Nifty trades near 24,100 level; IT shares rally for 3rd day

The headline equity benchmarks traded with decent gains in mid-morning trade. The Nifty traded near the 24,097 level. IT shares witnessed buying demand for the third consecutive trading session.

At 11:30 IST, the barometer index, the S&P BSE Sensex was up 264.33 points or 0.33% to 79,297.06. The Nifty 50 index rose 86.95 points or 0.36% to 24,097.55.

The broader market outperformed the frontline indices. The S&P BSE Mid-Cap index added 0.89% and the S&P BSE Small-Cap index rose 1.35%.

The S&P BSE Mid-Cap and S&P BSE Small-Cap index hit an all-time high at 46,577.16 and 52,843.35 respectively.

The market breadth was strong. On the BSE, 2,654 shares rose and 1,173 shares fell. A total of 169 shares were unchanged.

Economy:

The seasonally adjusted HSBC India Manufacturing Purchasing Managers� Index (PMI) increased to 58.3 from 57.5 in May, thus indicating a sharper improvement in business conditions. June data showed that buoyant demand conditions spurred the expansions in new orders, output and buying levels. As a consequence of ongoing increases in new order intakes, firms stepped up recruitment.

Manufacturing output increased at a sharp pace that was faster than in May, as underlying demand remained favourable and new business continued to flow in. June saw a stronger expansion in sales at manufacturers in India. Buoyant underlying demand, higher export volumes and successful advertising all fuelled growth, anecdotal evidence showed.

Maitreyi Das, Global Economist at HSBC, said: �Consequently, firms increased their hiring at the fastest pace in over 19 years. Input buying activity also rose during the month. On the price front, input costs moderated slightly in June, but remained at elevated levels. Manufacturers were able to pass on higher costs to customers, as demand remained robust, resulting in improved margin.�

Meanwhile, the India�s foreign exchange reserves (forex reserves) increased by $816 million to $653.711 billion during the week ended June 21, according to the latest RBI data. In the preceding week, the overall reserves had dropped by $2.922 billion to $652.895 billion.

For the week ended June 21, foreign currency assets, a major component of the reserves, decreased by $106 million to $574.134 billion.

According to the latest RBI data released on June 28, India�s gold reserves rose $988 million to $56.956 billion during the week ended June 21, while the special drawing rights (SDRs) fell $57 million to $18.049 billion.

India�s reserve position with the IMF was down by $9 million to $4.572 billion in the reporting week, according to the RBI data.

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.

The ICI measures the combined and individual performance of production of eight core industries viz. Cement, Coal, Crude Oil, Electricity, Fertilizers, Natural Gas, Refinery Products and Steel. The Eight Core Industries comprise 40.27 percent of the weight of items included in the Index of Industrial Production (IIP).

Furthermore, 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 revenue receipts, however, exceeded the expenditure, resulting in a surplus of Rs 90,923 crore, the CGA data showed. Higher tax revenue and the RBI dividend have kept the revenue receipts at 19% of the budgeted estimates for April-May FY25 period, compared to around 15% in the corresponding period last year.

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.

Buzzing Index:

The Nifty IT Index gained 1.98% to 36,874.05. The index rallied 4.14% in three consecutive trading sessions.

Persistent Systems (up 3.97%), Wipro (up 3.54%), Mphasis (up 2.46%), Tech Mahindra (up 2.15%), Coforge (up 2.05%), LTIMindtree (up 2%), L&T Technology Services (up 1.89%), Tata Consultancy Services (up 1.82%), Infosys (up 1.29%) and HCL Technologies (up 0.66%) advanced.

Stocks in Spotlight :

Escorts Kubota rose 0.63%. 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.

Ion Exchange (India) soared 13.41% after Nippon India Mutual Fund, a leading asset manager in India, increased its stake in the company.

Transformers And Rectifiers (India) was locked in an upper circuit of 5%, NCC gained 1.31%, Power Grid Corporation of India shed 0.60% and Adani Energy Solutions rose 0.35% after Transformers And Rectifiers (India) received multiple orders aggregating to Rs 148.55 crore.

Global Markets:

Asian stocks traded higher on Monday as traders pondered the US rates outlook.

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.

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.

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.

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