Key indices extend gains in morning deals

The local barometer gauges extended gains in morning session, as investors reacted to positive trade data and encouraging earnings news from Infosys. Data from the Ministry of Commerce & Industry showed India's merchandise trade balance swung to a surplus in June, the first in the last decade, as imports plummeted amid weak demand and supply disruptions due to the coronavirus pandemic. The trade balance showed a surplus of $0.79 billion for June versus a deficit of $15.28 billion in the same month last year. Some support also came with NITI Aayog CEO’s statement that India is set to make the Public Distribution System location independent to ensure that no one, especially the inter-state migrants, is left behind, citing the One Nation, One Card initiative being implemented by the government as a transformative solution in response to the COVID-19 pandemic. However, there was some cautiousness too with deteriorating US-China relations and a new wave of lockdowns amid record surge in Covid-19 cases. On the sectoral front, aviation stocks were trading in green despite rating agency Crisil stated that curtailed mobility of people due to the Covid-19 pandemic is expected to shrink India's domestic air passenger traffic by 40-45 per cent in FY21.

On the global front, Asian markets were trading mostly in red, weighed down by concern about deteriorating U.S.-China relations and the economic cost of a resurgence in coronavirus infections that is prompting some places to re-impose containment measures. Traders overlooked official data showed China's GDP expanded 3.2 percent year on year in the second quarter of 2020 amid coronavirus headwinds. Separate reports showed industrial output rose an annual 4.8 percent in June, expanding for the third straight month, while retail sales fell 1.8 percent year-on-year.

The BSE Sensex is currently trading at 36387.66, up by 335.85 points or 0.93% after trading in a range of 36038.41 and 36415.03. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.07%, while Small cap index was down by 0.51%.

The top gaining sectoral indices on the BSE were IT up by 7.63%, TECK up by 6.03%, Auto up by 0.87% and Energy up by 0.01%, while Utilities down by 1.30%, Power down by 1.25%, Telecom down by 0.99%, FMCG down by 0.98% and PSU down by 0.94% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 14.02%, HCL Technologies up by 4.54%, TCS up by 3.16%, Tech Mahindra up by 1.97% and Mahindra & Mahindra up by 1.64%. On the flip side, ITC down by 2.32%, NTPC down by 1.93%, Titan Company down by 1.82%, HDFC down by 1.63% and Power Grid down by 1.41% were the top losers.

Meanwhile, in order to boost economy, Former Reserve Bank of India (RBI) Governor Raghuram Rajan has said the government should focus on spending on profitable firms, which have been incurring costs but have not earned revenues in the last four months. He further said in the pandemic, unlike normal recession, there is enormous amount of destruction, which has happened to households and also to firms, and that’s where relief and repair has to come in along with stimulus.

He mentioned ‘the reality right now is not to say open the flood gates and spend on anything.  Stating that repair is important to recover from the impact of pandemic, he said if a firm is unable to function, that’s a loss to GDP going forward.  He added if it can benefit from additional funding, writing down of debt it may contribute significantly more than the normal Keynesian stimulus.

To contain the spread of COVID-19 pandemic, the government had imposed the lockdown from March 25. The gradual opening up of economy started since June. In May, the government had already announced a nearly Rs 21 lakh crore package to support the economy.

The CNX Nifty is currently trading at 10696.65, up by 78.45 points or 0.74% after trading in a range of 10595.20 and 10708.60. There were 17 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Infosys up by 14.22%, HCL Technologies up by 4.68%, TCS up by 3.41%, Mahindra & Mahindra up by 2.04% and Eicher Motors up by 2.01%. On the flip side, Bharti Infratel down by 3.53%, Indian Oil Corporation down by 2.98%, ITC down by 2.47%, NTPC down by 2.10% and Titan Company down by 1.97% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 298.50 points or 1.17% to 25,183.08, Nikkei 225 slipped 171.03 points or 0.75% to 22,774.47, Shanghai Composite declined 47.27 points or 1.41% to 3,314.03, Taiwan Weighted dropped 45.63 points or 0.37% to 12,157.22, KOSPI fell 15.81 points or 0.72% to 2,186.07 and Straits Times trembled 14.25 points or 0.54% to 2,634.65.

On the flip side, Jakarta Composite soared 18.95 points or 0.37% to 5,094.75.