Benchmarks trade slightly higher in early deals

Indian equity benchmarks made slightly positive start on Wednesday. Markets are trading higher with marginal gains in early deals led by buying in Auto, Consumer discretionary and Bankex stocks. Sentiments got a boost as Moody's Investors Service said India, China and Indonesia will be the only G-20 emerging economies to post a strong enough pick up of real GDP in the second half of 2020, and retained its projection of 3.1 per cent growth contraction for India in 2020. Adding optimism, Finance Minister Nirmala Sitharaman said that the government is open to further tweaking the Rs 3 lakh crore credit guarantee scheme for providing collateral-free loans to small businesses. Though, upside remained capped as the Reserve Bank of India (RBI) in its annual report for 2019-20 said that the Country's headline inflation is expected to firm up further in the coming months largely due to disruptions in food and manufactured items' supply chains.

Global cues remained lackluster with most of the Asian markets were trading lower following the mixed cues overnight from Wall Street. Investors also turned cautious as they looked ahead to Federal Reserve Chair Jerome Powell's speech to the Jackson Hole symposium on Thursday. Market participants have suggested Powell will signal an increased tolerance for higher inflation, with some predicting he will call for a shift to ‘average inflation’ targeting rather than the long-standing 2 percent target.

Back home, agriculture industry stocks were in limelight as the RBI flagged concerns about impact of climate change, in terms of volatile rainfall intensity, increase in extreme events and rising temperature, having implications for India's agriculture outlook. In scrip specific developments, SBI was trading in red after Moody's Investors Service downgraded its standalone profile, citing deteriorating asset quality and profitability. Birla Tyres jumped ahead of a board meet to consider capital raising options.

The BSE Sensex is currently trading at 38906.83, up by 62.95 points or 0.16% after trading in a range of 38846.76 and 38980.60. 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 0.53%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Auto up by 1.74%, Consumer discretionary up by 0.88%, Bankex up by 0.87%, Realty up by 0.75%, Metal up by 0.64%, while Telecom down by 1.42%, Energy down by 0.30%, TECK down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 3.77%, Indusind Bank up by 3.03%, Bajaj Finserv up by 2.36%, Mahindra & Mahindra up by 1.99% and Axis Bank up by 1.49%. On the flip side, Bharti Airtel down by 1.66%, Asian Paints down by 1.14%, Tech Mahindra down by 0.62%, HCL Technologies down by 0.45% and HDFC down by 0.42% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said the government is open to further tweaking the Rs 3 lakh crore credit guarantee scheme for providing collateral-free loans to small businesses. She said domestic revenue generation is a concern as sectors such as tourism, real estate, hospitality, and airlines have been affected disproportionately by the COVID-19 pandemic. She noted that structural reform is a key priority for the government and it will move fast on the Cabinet-cleared disinvestment proposals, including that of banks.

The minister further said that every announcement has had a structural reform component with it, and the government is reaching out to industry to understand their concerns. She also said structural reforms are key priority for the government, reflected in government announcements to address COVID-19 challenges. On the private investment cycle, she said that in September 2019, the government had reduced corporate tax rate but investments could not happen due to COVID-19. With post-COVID reset happening, she said data-driven manufacturing models and newer investments can happen in FinTech.

Earlier this month, the government had widened the scope of the Rs 3-lakh crore credit guarantee scheme by doubling the upper ceiling of loans outstanding to Rs 50 crore and including certain individual loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit, apart from MSMEs. Till August 20, banks have disbursed more than Rs 1 lakh crore loans under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which was announced as part of the Aatmanirbhar Bharat package.

The CNX Nifty is currently trading at 11495.25, up by 23.00 points or 0.20% after trading in a range of 11479.70 and 11517.55. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 4.41%, Adani Ports & SEZ up by 4.22%, Bajaj Auto up by 3.95%, Indusind Bank up by 3.10% and Bajaj Finserv up by 2.49%. On the flip side, Britannia Industries down by 2.04%, Bharti Airtel down by 1.86%, HDFC Life Insurance down by 1.30%, Asian Paints down by 1.11% and Tech Mahindra down by 0.72% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 37.96 points or 0.16% to 23,258.81, Straits Times lost 27.18 points or 1.06% to 2,531.85, Hang Seng decreased 53.75 points or 0.21% to 25,432.47, KOSPI dropped 4.54 points or 0.19% to 2,362.19 and Jakarta Composite fell 5.92 points or 0.11% to 5,332.97. Shanghai Composite was down by 36.55 points or 1.08% to 3,337.03, while Taiwan Weighted gained 19.15 points or 0.15% to 12,777.40.