Indices hover near flat line, breadth remains strong

The domestic equity benchmarks were almost flat in the mid-morning trade. The Nifty was trading above 16,580 mark. Metal stocks advanced for the third consecutive trading session.

At 11:27 IST, the barometer index, S&P BSE Sensex was up 57.51 points or 0.10% to 55,623.92. The Nifty 50 index rose 6.10 points or 0.03% to 16,590.65.

The broader market outperformed the headline stock indices. The S&P BSE Mid-Cap index rose 0.19% while the S&P BSE Small-Cap index gained 0.76%.

However, the market breadth remained strong. On the BSE, 1,955 shares rose while 1,145 shares fell. A total of 161 shares were unchanged.

India Manufacturing PMI:

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers` Index (PMI) stood at 54.6 in May, little-changed from 54.7 in April, pointing to a sustained recovery across the sector. The above-50.0 reading was the eleventh in as many months and consistent with a solid improvement in operating conditions.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: India`s manufacturing sector sustained strong growth momentum in May. Thanks in part to the sharpest rise in international sales for eleven years, total new orders expanded further. In response to demand resilience, companies continued with their efforts to rebuild stocks and hired extra workers accordingly.

While firms appear to be focusing on the now, the survey`s gauge of business optimism shows a sense of unease among manufacturers. The overall level of sentiment was the second-lowest seen for two years, with panellists generally expecting growth prospects to be harmed by acute price pressures.

"There was little-movement in the rate of input price inflation during May, which remains historically high, but output charge inflation surged to its highest in over eight-and-a-half years as companies continued to transfer additional cost burdens to their clients."

Economy:

India`s GDP growth in Q4 FY22 was at 4.1% year-on-year, compared to a revised growth of 5.4% for Q3 FY22. Gross Value Added (GVA), which excludes the impact of subsidies and indirect taxes, grew 3.9% year-on-year in the fourth quarter.

For the full fiscal year, GDP grew 8.7% year-on-year, compared to a contraction of 6.6% in FY21. GVA for FY22 grew 8.1% year-on-year, compared to a contraction of 4.8% in FY21.

The combined Index of Eight Core Industries stood at 143.2 in April 2022, which is an increase of 8.4% (provisional) as compared to the Index of April 2021. The production of Coal, Electricity, Refinery Products, Fertilizers, Cement and Natural Gas industries increased in April 2022 over the corresponding period of last year. The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).

Final growth rate of Index of Eight Core Industries for January 2022 is revised to 4.0% from its provisional level 3.7%. The growth rate of ICI during April-March 2021-22 was 10.4% (P) as compared to the corresponding period of last FY.

Buzzing Index:

The Nifty Metal index rose 0.76% to 5,373.45. The index added 3.11% extending its winning run to three consecutive trading sessions.

Among the components of the Nifty Metal index, APL Apollo Tubes (up 3.81%), JSW Steel (up 3.06%), Jindal Stainless (up 2.23%), Hindustan Zinc (up 2.18%) and Welspun Corp (up 1.86%) were the top gainers.

Among the other gainers were Jindal Steel & Power (up 1.76%), Tata Steel (up 1.74%), Steel Authority of India (up 1.05%), Vedanta (up 0.58%) and NMDC (up 0.56%).

On the other hand, National Aluminium Company (down 2.29%) and Hindalco Industries (down 1.59%) declined.

Stocks in Spotlight:

Bajaj Auto declined 2.38% after the company`s total sales rose 1% to 2,75,868 units in May 2022 as against 2,71,862 units sold in May 2021. Sequentially, the company`s total sales declined 11.23% last month from 3,10,774 units in April 2022. Domestic sales jumped 85% to 1,12,308 units while exports skid 22% to 1,63,560 units in May 2022 over May 2021. Total two-wheelers sale rose 4% to 2,49,499 units in May 2022 as against 2,40,554 units dispatched in May 2021. Commercial vehicles sales decreased 16% to 26,369 units in May 2022 from 31,308 units sold in May 2021.

Escorts shed 0.82% after the company total tractor sales jumped by 31.1% YoY to 8,421 units in May 2022 from 6,423 units sold in May 2021. On a sequential basis, tractor sales rose 1.15% in May 2022 from 8,325 units sold in April 2022. Domestic tractor sales in May 2022 stood at 7,667 tractors as against 6,158 tractors sold in May 2021, registering a growth of 24.5% year on year. Export tractor sales in May 2022 were at 754 units in May 2022 against 265 units sold in May 2021, posting a jump of 184.5% year on year

VST Tillers Tractors fell 0.84% after the company`s total sales jumped 36.33% to 3,628 units in May 2022 from 2,661 units sold in May 2021. Sequentially, the company`s total sales rose 27.65% in May 2022 from 2,842 units sold in April 2022. The company`s power tillers sales grew 47.35% to 3,037 units in May 2022 from 2,061 units in May 2021. Total tractor sales stood at 591 units in May 2022, 1.5% lower than 600 units sold in May 2021.

Global Markets:

The US Dow Jones index futures were up 149 points, indicating a positive opening in the US stocks today.

Asian shares were mixed on Wednesday as investors reacted to the release of a private survey on Chinese factory activity for May.

China`s Caixin/Markit manufacturing Purchasing Managers` Index for May came in at 48.1 on Wednesday, an improvement over April`s reading of 46 but still remaining below the 50-level mark that separates expansion from contraction.

Meanwhile, Bank of Japan Deputy Gov. Masazumi Wakatabe said Wednesday that both monetary easing and fiscal expansion would be needed to tackle higher commodity prices and Japan`s low inflation at the same time.

The deputy governor also said medium- to long-term inflation is still expected to rise only moderately in Japan, where he believes there are "scarring effects of prolonged deflation."

U.S. stocks closed lower Tuesday, as Treasury yields pushed higher following last week`s equity market bounce after a historic string of weekly losses. The S&P 500 shed 0.63% to 4,132.15. The Dow Jones Industrial Average dropped 222.84 points, or 0.67%, to 32,990.12. The tech-heavy Nasdaq Composite dipped 0.41% to 12,081.39.

In the commodities market, Brent crude for August 2022 settlement was up 17 cents or 0.15% at $115.77 a barrel. The gains came after European Union leaders agreed to a partial and phased ban on Russian oil and China ended its COVID-19 lockdown in Shanghai.

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