Benchmarks trade slightly higher in early deals

Indian equity benchmarks made cautious start on Tuesday amid India-China tensions at the border. According to reports, an incident of firing took place on the Line of Actual Control in Eastern Ladakh sector where troops of India and China have been engaged in a stand-off for over three months. Markets are lingering around neutral lines in early deals with marginal gains supported by buying in IT, Energy and TECK counters. Some support came in with report that the Reserve Bank of India (RBI) announced a special round of simultaneous sale and purchase of government securities (G-Secs) for Rs 10,000 crore each, on September 10, 2020. It has released details of the sale and purchase of securities, which will be done using the multiple price auction method. Though, upside remained capped as traders remained concerned with global credit rating agency Fitch revising India’s FY21 central government fiscal deficit forecast to 8.2 percent of GDP from 7.2 percent due to higher than anticipated willingness of govt to spend amid weak revenue collection.

On the global front, most of the Asian markets were trading higher following the overnight rallies in European markets amid optimism about potential coronavirus vaccines, while the US markets were closed for a public holiday. Investors shrugged off worries about US-China tensions as well as data that showed the Japanese economy shrank more than initially estimated in the second quarter.

Back home, aviation stocks were in focus as rating agency ICRA said air passenger traffic in the country logged a 26 per cent month-on-month growth at 2.6 million passengers in August, with airlines scaling up capacity by 27 per cent over July. In scrip specific developments, Wipro gained as it entered into a multi-year global agreement with Marelli, for automotive engineering services. On the other hand, Bharat Dynamics came under pressure as the government is planning to sell 15% stake in the company through an offer for sale.

The BSE Sensex is currently trading at 38476.71, up by 59.48 points or 0.15% after trading in a range of 38332.20 and 38507.58. There were 10 stocks advancing against 18 stocks declining, while 2 stocks remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.20%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were IT up by 1.17%, Energy up by 0.77%, TECK up by 0.73%, Oil & Gas up by 0.67%, Healthcare up by 0.51%, while Telecom down by 1.26%, Utilities down by 0.57%, FMCG down by 0.39%, Consumer Durables down by 0.36%, Realty down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.41%, Infosys up by 1.23%, Reliance Industries up by 0.91%, Bajaj Finserv up by 0.72% and HCL Technologies up by 0.65%. On the flip side, Power Grid down by 0.99%, Nestle down by 0.92%, NTPC down by 0.92%, Kotak Mahindra Bank down by 0.90% and HDFC down by 0.71% were the top losers.

Meanwhile, the Associated Chambers of Commerce and Industry of India (Assocham) has said that the rate of decline in output of core segments of the economy has been arrested considerably in July 2020. In line with an evaluation by Assocham, cement, steel and coal, which suffered heavy declines in the first quarter, recovered significantly in July 2020, even though the annualised numbers reflect contraction. It also said within the broader index of industrial production, manufacturing has the largest of the weight. Having fallen off the cliff by 40.7 percent during the April-June quarter, it is likely to witness a rebound when July IIP data is released. However, turnaround to positive growth trajectory could be some time away. 

Industry chamber has stated that after a contraction of 15 percent in Q1 of 2020-21 over the same quarter in the previous fiscal, coal production dropped at a much lesser pace of 5.7 per cent in July. Likewise, cement output in July dropped by 13.5 percent in the month after witnessing a sharp contraction of 38.3 percent in April-June. Fall in steel output too has been arrested to 16.4 percent in July, after a drop of 56.8 percent for the April-June period. The Assocham analysis, however, takes production and consumption at the same level due to absence of data about the possible inventory. 

It further said other vital sectors of the economy like electricity and construction too are expected to restore much of their lost traction. It believes that agriculture and allied sector, which remains the bright spot in the challenging times, is likely to retain the positive trajectory, thus boosting segments like tractors, chemicals, fertiliser, two-wheelers and non-discretionary consumption.

The CNX Nifty is currently trading at 11369.50, up by 14.45 points or 0.13% after trading in a range of 11328.75 and 11379.00. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.07%, TCS up by 1.42%, Wipro up by 1.38%, Infosys up by 1.37% and Reliance Industries up by 0.98%. On the flip side, Bharti Infratel down by 3.23%, ITC down by 1.32%, Nestle down by 0.97%, Tata Motors down by 0.94% and Power Grid down by 0.91% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 123.26 points or 0.53% to 23,213.21, Straits Times rose 5.43 points or 0.22% to 2,516.64, Taiwan Weighted gained 60.90 points or 0.48% to 12,662.30, KOSPI added 15.28 points or 0.64% to 2,399.50 and Jakarta Composite advanced 13.18 points or 0.25% to 5,243.38. On the other hand, Hang Seng fell 149.92 points or 0.61% to 24,439.73 and Shanghai Composite was down by 11.30 points or 0.34% to 3,281.29.