Markets trade tad higher in early deals

Indian equity benchmarks made slightly positive start on Tuesday amid mixed cues from Asian peers. Soon, markets turned volatile and are trading above neutral lines in early deals. Sentiments got a boost as the Ministry of Finance asserted that green shoots have started to emerge in the domestic economy. In its monthly macroeconomic report, the ministry highlighted that total digital retail financial transactions via NPCI platforms rose sharply from Rs 6.71 lakh crore in April to Rs 9.65 lakh crore in May, a sign of revival in economic activity. Adding optimism, a Ficci-Dhruva Advisors industry survey report stated that the opening up of India's economy post lockdown and implementation of the economic package unveiled by the government have started showing results on the ground with initial signs of improvement in the performance of businesses now visible. Though, rising coronavirus cases in the country limited the upside. Once again, India has witnessed a massive spike in the number of coronavirus cases. With over 22,000 new cases in a day, the tally has hit 720,346 and 20,174 people have died.

On the global front, Asian markets are trading mixed despite the positive cues overnight from Wall Street following upbeat US economic data and on hopes of an economic recovery in China. Worries over a spike in coronavirus cases in some US states and other parts of the world weighed on investors sentiment. Investor sentiment was dampened due to the rising number of new coronavirus cases in Tokyo and data showing that Japanese household spending tumbled at the fastest pace on record in May.

Back home, IT stocks were trading in green despite rating agency CRISIL’s report that the H-1B visa ban could have an impact of nearly Rs 1,200 crore on Indian IT companies. It added that this could mean a marginal impact of 0.25-0.30 percent on their profitability. In scrip specific development, Bajaj Finance climbed after announcing it may consider additional accelerated provisioning for Covid-19 in the first quarter of FY21. On the other hand, NBCC (India) declined as it reported a 41% fall in its consolidated net profit for the June quarter.

The BSE Sensex is currently trading at 36517.21, up by 29.93 points or 0.08% after trading in a range of 36483.08 and 36660.35. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.12%, while Small cap index was up by 0.45%.

The top gaining sectoral indices on the BSE were IT up by 1.54%, TECK up by 1.31%, Telecom up by 0.56%, Healthcare up by 0.53%, Capital Goods up by 0.49%, while Utilities down by 1.38%, Oil & Gas down by 1.30%, PSU down by 1.30%, Power down by 0.71%, Metal down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.57%, Bajaj Finance up by 1.69%, Bajaj Auto up by 1.58%, Asian Paints up by 1.50% and Bajaj Finserv up by 1.27%. On the flip side, Power Grid down by 2.28%, ONGC down by 1.97%, ITC down by 1.65%, Axis Bank down by 1.51% and NTPC down by 1.47% were the top losers.

Meanwhile, domestic rating agency Crisil in its latest report has said that the US government's decision to suspend issuance of new H1-B and L1 visas till December 2020, will cost domestic information technology (IT) firms just Rs 1,200 crore and have a marginal 0.25-0.30 percent impact on their profitability. It noted that an increase in local hiring over the last few years since the US-the largest market for Indian IT firms started curbing the visa issuances will help limit the impact on the Indian IT companies now.

It can be noted that last month, the visas used by Indian tech professionals to work out of the US were suspended by the Donald Trump administration as it looked to arrest the rising unemployment. The rating agency, however, said that the marginal impact will be over and above the up to 2.50 percent decline in IT firms' profits because of the COVID19 pandemic. It noted that operating profitability is seen at 23 percent in FY21 as per an analysis of 15 top firms' performance. It said the US move on the H1B and L1 visas will have limited impact because of the lower reliance on the entry system by hiring locally, and added that renewals of the visas will be unaffected.

According to the report, new H1B visa issuances contribute less than 5 percent of the US onshore workforce of the top 5 listed Indian IT firms, which account for 60 percent of the industry revenue. On the other hand, it said the share of local hires in their US onshore employee mix has steadily increased from 3035 percent in fiscal 2017 to about 5560 percent in fiscal 2020. It added that with IT firms aiming to increase the share of local talent, especially with digital skills, the transition impact is expected to be marginal for them.

The CNX Nifty is currently trading at 10772.20, up by 8.55 points or 0.08% after trading in a range of 10753.45 and 10803.60. There were 23 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Infosys up by 3.08%, Bajaj Auto up by 2.07%, Tata Motors up by 1.97%, Bajaj Finance up by 1.82% and Maruti Suzuki up by 1.57%. On the flip side, Power Grid down by 2.28%, BPCL down by 2.05%, ONGC down by 2.03%, Zee Entertainment down by 1.83% and Bharti Infratel down by 1.81% were the top losers.

Asian markets are trading mixed; Nikkei 225 declined 110.08 points or 0.48% to 22,604.36, Straits Times slipped 5.02 points or 0.19% to 2,684.59, KOSPI lost 5.32 points or 0.24% to 2,182.61 and Jakarta Composite inched down 0.39 points or 0.01% to 4,988.48. On the other hand, Hang Seng rose 30.79 points or 0.12% to 26,369.95, Taiwan Weighted gained 25.09 points or 0.21% to 12,141.79 and Shanghai Composite was up by 43.91 points or 1.32% to 3,376.79.