Indian benchmarks notch monthly gains on trade deal hopes, tensions with Pakistan weigh

Indian benchmarks closed flat on Wednesday but wrapped up a strong month, with both the Nifty 50 and Sensex logging monthly gains on expectations of a US-India trade deal and renewed foreign inflows.

The Nifty 50 fell 0.01% to 22,334.2 and the BSE Sensex lost 0.06% to 80,242.24 on Wednesday.

For April, the Nifty and Sensex gained 3.5% and 3.7%, respectively.

Daily moves were muted as HDFC Bank offset pressure from tensions with Pakistan.

Banks and financials led monthly gains, helped by stable earnings from key constituents and foreign inflows.

Pak-India tensions: KSE-100 Index closes over 3% lower amid strong selling pressure

Meanwhile, the IT index fell 3% in April, logging declines for the fourth month in a row - its longest losing streak since October 2016.

Foreign portfolio investors (FPI) have pumped in $4.4 billion in Indian stocks in the last ten sessions, their longest buying spree in nearly two years, fuelled by trade deal optimism with the US

Officials from both countries have hinted at a potential bilateral deal as early as this week or next.

Indian benchmarks surrender gains as Kashmir jitters offset trade deal optimism

“Shift of money to emerging markets from the US due to economic uncertainty and expectation of a trade deal between India and the US helped markets higher in April,” said Samrat Dasgupta, CEO of Esquire Capital Investment Advisors.

He, however, warned that jitters over potential escalations between India and Pakistan could keep markets highly volatile going forward.

Among stocks, non-bank lender Bajaj Finance fell 5% on Wednesday as brokerages flagged weak quarterly pre-provision profit and higher credit costs as negatives.

However, HDFC Bank, the heaviest stock on the Nifty, rose 0.9%, lending support to the benchmarks.

Indian markets will be closed for a holiday on Thursday. Trading will resume on May 2, Friday.