Benchmarks continue firm trade in afternoon session

Indian equity markets continued to trade firm in afternoon session, tracking recovery in Asian and global markets. The sentiments remained positive with Commerce and Industry Minister Piyush Goyal’s statement that use of artificial intelligence (AI) in different forms can help achieve the target of making India a $5 trillion economy in the coming years. Moreover, the rupee was in a sweet spot, strengthening by another 20 paise to 71.73 against the dollar in early trade. However, markets trimmed some of their early morning gains, as investors remained cautious with a report stating that the rally in brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India's FY20 current account deficit (CAD) and forecasts for a balance of payment surplus. On the sectoral front, renewable sector was in focus with Fitch Solutions stating that the government’s proposed carbon tax waiver on coal may pose substantial downside risks to India's renewable sector growth. It noted that in a bid to alleviate significant debt levels in the power industry, the government had proposed to waive carbon taxes on coal by Rs 400 per tonne.

On the global front, Asian markets were trading mostly in green, following the overnight recovery on Wall Street and as no fresh escalation in tensions were reported from the Middle East. Investors are also optimistic that the geopolitical tensions will not have a major impact on the global economy. Back home, the BSE Sensex is currently trading at 40960.90, up by 284.27 points or 0.70% after trading in a range of 40892.85 and 41230.14. There were 26 stocks advancing against 4 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index rose 0.67%, while Small cap index was up by 0.90%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.28%, Metal up by 1.20%, Energy up by 1.06%, Realty up by 0.95% and Power was up by 0.88%, while Telecom down by 0.47% and Consumer Durables was down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.73%, HDFC Bank up by 1.51%, NTPC up by 1.30%, Reliance Industries up by 1.23% and Asian Paints was up by 1.16%. On the flip side, Hero MotoCorp down by 0.51%, Bharti Airtel down by 0.42%, Nestle down by 0.26% and Titan Company was down by 0.14% were the top losers.

Meanwhile, Fitch Solutions has said that the government’s proposed carbon tax waiver on coal may pose substantial downside risks to India's renewable sector growth. It noted that in a bid to alleviate significant debt levels in the power industry, the government had proposed to waive carbon taxes on coal by Rs 400 per tonne.

This comes at a time where aggressive bidding and rapid fall in tariff prices in country's renewable power auctions have squeezed profit margins for project developers and threatened the economic feasibility of the project pipeline in the renewables sector. Fitch pointed out that the proposed carbon tax waiver on coal will weigh on renewables growth and added that the carbon tax waiver was likely to make coal-fired power cheaper, increasing the use of coal.

It also expects coal to continue dominating India's power sector, making up a share of slightly under 70 percent of the total power generation mix by 2029, with non-hydro renewables at 15.6 percent. It said ‘we stress that the continued push for lower tariffs in the tender process have already resulted in the undersubscription and cancellation of a few auctions across FY18 and FY19.’

The CNX Nifty is currently trading at 12079.35, up by 86.30 points or 0.72% after trading in a range of 12053.35 and 12152.15. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.45%, UPL up by 3.17%, Zee Entertainment up by 2.28%, Tata Steel up by 1.87% and HDFC Bank was up by 1.47%. On the flip side, Bharti Infratel down by 1.59%, Tata Motors down by 0.70%, Bharti Airtel down by 0.48%, Hero MotoCorp down by 0.42% and Nestle was down by 0.31% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 370.86 points or 1.6% to 23,575.72, Hang Seng increased 146.24 points or 0.52% to 28,372.43, Straits Times advanced 23.87 points or 0.74% to 3,242.73, KOSPI rose 20.47 points or 0.95% to 2,175.54 and Shanghai Composite was up by 20.05 points or 0.65% to 3,103.46.

On the flip side, Jakarta Composite lost 3.60 points or 0.06% to 6,253.80 and Taiwan Weighted was down by 73.04 points or 0.61% to 11,880.32.