Market Commentary     03-Jun-24
Mid-Session
Barometers turn rangebound; oil & gas shares rally
The frontline indices traded in narrow range with robust gains in mid-morning trade. Barometers surged to record highs following exit polls projecting a third term for Prime Minister Narendra Modi's government. The Nifty traded above the 23,150 mark. Oil & gas shares rallied for the second day in a row.

The last phase of the Lok Sabha polls ended on Saturday, following which the exit poll results forecast a historic third term for Prime Minister Narendra Modi. The counting for the Lok Sabha polls will take place on Tuesday, June 4.

At 11:30 IST, the barometer index, the S&P BSE Sensex soared 2,181.87 points or 2.96% to 76,153.14. The Nifty 50 index surged 658.05 points or 2.92% to 23,188.75.

The Sensex and Nifty clocked an all-time high of 76,738.89 and 23,338.70 respectively in early trade.

In the broader market, the S&P BSE Mid-Cap index rallied 3.12% and the S&P BSE Small-Cap index advanced 1.77%.

The market breadth was strong. On the BSE, 2,515 shares rose and 1,283 shares fell. A total of 167 shares were unchanged.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, tumbled 18.33% to 20.09.

Economy:

India's manufacturing sector growth softened to a three-month low in May. The HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global, dipped to 57.5 in May from April's 58.8, below a preliminary estimate of 58.4.

However, the index remained above its long-run average and has been above the 50-mark separating contraction from expansion for almost three years. Firms showed the highest level of positive sentiment in more than nine years on expectations that demand will remain buoyant. The optimism prompted companies to add jobs at the fastest pace since November 2022.

India's GDP grew at 7.8% in Q4 of FY24, raising the full-year growth estimate to 8.2%, according to data released by the Ministry of Statistics and Programme Implementation (MOSPI) on Friday.

India's GST collections rose 10% YoY to Rs 1.73 lakh crore in May 2024, driven by a surge in domestic spending. This strong domestic performance points to a healthy economy, despite a 4.3% decline in imports.

Meanwhile, the combined Index of Eight Core Industries (ICI) increased by 6.2% (provisional) in April, 2024 as compared to the Index in April, 2023. The production of Electricity, Natural Gas, Coal, Steel, Refinery Products, Crude Oil and Cement recorded positive growth in April 2024. The final growth rate of the Index of Eight Core Industries for January 2024 is revised to 4.1%. The cumulative growth rate of ICI during 2023-24 reported 7.6% (provisional) as compared to the corresponding period of last year.

Further, after rising for three consecutive weeks, India’s forex reserves fell $2.027 billion to $646.673 billion for the week ended May 24, according to the latest RBI data.

For the week ended May 24, foreign currency assets, a major component of the reserves, decreased by $1.51 billion to $567.499 billion, the data released on May 31 showed.

Gold reserves decreased by $482 million to $56.713 billion during the week ended May 24. The special drawing rights (SDRs) were down by $33 million to $18.135 billion, according to the latest RBI data.

India’s reserve position with the IMF was also down by $1 million to $4.326 billion in the reporting week, the apex bank data showed.

IPO Update:

The initial public offer (IPO) of Kronox Lab Sciences received 1,67,33,860 bids for shares as against 66,99,000 shares on offer, according to stock exchange data at 11:20 IST on Monday (03 June 2024). The issue was subscribed 2.50 times.

The issue opened for bidding on Monday (03 June 2024) and it will close on Wednesday (05 June 2024). The price band of the IPO is fixed between Rs 129 to Rs 136 per share. An investor can bid for a minimum of 110 equity shares and in multiples thereof.

Buzzing Index:

The Nifty Oil & Gas index surged 5.27% to 12,238.20. The index rallied 6.05% in two consecutive trading sessions.

GAIL (India) (up 7.88%), Hindustan Petroleum Corporation (up 7.77%), Bharat Petroleum Corporation (up 7.08%), Adani Total Gas (up 6.88%), Mahanagar Gas (up 6.83%), Indian Oil Corporation (up 6.43%), Indraprastha Gas (up 5.76%), Oil & Natural Gas Corpn (up 5.24%), Oil India (up 4.03%) and Petronet LNG (up 3.97%) advanced.

Stocks in Spotlight:

Ganesha Ecosphere advanced 2.89% after the company said that its board has granted approval for making a strategic investment of Rs 16 crore in the equity share capital of RACE Eco Chain (RACE).

Bajaj Auto advanced 3.17% after the company reported a marginal increase in total auto sales to 3,55,323 units in May 2024 as against 3,55,148 units in May 2023.

Welspun Corp added 1.26% after the company said that its associate company, East Pipes Integrated (EPIC) has signed multiple contracts with Aramco for manufacturing and supply of steel pipes.

Global Markets:

Most of the Asian stocks advanced on Monday as investors anticipated a rate cut in Europe this week, potentially marking the first time the European Central Bank (ECB) eases policy ahead of the U.S. Federal Reserve. The ECB is widely expected to lower rates by 0.25% to 3.75% on Thursday.

Meanwhile, positive data emerged from China, a key driver for regional growth. The Caixin manufacturing Purchasing Managers' Index (PMI) for May came in at 51.7, indicating continued expansion in the sector. This suggests some resilience in the Chinese economy.

US stocks closed mostly positive on Friday, with the S&P 500 recovering from early losses to end the day in the green. The Dow Jones Industrial Average jumped 574.84 points, or 1.5%, to close at 38,686.32. The S&P 500 rose 0.8%, while the Nasdaq Composite slipped less than 0.1%.

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