Profit booking by investors subdues Indian stock indices

New Delhi [India], June 1 : Indian stock markets closed Thursday's session in the red after having traded strongly in the morning.

Benchmark indices Sensex and Nifty closed about 0.3 per cent lower each. The fall in indices could be attributed to profit booking by investors after the latest consistent rally in Indian stocks.

"Markets are witnessing profit booking for the last two days and we expect this consolidation to continue in the near term. Q4FY23 result season has ended on a healthy note, with earnings driven by Financials and Auto," said Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services.

"Now the focus will shift to Macro data to be released globally as well as domestically which would provide future direction to central banks in their upcoming meetings," said Khemka.

The recent banking crisis in the US following the collapse of Silicon Valley Bank in early March and the relatively strong economic outlook for India seemed to have made renewed appetite for domestic stocks.

As per the provisional estimates released by the National Statistical Office (NSO), real GDP growth for 2022-23 stood at 7.2 per cent, higher than the 7 per cent projected.

"...the Q4FY23 and full year FY23 GDP growth figures coming at 6.1 per cent and 7.2 per cent have impressively beaten the market expectations indicating that the FPI optimism is justified," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Meanwhile, foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the third straight month.

FPIs bought Indian stocks worth Rs 43,838 crore in the month of May. In March and April, they bought Rs 7,936 crore and Rs 11,631 crore worth of assets, respectively, NSDL data showed.

The GST collections, a key economic parameter for financial markets, too are buoyant.

The Goods and Services Tax (GST) revenue collected in the month of May 2023 was worth Rs 157,090 crore, official data showed Thursday. The revenues for the month of May 2023 are 12 per cent higher than the GST revenues in the same month last year.

"Going ahead, a decisive break below 43500 in the banking index might deteriorate the market mood. Meanwhile, we reiterate our view to maintain the positive bias while keeping a check on positions," said Ajit Mishra, SVP - Technical Research, Religare Broking. The Nifty Bank index today closed at 43,790 points.

According to Vinod Nair, Head of Research at Geojit Financial Services, "Despite challenges in the global economies, the domestic market displayed better than estimated Q4 earnings growth, along with 7.2 per cent GDP growth in FY23, adding buoyancy to the market during the week."

"However, today the market closed with a marginal negative bias in which banks witnessed heavy profit booking. Investors turned cautious in anticipation of inflationary pressure in the US after raising the US debt ceiling."

The United States House of Representatives passed legislation late Wednesday to implement the debt ceiling agreement negotiated between President Joe Biden and House Speaker Kevin McCarthy, putting Congress on track to approve additional borrowing just days before the government is anticipated to run out of money.

Treasury Secretary Janet Yellen has cautioned that if Congress does not increase or suspend the debt ceiling by Monday, June 5, the US government will be unable to cover its ongoing obligations.

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