Market Commentary     07-Jun-24
Quick Review
Sensex soars 1,619 pts, hits record high; Nifty settles at 23,290
The Indian equity benchmarks ended with robust gains on Friday, as the Reserve Bank of India's monetary policy committee raised India's FY25 real GDP forecast to 7.2% from the earlier 7%. The Nifty settled near 23,300 level after hitting the day’s low of 22,789.05 in early trade. All the sectorial indices on NSE ended in the green with IT, auto and oil & gas shares gaining the most.

As per provisional closing data, the barometer index, the S&P BSE Sensex was surged 1,618.85 points or 2.16% to 76,693.36. The Nifty 50 index jumped 468.75 points or 2.05% to 23,290.15.

The S&P BSE Sensex hit a record high of 76,795.31 in late trade while the Nifty 50 ended a few points away from its all-time high.

In the broader market, the S&P BSE Mid-Cap index rallied 1.28% and the S&P BSE Small-Cap index jumped 2.18%.

The market breadth was strong. On the BSE, 2,895 shares rose and 966 shares fell. A total of 91 shares were unchanged.

Politics:

India's Narendra Modi was elected by National Democratic Alliance (NDA) lawmakers on Friday for a historic third consecutive term as prime minister. He will meet President Droupadi Murmu to present his claim to form a new government, with his swearing-in set for Sunday (9th June) evening. For the first time in a decade, Modi's BJP needed support from regional parties, securing only 240 seats in the lower house, short of the 272 needed for a majority. The NDA won 293 seats in the 543-member Lok Sabha, while the opposition INDIA alliance, led by Rahul Gandhi's Congress party, exceeded forecasts with over 230 seats.

RBI Monetary Policy Outcome:

The Reserve Bank of India (RBI) monetary policy committee (MPC) has voted to keep the repo rate unchanged at 6.5%.

RBI's MPC at its meeting today, 7 June 2024, decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%. Consequently, the standing deposit facility (SDF) rate remains unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%.

The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.

The projected real GDP growth for 2024-25 has been revised upward to 7.2%. The quarterly breakdown is as follows: Q1 at 7.3%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%. This represents a slight improvement from the previous estimate, where the GDP growth was projected at 7%, with Q1 at 7.1%, Q2 at 6.9%, Q3 at 7%, and Q4 also at 7%. The risks associated with this projection are considered evenly balanced.

The projected CPI inflation for 2024-25 remains unchanged at 4.5%. The quarterly breakdown is as follows: Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%. This is consistent with the previous meeting's projection, where CPI inflation for the same period was also estimated at 4.5%, with Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%.

The minutes of the MPC’s meeting will be published on 21 June 2024. The next meeting of the MPC is scheduled during August 6 to 8, 2024.

Buzzing Index:

The Nifty IT index surged 3.18% to 35,105.90. The index rallied 8.63% in three consecutive trading sessions.

Wipro (up 5.03%), Tech Mahindra (up 4.73%), Persistent Systems (up 4.44%), Coforge (up 4.3%), Infosys (up 4.28%), LTIMindtree (up 3.78%), HCL Technologies (up 2.53%), L&T Technology Services (up 2.51%), Mphasis (up 1.71%) and Tata Consultancy Services (up 1.57%) advanced.

Wipro soared 5.03% after the IT giant received order by a leading US communication service provider for $500 million.

Stocks in Spotlight:

Adani Ports and Special Economic Zone (APSEZ) rose 1.91% after the company has received letter of intent (LoI) from Syama Prasad Mookerjee Port Authority, Kolkata (SMPK) for operation and maintenance of container terminal at Kolkata.

Bajaj Finance jumped 3.86% after the NBFC’s board approved the offer for sale (OFS) of equity shares of a wholly owned subsidiary, Bajaj Housing Finance (BHFL), aggregating to Rs 3,000 crore through initial public offer (IPO).

Tata Chemicals shed 0.67%. The Chester Crown Court, United Kingdom (UK), ordered a fine of GBP 11,00,000 on Tata Chemicals Europe, company’s subsidiary in UK, for safety incident which occurred in 2016.

Dixon Technologies (India) gained 2.31% after the company entered into a term sheet with HKC Corporation to form a joint venture (JV), subject to receipt of necessary statutory approvals and signing of definitive agreements.

Rail Vikas Nigam (RVNL) advanced 1.56% after the civil construction firm received letter of award (LoA) from National Thermal Power Corporation (NTPC) for Rs 495.14 crore.

Mastek rallied 7.83% after the company’s cloud-native platform, icxPro platform partnered with NVIDIA AI Enterprise to boost CX (Customer Experience) management for different sectors.

RITES rose 0.70%. The company said that it has received a letter of award (LoA) from Tata Steel for Loco Hiring along with operation and maintenance.

Global Markets:

European market declined while Asian stocks ended mixed on Friday as traders refrained from big bets ahead of the US nonfarm payrolls report.

The US nonfarm payrolls report, a crucial indicator of the health of the American economy, will be released later today. Investors are watching this data closely to gauge its impact on global markets.

Meanwhile, China's exports in May grew faster than expected, while imports missed forecasts, customs data showed Friday. Exports rose by 7.6% in May from a year a go in U.S. dollar terms. Imports, however, rose by 1.8% during that time.

In the US, the S&P 500 and Nasdaq closed slightly lower on Thursday, giving back some of their gains from the previous session's record highs. This came ahead of a key labor market report due Friday. Technology stocks, particularly Nvidia, led the decline.

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