Post Session: Quick Review

Indian equity benchmarks ended on a strong note on Monday. After an optimistic start, markets remained higher during the whole day, as investors cheered the domestic economy returning to growth in the October-December period after two quarters of contraction. India’s gross domestic product returned to growth -- of 0.4 per cent -- in October-December. The Ministry of Finance said this is a ‘reflection of further strengthening of V-shaped recovery’, which began in Q2 of 2020-21, especially after a large GDP contraction in Q1 due to the lockdown. Adding more optimism on the street, India Ratings and Research (Ind-Ra) upgraded its FY21 credit growth estimates to 6.9 per cent from 1.8 per cent, given the improved economic environment in 2H FY21 and the government's focus on higher -- spending especially on infrastructure.

 In early afternoon deals, key indices cut some of their gains, after Indian manufacturing activity eased marginally in the month of February but it remains above the boom-or-bust line of 50 that separates expansion from contraction, as firms responded to strong increases in new work intakes by lifting production, input buying and stocks of purchases. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - stood at 57.5 in February as against 57.7 in January. Besides, data released by the Ministry for Commerce and Industry showed that the core sector index, which measures output of eight infrastructure industries, rose marginally by 0.1 per cent in January, indicating a wobbly recovery from the pandemic shock. Output in five of the eight crucial sectors fell on a year-on-year (YoY) basis.

But, in the second half of the trading session, markets again added gains to end on a strong note, as the finance ministry said the GDP growth of 0.4 per cent in the December quarter shows that the economy has returned to pre-pandemic times and reflects further strengthening of a V-shaped recovery. It also said the initial policy choice of ‘lives over livelihoods’ succeeded by ‘lives as well as livelihoods’ is now bearing positive results converging with the foresight the government had about an imminent V-shaped recovery. Sentiments were upbeat as the Indian equities continued to scale new highs post the Union Budget for FY22, the net foreign portfolio investments (FPI) into the Indian equities in February was Rs 25,787 crore. Foreign investments have continued to flow in post the Union Budget which announced further liberalisation measures including privatisation of banks and also did not come up with a new tax levy.

On the global front, European markets were trading higher after sharp losses last week as a selloff in bond markets eased, while optimism over COVID-19 vaccination programme and U.S. stimulus package further aided sentiment. Asian markets ended mostly higher on Monday, after the manufacturing sector in China continued to expand in February, albeit at a slower pace, the latest survey from Caixin showed on Monday with a manufacturing PMI score of 50.9. That's down from 51.5 in January, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Individually, output expanded modestly amid a softer rise in new work as the pandemic weighed on export sales and supplier performance.

The BSE Sensex ended at 49849.84, up by 749.85 points or 1.53% after trading in a range of 49440.46 and 50058.42. There were 29 stocks advancing against 1 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.46%, while Small cap index was up by 1.61%. (Provisional)

The top gaining sectoral indices on the BSE were Basic Materials up by 2.91%, PSU up by 2.59%, Utilities up by 2.49%, Auto up by 2.32% and Metal up by 2.08%, while Telecom down by 3.41% was the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 5.94%, ONGC up by 5.40%, Ultratech Cement up by 4.30%, Asian Paints up by 3.76% and Kotak Mahindra Bank up by 3.53%. On the flip side, Bharti Airtel down by 4.45% was the top loser. (Provisional)

Meanwhile, Indian manufacturing activity eased marginally in the month of February but it remains above the boom-or-bust line of 50 that separates expansion from contraction, as firms responded to strong increases in new work intakes by lifting production, input buying and stocks of purchases. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - stood at 57.5 in February as against 57.7 in January.

The report further said that better demand conditions and successful marketing campaigns reportedly underpinned a further increase in new orders during February. Although easing from January, the pace of growth remained sharp in the context of historical data. New export orders also rose halfway through the final quarter of fiscal year 2020/21, albeit at a modest rate that was softer than in January. Besides, payroll numbers fell further amid the observance of government guidelines aimed at halting the spread of COVID-19 by implementing shift work. The decline was the eleventh in successive months.

On the inflation front, strengthening demand for raw materials and semi-finished items exerted upward pressure on input cost inflation, which picked up to a 32-month high. Factory gate charges also rose, albeit at a modest and softer pace. Meanwhile, goods producers expect output to increase over the coming 12 months, with the overall level of positive sentiment matching that recorded in January. Optimistic growth projections reflected forecasts of an improvement in economic conditions and the lifting of restrictions as the vaccination programme expands.

The CNX Nifty ended at 14761.55, up by 232.40 points or 1.60% after trading in a range of 14638.55 and 14806.80. There were 49 stocks advancing against 1 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 6.04%, ONGC up by 5.45%, Grasim Industries up by 5.43%, UPL up by 5.17% and Shree Cement up by 4.55%. On the flip side, Bharti Airtel down by 4.33% was the top loser. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 107.88 points or 1.66% to 6,591.31, France’s CAC increased 82.69 points or 1.45% to 5,785.91 and Germany’s DAX was up by 169.05 points or 1.23% to 13,955.34.

Asian markets ended mostly higher on Monday on investors' optimism over swift global economic recovery after the US House of Representatives passed President Joe Biden’s $1.9 trillion corona virus relief package early Saturday. Further, optimism over Covid-19 vaccine rollouts too supporting market sentiments. Johnson & Johnson's single-dose Covid-19 vaccine was given the green light by the United States Food and Drug Administration (USFDA) on Saturday for emergency use purposes. Chinese shares ended up despite reports that China’s factory activity grew in February at a slower pace than a month earlier. The latest survey from Caixin showed that the manufacturing sector in China continued to expand in February, albeit at a slower pace with a manufacturing PMI score of 50.9, down from 51.5 in January. Moreover, Japanese stocks settled with strong gains after a survey showed that Japan climbed into expansion territory in February with a 22-month high manufacturing PMI score of 51.4, while the corona virus related state of emergency was lifted in six prefectures outside the Tokyo region amid signs of an improvement in the infection situation too kept the sentiments positive. Meanwhile, markets in South Korea and Taiwan were closed for holidays.