Markets trade higher with marginal gains in early deals

Indian equity benchmarks made slightly positive start and turned volatile on Wednesday. But, markets managed to trade in green terrain in early deals. Buying in Telecom, TECK and IT stocks supported the domestic indices. Sentiments got some support with CII-IBA survey report stating that the financial conditions are looking up in the current quarter (Q2FY21) due to policy decisions and steps the government and Reserve Bank of India have taken to support economy. Traders took note of Union Minister of Commerce and Industry Piyush Goyal’s statement that the whole package of the US-India trade deal is almost ready and it can be finalised when the local political situation in the United States is conducive. Though, upside remained capped with the Finance Ministry’s statement that the gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422 crore collected in July. Also, Moody's Investors Service said India will be among the large emerging market sovereigns to have highest debt burden by 2021. Also, rising coronavirus cases is likely to dampen the sentiments in the markets.

On the global front, most of the Asian markets were trading lower despite overnight gains on Wall Street. Traders were keeping an eye on Washington after Treasury Secretary Steven Mnuchin said he would reach out to the Democrats to work on pushing through a new stimulus package for the beleaguered US economy. Investors are also looking for more clues on the state of the economic recovery this week, including the monthly US jobs report on Friday.

Back home, India has recorded over 68,000 new cases in the past 24 hours, taking its total caseload to 3,766,108. On the sectoral front, auto stocks were in action reacting to their monthly sales numbers. TVS Motor registered a sales growth of 14% in August 2020 with 287,398 units as against 252,744 units in July 2020. Hero MotoCorp reported a 7.55% increase in sales in August at 584,456 units, compared to the corresponding month last year.

The BSE Sensex is currently trading at 38970.39, up by 69.59 points or 0.18% after trading in a range of 38818.17 and 39030.33. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.56%, while Small cap index was up by 0.98%.

The top gaining sectoral indices on the BSE were Telecom up by 1.06%, TECK up by 1.04%, IT up by 1.04%, Basic Materials up by 0.90%, Energy up by 0.61%, while Utilities down by 0.85%, PSU down by 0.54%, Bankex down by 0.53%, Power down by 0.27%, Consumer Durables down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 3.04%, ONGC up by 1.45%, Tech Mahindra up by 1.28%, Infosys up by 0.96% and HCL Technologies up by 0.93%. On the flip side, Power Grid down by 2.39%, SBI down by 1.67%, Bajaj Auto down by 1.23%, HDFC down by 1.02% and Kotak Mahindra Bank down by 0.90% were the top losers.

Meanwhile, State Bank of India's (SBI) research report – Ecowrap has said that India’s real Gross domestic product (GDP) is expected to shrink by 10.9 percent in the current fiscal year (FY21). It had earlier estimated real GDP at (-) 6.8 percent for FY21. It estimates Q2 real GDP decline in the range of (-) 12 percent to (-) 15 percent, while Q3 GDP is seen between (-) 5 percent and (-) 10 percent. Q4 is expected to be in (-) 2 percent to (-) 5 percent range.

The report stated that the country’s economy has suffered its worst slump on record in April-June quarter of current fiscal year (Q1FY21), with the GDP contracting by 23.9 percent, due to the nationwide lockdown imposed on March 25, 2020, in the wake of the COVID-19 pandemic and is much worse than market and its estimates.

According to the report, as anticipated private final consumption expenditure (PFCE) growth collapsed as COVID-19 containment measures reduced consumption to mostly essential items. With investment demand not seeing recovery due to unutilised capacity, it said the share of private consumption expenditure will remain on the higher side in overall GDP estimate. It said ‘assuming that it remains at 57 percent of GDP in nominal terms, we will see at least around 14 percent decline in PFCE growth in FY21, as against an average of 12 per cent growth for the nine-year period ended FY20.’ It added that this indicates an average swing of 26 percent in current fiscal indicating a consumption washout.

The CNX Nifty is currently trading at 11494.60, up by 24.35 points or 0.21% after trading in a range of 11449.30 and 11515.65. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 3.44%, Ultratech Cement up by 2.93%, Bharti Infratel up by 2.49%, Wipro up by 1.51% and ONGC up by 1.39%. On the flip side, Power Grid down by 2.47%, SBI down by 1.72%, Grasim Industries down by 1.58%, Bajaj Auto down by 1.26% and HDFC down by 1.04% were the top losers.

Asian markets were trading mostly in red; Straits Times declined 11.68 points or 0.46% to 2,526.87, Hang Seng fell 151.04 points or 0.60% to 25,033.81, Taiwan Weighted lost 46.23 points or 0.36% to 12,657.05, KOSPI slipped 4.54 points or 0.19% to 2,345.01, Jakarta Composite decreased 1.28 points or 0.02% to 5,309.40 and Shanghai Composite was down by 13.23 points or 0.39% to 3,397.38, while Nikkei 225 rose 52.98 points or 0.23% to 23,191.05.