Benchmarks trade firm in early deals

Indian equity benchmarks made positive start following global markets. Markets are trading firm in early deals, with gains of around half a percent each. Domestic indices also got support with buying in Power up, Utilities and Metal stocks, while selling in IT and TECK counters kept upside in check. Traders took encouragement with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India will transform into a middle-income country from a lower middle-income economy by 2030. Kumar also said that India will witness a recovery in investment cycle by April 2021 and beef up efforts on trade front as well. Adding more optimism among market participants as Commerce and industry minister Piyush Goyal said that India's exports in the first two weeks of June have reached above 80% level of the same period last year and would be only 10-12% lower in the month compared to June 2019. Meanwhile, India has again recorded nearly 15,000 cases of coronavirus in a day, taking its total to 440,450. The country's death toll has crossed the 14,000 mark.

On the global front, most of the Asian markets are trading in green following the positive cues overnight from Wall Street amid optimism about a quick economic recovery from the coronavirus-induced setback. Investors’ sentiment also got a boost after White House trade advisor Peter Navarro clarified that the US-China trade deal remains in place. Meanwhile, the latest survey from Jibun Bank revealed that the manufacturing sector in Japan continued to contract in June, and at a faster rate, with a manufacturing PMI score of 28.9.

Back home, Information and Technology (IT) stocks were under pressure after the US President Donald Trump signed an order restricting H-1B, L-1 and other temporary work permits. In scrip specific developments, Satin Creditcare Network gained as its board has approved raising Rs 120 crore via rights issue. However, Bharti Airtel trading in red as Fitch Ratings revised the outlook on the company's Long-Term Foreign-Currency (FC) Issuer Default Rating (IDR) to negative from stable, affirming it at 'BBB-'.

The BSE Sensex is currently trading at 35057.03, up by 145.71 points or 0.42% after trading in a range of 34952.62 and 35116.22. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.07%, while Small cap index was up by 0.81%.

The top gaining sectoral indices on the BSE were Power up by 2.03%, Utilities up by 1.46%, Metal up by 1.38%, Capital Goods up by 1.30%, PSU up by 1.18%, while IT down by 0.29%, TECK down by 0.07% were the only losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.91%, Power Grid up by 2.63%, Bajaj Finance up by 2.61%, NTPC up by 2.00% and Nestle up by 1.94%. On the flip side, TCS down by 0.61%, Asian Paints down by 0.42%, Infosys down by 0.38%, HDFC down by 0.09% and Mahindra & Mahindra down by 0.01% were the top losers.

Meanwhile, Fitch Ratings in its latest report has stated that India is very likely to come out with another round of fiscal stimulus package, worth about 1 percent of Gross Domestic Product (GDP) in the coming months. Fitch, which recently revised India's sovereign rating outlook to 'negative' from 'stable', said it has factored in the outgo for additional fiscal stimulus while deciding on the rating action.

Fitch Director Sovereign Ratings Thomas Rookmaaker stated that COVID-19 is still in India and it is very likely that the government will have to spend a bit more on fiscal measures to support the economy. He said ‘in our forecast we have factored in a larger stimulus package, not just 1 percent of GDP of fiscal measures that have been announced so far. You may recall that Prime Minister Narendra Modi announced 10 percent of GDP as measures, but 9 percentage points were nonfiscal in nature. There was also an announcement of bond issuance, borrowing requirement of government and that was 2 percentage points of GDP. That could give an indication that another 1 percentage points could come in the months ahead to provide relief for those who need it.’

Rookmaaker further said while reforms will help boost growth going ahead, it would depend on the impact of COVID-19 pandemic on businesses and financial sector. He also said ‘the question is to what extent the businesses and financial sector is scarred by pandemic. He added that the SMEs have been hit by a number of shocks in the past couple of years and the big question is to what extent the financial sector will be able to perform the role as supplier of credit and facilitate GDP growth.’

The CNX Nifty is currently trading at 10360.10, up by 48.90 points or 0.47% after trading in a range of 10328.10 and 10378.15. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.49%, UPL up by 4.45%, JSW Steel up by 2.40%, Nestle up by 2.35% and Power Grid up by 2.32%. On the flip side, TCS down by 0.63%, Infosys down by 0.41%, HDFC down by 0.25%, Wipro down by 0.21% and Asian Paints down by 0.14% were the top losers.

Asian markets are trading mostly higher; Nikkei 225 surged 193.24 points or 0.86% to 22,630.51, Straits Times rose 3.28 points or 0.12% to 2,632.97, Hang Seng gained 236.69 points or 0.97% to 24,748.03, Taiwan Weighted advanced 34.78 points or 0.30% to 11,607.71, KOSPI soared by 8.59 points or 0.40% to 2,135.32 and Shanghai Composite up by 5.03 points or 0.17% to 2,970.30. On the other hand, Jakarta Composite was down by 13.33 points or 0.27% to 4,905.50.