Indian equities remain in green in morning deals

Indian equities trimmed some of their gains but continued to trade in green territory in morning session, tracking gains in index majors HDFC twins, Sun Pharma and NTPC amid positive global cues. Sentiments remained positive with data showed the country’s annual retail inflation eased slightly in August, against expectations. India's retail inflation in August of 6.69 percent was lower than the 6.73 percent recorded in July, but it remained above the upper end of the Reserve Bank of India's (RBI) medium-term target for the fifth straight month. Some support also came with Minister of State for Finance Anurag Singh Thakur’s statement that the lowering of corporate tax rate has made India a globally competitive and favoured destination for investment and the impact of this landmark reform will be felt in the coming years. The government last year slashed the base corporation tax rate to 22 percent from 30 per cent, leading to revenue implication of Rs 1.45 lakh crore. However, gains remain capped as S&P Global Ratings slashed its FY21 growth forecast for India to (-) 9 percent, from (-) 5 percent estimated earlier, saying that rising COVID-19 cases would keep private spending and investment lower for longer.

On the global front, Asian markets were trading mostly in green, following the positive cues from Wall Street and optimism around COVID-19 vaccines. Some support also came with report that China’s industrial output accelerated the most in eight months in August, while retail sales grew for the first time this year, suggesting the economic recovery is gathering pace as demand starts to improve more broadly from the coronavirus crisis. However, investors remained on sidelines ahead of key central bank meetings this week and as they looked ahead to the release later today of minutes of the Reserve Bank of Australia's September 1 monetary policy meeting. Back home, on the sectoral front, stocks related to textile sector remained in watch with India Ratings’ report stating that man-made fibres and yarn segments are expected to recover on the back of pent-up demand and strong export order build up in all the segments. Both man-made fibres and cotton segments should start benefiting from the low raw material prices in the third quarter this financial year.

The BSE Sensex is currently trading at 38881.98, up by 125.35 points or 0.32% after trading in a range of 38847.70 and 39013.06. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.79%, while Small cap index was up by 1.04%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.22%, Power up by 1.89%, Consumer Durables up by 1.24%, Basic Materials up by 1.20% and Utilities up by 0.92%, while IT down by 0.44%, Realty down by 0.34% and TECK down by 0.29% were the few losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.79%, NTPC up by 1.93%, HDFC up by 1.74%, ICICI Bank up by 1.70% and Tata Steel up by 1.34%. On the flip side, Tech Mahindra down by 1.35%, HCL Technologies down by 1.06%, TCS down by 0.72%, ITC down by 0.46% and Asian Paints down by 0.46% were the top losers.

Meanwhile, the State Bank of India (SBI) economists said in a note that the country needs to adopt an activist fiscal policy rather than depending on the monetary accommodation alone for turning the economic fortunes. Using a formula, they estimated the lower bound of interest rates - below which the gains of rate cuts start reversing - at 3.5 per cent for India as against the Reserve Bank of India's (RBI) policy repo rate of 4 per cent.

The RBI has cut rates by a cumulative 1.15 percentage points since the onset of the coronavirus pandemic but paused at the last review because of high inflation. The government has promised to spend an additional less than 2 per cent of the GDP as part of a stimulus package to help the economy which is much lower than what other nations have done. They said ‘we believe any further rate cuts will have the unintended impact on the economy. Instead, we strongly recommend for India an activist fiscal policy’. They added fiscal expansion is a must.

They said providing fiscal stimulus is the most effective solution in the current pandemic and it should be taken up immediately by India just like other countries. They said countries are providing sizable fiscal support through budgetary measures, and off-budget liquidity support measures taken by the governments in the US and Europe to protect vulnerable firms and employees during the lockdown have largely met their goals.

The CNX Nifty is currently trading at 11480.65, up by 40.60 points or 0.35% after trading in a range of 11462.70 and 11510.55. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Cipla up by 4.20%, Dr. Reddys Lab up by 3.00%, Sun Pharma up by 2.96%, NTPC up by 1.93% and ICICI Bank up by 1.68%. On the flip side, Tech Mahindra down by 1.33%, Eicher Motors down by 1.13%, HDFC Life Insurance down by 0.95%, HCL Tech. down by 0.94% and Wipro down by 0.93% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 119.24 points or 0.48% to 24,759.52, Taiwan Weighted strengthened 53.70 points or 0.42% to 12,841.52, Straits Times advanced 15.99 points or 0.64% to 2,498.54, KOSPI rose 12.67 points or 0.52% to 2,440.58 and Shanghai Composite gained 9.26 points or 0.28% to 3,288.07.

On the flip side, Jakarta Composite lost 65.14 points or 1.26% to 5,096.69 and Nikkei 225 slipped 110.74 points or 0.47% to 23,448.56.