Markets trade firm with notable gains in early deals

Indian equity benchmarks made positive start on Tuesday tracking gains in global peers. Markets are trading firm with gains of over half a percent each in early deals supported by buying in all the sector indices, led by Consumer Durables and Power stocks. Softening retail inflation also aided domestic indices. The government data showed that India’s consumer inflation in August came at 6.69%, slightly lower than 6.73% recorded in the previous month. Adding optimism, the Reserve Bank of India’s (RBI) report showed that bank credit grew 5.49% to Rs 102.11 lakh crore, while deposits increased 10.92% to Rs 141.76 lakh crore in the fortnight ended August 28. Market participants took note of SBI’s report that the country needs to adopt an activist fiscal policy rather than depending on the monetary accommodation alone for turning the economic fortunes. though, gains were capped as S&P Global Ratings cut India's FY21 GDP forecast to -9 percent from -5 percent as it believes that rising COVID-19 cases in the country will keep private spending and investment lower for longer. Also, with over 81,000 new cases, India's coronavirus tally has reached 4,926,914. The death toll has risen by 1,073 to 80,827.

On the global front, Asian markets were trading mostly higher with modest gains following the positive cues from Wall Street and as investors turned cautious ahead of key central bank meetings this week. The U.S. Federal Reserve's monetary policy statement is due on Wednesday, while the Bank of Japan and the Bank of England are scheduled to announce their respective monetary policy decisions on Thursday. Meanwhile, data released by China showed that the country's industrial production and retail sales increased in August from a year ago and beat expectations, while fixed asset investment declined. Back home, on the sectoral front, banking stocks were in focus with report that banks' non-performing assets in large industry and services declined 31 percent in over two years to about Rs 4.36 lakh crore in June this year.

The BSE Sensex is currently trading at 38963.96, up by 207.33 points or 0.53% after trading in a range of 38847.70 and 39013.06. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.03%, while Small cap index was up by 1.21%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.29%, Power up by 1.67%, Healthcare up by 1.50%, Basic Materials up by 1.01%, Consumer Discretionary up by 0.86%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Titan Company up by 2.35%, Sun Pharma up by 1.91%, HDFC up by 1.72%, ICICI Bank up by 1.66% and Bajaj Finance up by 1.30%. On the flip side, HCL Technologies down by 1.13%, Tech Mahindra down by 0.94%, Kotak Mahindra Bank down by 0.68%, ITC down by 0.33% and Bajaj Auto down by 0.18% were the top losers.

Meanwhile, S&P Global Ratings has said that India’s Gross Domestic Product (GDP) is likely to contract by 9 percent in the current financial year (FY21).  Earlier, it had a projection of 5 percent de-growth in GDP for FY21. It said that rising coronavirus disease (COVID-19) cases in the country will keep private spending and investment lower for longer. For 2021-22 fiscal, it expects economic growth at 10 percent. 

The US-based rating agency said risks to the growth outlook include a weaker recovery in informal sectors of the economy and deeper economic losses for micro and small enterprises. In addition, it said if credit quality worsens materially following the expiration of loan moratoriums, the recovery will slow. It pointed out that one factor that presents potential upside to growth is the availability of a widely-distributed COVID vaccine earlier than its current estimate around mid-2021. It added that the 23.9 percent contraction in for April-June quarter of fiscal year 2020-21 (Q1FY21) was larger than expected.

While India eased lockdowns in June, S&P believed the pandemic will continue to restrain economic activity. It said as long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain. Adding further, it said even as industrial activity is recovering faster than services, high frequency indicators suggest that output is still lower relative to the same period last year and hence growth for the July–September quarter will be negative year on year. The potential for further monetary support is curbed by India's inflation worries.

The CNX Nifty is currently trading at 11499.10, up by 59.05 points or 0.52% after trading in a range of 11462.70 and 11510.55. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Titan Co up by 2.61%, Cipla up by 2.34%, Sun Pharma up by 2.14%, Grasim Industries up by 2.05% and UPL up by 1.80%. On the flip side, HCL Technologies down by 0.94%, Wipro down by 0.90%, Tech Mahindra down by 0.88%, Kotak Mahindra Bank down by 0.67% and Eicher Motors down by 0.48% were the top losers.

Asian markets were trading mostly higher; Straits Times added 15.53 points or 0.63% to 2,498.08, Hang Seng jumped 135.77 points or 0.55% to 24,776.05, Taiwan Weighted rose 51.67 points or 0.40% to 12,839.49, KOSPI soared 14.00 points or 0.58% to 2,441.91 and Shanghai Composite was up by 9.26 points or 0.28% to 3,288.07. On the other hand, Nikkei 225 slipped 142.16 points or 0.60% to 23,417.14 and Jakarta Composite lost 66.60 points or 1.29% to 5,095.23.