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Benchmarks scale fresh intraday high; European markets advance
(13:28, 13 May 2022)

The key equity benchmarks scaled fresh intraday highs in afternoon trade. The Nifty traded above the 16,050 mark. Autos, PSU banks, FMCG and consumer durable stocks were the top gainers.

At 13:25 IST, the barometer index, S&P BSE Sensex was up 789.02 points or 1.49% to 53,719.33. The Nifty 50 index added 257.20 points or 1.63 % to 16,065.20.

In the broader market, the S&P BSE Mid-Cap index gained 2.65% while the S&P BSE Small-Cap index added 2.75%.

The market breadth, indicating the overall health of the market, was strong. On the BSE, 2,576 shares rose while 695 shares fell. A total of 108 shares were unchanged.

Economy:

India's retail inflation, which is measured by the Consumer Price Index (CPI), rose to 7.79% in the month of April 2022. The retail inflation for the month of March was 6.95%. This is the fourth consecutive month that the CPI data has breached the Reserve Bank of India's (RBI) upper margin of 6%.

India's factory output, measured in terms of Index of Industrial Production (IIP), witnessed a growth of 1.9% in March 2022. Industrial production grew 1.7% in February 2022. The IIP soared 24.2% in March 2021, the data showed. The manufacturing sector's output grew 0.9% in March 2022. Mining output rose 4% and power generation increased 6.1%.

Stocks in Spotlight:

Larsen & Toubro (L&T) advanced 3.02%. The company's construction arm secured 'significant' contract for its water & effluent treatment business. As per L&T's classification, the value of the 'significant' contract lies between Rs 1,000 crore to Rs 2,500 crore.

L&T had announced its earnings for the quarter and the year ended on 31 March 2022 after market hours yesterday. The engineering and construction major's consolidated net profit rose 10% to Rs 3620.69 crore on 9.9% increase in revenues to Rs 52850.67 crore in Q4 March 2022 over Q4 March 2021.

In its outlook, L&T, with its detailed 5 year Strategic Plan (Lakshya'26), has chalked out a path for pursuing profitable growth in its traditional businesses of EPC projects and manufacturing. The group will look to expand the size and scale of its IT&TS portfolio. The company will incubate digital offerings in data centers, tech education and B2B e-commerce. It also has plans to invest in the new areas of green energy.

Tata Motors surged 10.58%. The company reported a consolidated net loss of Rs 1,032.84 crore in Q4 FY22 as against a net loss of Rs 7,605.40 crore in Q4 FY21.

With respect to outlook, Tata Motors said: “We expect performance to improve through the year as the China COVID and semiconductor supplies improve and aim to deliver strong EBIT improvement and free cash flows in FY 2023 to get to near net auto debt free by FY 2024.”

CreditAccess Gramen zoomed 10.32%. The company's consolidated net profit soared 104.41% to Rs 157.13 crore on 13.5% increase in total income to Rs 824.48 crore in Q4 FY22 over Q4 FY21. On consolidated basis, net interest income (NII) increased by 12.1% YoY to Rs 519.6 crore in Q4 FY22 as against Rs 463.7 crore in Q4 FY21. Net interest margin (NIM) stood at 10.9%.

Union Bank of India jumped 6.53% to Rs 35.90 after the bank reported 8.26% rise in net profit to Rs 1,440 crore on a 25.29% increase in net interest income to Rs 6,769 crore in Q4 FY22 over Q4 FY21. Total income for Q4 FY22 stood at Rs 20,417.44 crore, up 3.09% YoY.

Global Markets:

Shares in Europe and Asia advanced across the board on Friday as global markets looked to regain some ground after a bruising week, with investors assessing the outlook for inflation and interest rates.

U.S. Federal Reserve Chairman Jerome Powell said Thursday that he could not guarantee a so-called “soft landing” that tempers inflation without pushing the economy into recession.

In China, Beijing officials denied the city will be locked down. Residents flocked to grocery stores amid growing concern the Chinese capital will step up curbs to fight a persistent Covid outbreak.

Investors are also monitoring the geopolitical fallout from the war in Ukraine. Russia on Thursday threatened retaliation against Finland after Finnish leaders said the northern European nation must apply to join NATO “without delay.”

European leaders are also facing a race to secure alternative gas suppliers after Moscow announced sanctions on European subsidiaries of its majority state-owned corporation Gazprom. The move came after Ukraine's state-owned grid operator suspended Russian flows into Europe through a key entry point.

On the data front, French and Spanish inflation figures for April and euro area industrial production readings for March are due on Friday.

In the US, the S&P 500 and the Dow Jones bounced off the day's low to end slightly lower, but the Nasdaq eked out a modest gain on Thursday. Investors weighed signs of peaking inflation with fears that it could remain elevated. All three major U.S. stock indexes seesawed and the S&P 500 came within striking distance of confirming it entered a bear market.

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