Markets hold gains; Sensex hovers around 32,000 mark

Following firm Asian markets, Indian equity benchmarks held their earlier gains in early afternoon session, led by gains in frontline blue chip stocks such as Dr. Reddys Lab, Bajaj Auto and Asian Paints among others. Sentiments remained positive with the report that India’s factory activity unexpectedly expanded in August, snapping back from a contraction the previous month, as disruptions stemming from confusion over a new national sales tax eased. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rebounded to 51.2 in August from a low of 47.9 in the previous month. Investors paid no heed towards the weak GDP data of the June quarter. India's Gross Domestic Product (GDP) growth slowed down to a three-year low of 5.7% during the first quarter (April-June) of the fiscal year 2017-18, as against 7.9% in the corresponding period a year ago and 6.1% in the preceding quarter. The broader markets also gained strength with the BSE Midcap and Smallcap indices increasing by 0.93% and 0.98%, respectively. In scrip specific development, Yes Bank was up by around a percent after partnering with leading digital money transfer service WorldRemit to launch a new instant money transfer service to India.

On the global front, Asian markets were trading mostly in green, as investor sentiment bolstered by the positive cues overnight from Wall Street and data showing that China's manufacturing sector continued to expand in August. Back home, the BSE Sensex is currently trading at 31865.62, up by 135.13 points or 0.43% after trading in a range of 31707.27 and 31890.28. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.93%, while Small cap index was up by 0.98%.

The top gaining sectoral indices on the BSE were Realty up by 2.82%, Auto up by 1.63%, Healthcare up by 1.59%, Consumer Disc up by 1.38% and Metal up by 1.22%, while IT down by 0.34%, Telecom down by 0.32%, TECK down by 0.21% and Consumer Durables down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 7.95%, Bajaj Auto up by 3.44%, Asian Paints up by 2.74%, Kotak Mahindra Bank up by 1.95% and Tata Motors up by 1.93%. On the flip side, TCS down by 1.83%, Bharti Airtel down by 1.20%, NTPC down by 0.89%, HDFC down by 0.79% and Wipro down by 0.65% were the top losers.

Meanwhile, with the government setting a target of 175 GW renewable energy (RE) capacity by the end of 2022, the rating agency ICRA in its latest report has said that growth in the domestic coal demand is likely to witness a structural slowdown. It noted that over the years, the capital cost of setting up renewable energy (RE) in the country has been going down steadily with the tariffs of RE coming at par with the conventional sources. It also highlighted that this year, solar power tariff dropped to hit a new low of Rs 2.44 per unit in the auction conducted for Bhadla solar park.

The rating firm believes that a greater parity between conventional and RE tariffs, along with the current thermal overcapacity, will lead to a perceptible slowdown in fresh investments in setting up coal-based generation capacities in the next five years. It also expects that this trend would trigger a prolonged period of subdued demand of thermal coal for domestic miners. Considering that the country’s RE capacity reaches 125 GW in 2022, the report noted that domestic coal demand is likely to register a modest compounded annual growth rate of around 3.5 percent between FY2018 and FY2022, as against 5.6 percent registered between FY2013 and FY2017. Reflecting the trend, it further said that coal India’s ambitious coal production target of 1 billion tonne in FY2020 is likely to be missed by a wide margin.

However, the report maintained that notwithstanding the anticipated slowdown in average annual coal demand in the next five years, domestic coal production is likely to grow by a higher compounded annual growth rate (CAGR) of around 5.5 per cent between FY2018 and FY2022, leading to a significant reduction in India’s coal imports. It also said that thermal coal imports are expected to contract to below 100 metric tonne in FY2022, declining from 149 metric tonne in FY2017. It added that a gradual replacement of imported coal by domestic coal is expected to help domestic miners to an extent. 

The CNX Nifty is currently trading at 9961.45, up by 43.55 points or 0.44% after trading in a range of 9909.85 and 9963.90. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 7.92%, Bajaj Auto up by 3.25%, Asian Paints up by 2.73%, Aurobindo Pharma up by 2.59% and GAIL India up by 2.43%. On the flip side, TCS down by 1.97%, Indian Oil Corp. down by 1.32%, Bharti Airtel down by 1.19%, Power Grid down by 1.16% and HDFC down by 0.85% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite increased 3.58 points or 0.11% to 3,364.39, Taiwan Weighted rose 9.04 points or 0.09% to 10,594.82 and Nikkei 225 added 45.23 points or 0.23% to 19,691.47.

On the flip side, Hang Seng decreased 51.49 points or 0.18% to 27,918.81 and KOSPI Index was down by 5.5 points or 0.23% to 2,357.69.