Markets trade higher with notable gains in early deals

Indian equity benchmarks made cautious start amid mixed global cues coupled with weak macro-economic data. But, soon markets gained traction and are trading higher with notable gains in early deals. Buying in all the sector in indices, led by Metal, Power and Basic Materials, supported the domestic markets. Investors are eyeing the Manufacturing PMI data to be out later in the day. Some support came in with report that the RBI will conduct a simultaneous purchase and sale of government securities under open market operation (OMO) for an aggregate amount of Rs 10,000 crore on September 03, 2020. Traders largely overlooked report that India's economy suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. Meanwhile, the Union Government's fiscal deficit overshot the budget target for the current financial year within four months (April-July), mainly on account of the impact of lockdown on revenue collections.

On the global front, Asian markets were trading mixed amid lackluster cues overnight from Wall Street. Data showing that China's manufacturing sector continued to expand in August and signaled a recovery from the coronavirus pandemic helped boost investors' sentiment. Meanwhile, the latest survey from Jibun bank revealed that the manufacturing sector in Japan continued to contract in August, albeit at a slower pace, with a manufacturing PMI score of 47.2.

Back home, auto sector stocks were in action, reacting to their monthly sales numbers. Also, Hotel industry stocks were in limelight as Maharashtra allowed hotels and lodges to operate at 100 per cent capacity. In scrip specific developments, Bharti Infratel gained after it approved the company's merger with Indus Tower. On the other hand, JK Cement was trading in red on reported a 62.25% decline in consolidated net profit at Rs 49.94 crore for the first quarter ended June 2020 as company's operations and business performance was impacted due to lockdown.

The BSE Sensex is currently trading at 38966.90, up by 338.61 points or 0.88% after trading in a range of 38563.37 and 39037.41. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index jumped 1.35%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Metal up by 2.53%, Power up by 1.98%, Basic Materials up by 1.65%, Healthcare up by 1.62%, Capital Goods up by 1.57%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Indusind Bank up by 3.57%, NTPC up by 2.59%, Tata Steel up by 2.44%, Bajaj Finance up by 2.23% and Asian Paints up by 2.04%. On the flip side, ONGC down by 2.32% and Infosys down by 0.04% were the only losers.

Meanwhile, the ministry of Commerce and Industry in its latest data has showed that the growth of eight core infrastructure industries have contracted by 9.6 percent in July 2020 as compared to same period of last year, due to decline mostly in production of steel, refinery products and cement. This is the fifth month of contraction in a row for the eight-core industries. The production of eight core sectors had expanded by 2.6 percent in July last year. The Eight Core Industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).  

Among eight core sectors, Coal production having 10.33 percent weight decreased by 5.7 percent in July, 2020 over July, 2019, and its cumulative index fell by 12.9 percent during April to July, 2020-21 over corresponding period of the previous year. Petroleum Refinery production having 28.04 percent weight declined 13.9 percent in July, 2020 over July, 2019, while its cumulative index dropped by 17.1 percent during April to July, 2020-21 over the corresponding period of previous year.

Electricity generation having 19.85 percent weight fell 2.3 percent in July, 2020 over July, 2019, while its cumulative index decreased by 12.4 percent during April to July, 2020-21 over the corresponding period of previous year. Cement production having 5.37 percent weight decreased by 13.5 percent in July, 2020 over July, 2019 and its cumulative index fell by 32.2 percent during April to July, 2020-21 over the corresponding period of previous year. Steel production having 17.92 percent weight declined by 16.4 percent in July, 2020 over July, 2019, while its cumulative index fell by 42.0 percent during April to July, 2020-21 over the corresponding period of previous year.

Crude Oil production having 8.98 percent weight fell by 4.9 percent in July, 2020 over July, 2019 and its cumulative index dropped by 6.1 percent during April to July, 2020-21 over the corresponding period of previous year. The Natural Gas production having 6.88 percent weight declined by 10.2 percent in July, 2020 over July, 2019, and its cumulative index was down by 14.7 percent during April to July, 2020-21 over the corresponding period of previous year. However, Fertilizer production having 2.63 percent weight increased by 6.9 percent in July, 2020 over July, 2019, and its cumulative index was up by 3.9 percent during April to July, 2020-21 over the corresponding period of previous year.

The CNX Nifty is currently trading at 11482.25, up by 94.75 points or 0.83% after trading in a range of 11370.10 and 11510.00. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.51%, Indusind Bank up by 3.51%, JSW Steel up by 3.11%, Bharti Infratel up by 2.97% and NTPC up by 2.59%. On the flip side, ONGC down by 2.26%, Zee Entertainment down by 0.84% and Infosys down by 0.03% were the few losers.

Asian markets were trading mixed; Taiwan Weighted rose 77.99 points or 0.62% to 12,669.44, KOSPI gained 18.73 points or 0.81% to 2,344.90, Jakarta Composite added 7.76 points or 0.15% to 5,246.25 and Shanghai Composite was up by 1.49 points or 0.04% to 3,397.17. On the other hand, Nikkei 225 lost 14.52 points or 0.06% to 23,125.24, Straits Times declined 18.33points or 0.72% to 2,514.18 and Hang Seng fell 5.50 points or 0.02% to 25,171.55.