BENGALURU (Reuters) – Indian shares erased early gains to trade flat on Tuesday as gains from energy stocks and declining daily cases of COVID-19 were offset by data that showed factory activity growth slowed significantly last month.
The blue-chip NSE Nifty 50 index was down 0.05% at 15,576.75 by 0524 GMT, while the benchmark S&P BSE Sensex rose 0.03% to 51,951.44. Both the indexes closed 1% higher on Monday, building up on gains posted last week.
India’s factory activity growth slowed in May as an escalation in novel coronavirus cases whacked new orders and output, while scarcity of raw materials drove up input costs, a private sector survey showed on Tuesday.
“There could be some volatility going forward because we are seeing a mixed bag of factors. Daily COVID-19 cases reducing is positive, while a lower manufacturing PMI for May is negative,” said Anita Gandhi, director at Arihant Capital Markets.
The country on Tuesday reported its lowest daily increase in new infections since April 8 at 127,510, staying below the 200,000-mark for a fifth straight day.
Meanwhile, its GDP picked up to 1.6% year-on-year in the January-March quarter, better than the 1.0% growth forecast of analysts in a Reuters poll. Economists, however, are pessimistic about the current quarter after a huge second wave of COVID-19 infections hit the country last month.
Goldman Sachs on Tuesday cut its second-quarter GDP forecast for India, and now expects a 27.6% annual contraction in the quarter from 20.5% in its earlier forecast.
Energy stocks offered support, with conglomerate Reliance Industries Ltd and oil exploration company Oil and Natural Gas Corporation Ltd being among the top boosts to the Nifty 50, rising 0.6% and 3.4%, respectively.
In other Asian markets, stocks rose ahead of European and U.S. data this week that may offer cues on global economic health. [MKTS/GLOB]
Reporting by Rama Venkat in Bengaluru; editing by Uttaresh.V
