Points   

Change in %     

Shanghai Composite

3,224.21

2.76

0.09

Hang Seng

18,595.78

44.67

0.24

Jakarta Composite

6,636.42

-44.68

-0.67

KLSE Composite

1,396.91

-8.02

-0.57

Nikkei 225

31,328.16

94.62

0.30

Straits Times

3,187.56

-7.66

-0.24

KOSPI Composite

2,585.52

26.71

1.03

Taiwan Weighted

16,622.74

-13.56

-0.08
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