Markets trade firm in early deals; Nifty reclaims 11,200 mark

Indian equity benchmarks made optimistic start on Wednesday tracking overnight gains on Wall Street. Markets are trading firm in early deals with gains of over half a percent each, supported by buying in Energy, IT and Realty counters. Easing of tensions between India and China are providing investors some relief. In first such moves to bring down tensions in eastern Ladakh, India and China agreed to stop sending more troops to the frontline, refrain from unilaterally changing the situation on the ground and avoid taking any actions that may further complicate matters. Some support also came in with ICRA’s report that India's current account will swing to a surplus of $30 billion or 1.2 percent of GDP in FY21, due to slowdown in imports during the pandemic, making it clear that it will be a temporary phenomenon. Though, upside remained limited as the United Nations Conference on Trade and Development (UNCTAD) projected India’s economy to contract 5.9 per cent in 2020, and warned the country to not repeat its past mistake of announcing austerity measures. It forecast the economy to grow 3.9 per cent next year.

Global cues remained lackluster with most of the Asian markets trading lower despite the tech-led rebound overnight on Wall Street as worries about the global economic recovery, the rising number of coronavirus cases in Europe and the U.S. as well as U.S.-China tensions weighed on the markets. Also, the latest survey from Jibun Bank revealed that the manufacturing sector in Japan continued to contract in September, albeit at a barely slower pace, with a manufacturing PMI score of 47.3. That's up marginally from 47.2 in August, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

Back home, select pharma stocks were in focus as the Drugs Controller General of India (DCGI) issued a new set of guidelines, focusing on safety, immunogenicity and efficacy parameters for pharma giants who are developing COVID-19 vaccines. In scrip specific developments, Reliance Industries rallied after it sold 1.28 percent stake in Reliance Retail to global investment firm KKR. Sun Pharma gained after its wholly-owned subsidiary launched ILUMYA (tildrakizumab) in Japan for the treatment of plaque psoriasis in adult patients.

The BSE Sensex is currently trading at 37970.55, up by 236.47 points or 0.63% after trading in a range of 37904.26 and 38140.07. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.66%, while Small cap index was up by 1.12%.

The top gaining sectoral indices on the BSE were Energy up by 1.60%, IT up by 1.31%, Realty up by 1.01%, Consumer discretionary up by 0.97%, Consumer Durables up by 0.91%, while Telecom down by 2.42%, Power down by 0.99%, Utilities down by 0.41%, Metal down by 0.14%, PSU down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.82%, Reliance Industries up by 2.06%, HCL Technologies up by 1.58%, Asian Paints up by 1.41% and Larsen & Toubro up by 0.96%. On the flip side, Bharti Airtel down by 2.93%, Tata Steel down by 2.23%, Power Grid down by 1.42%, NTPC down by 1.14% and TCS down by 0.97% were the top losers.

Meanwhile, Rating agency ICRA in its latest report has said that India's current account balance will swing into a sizable, albeit temporary, surplus of $30 billion or 1.2 percent of Gross Domestic Product (GDP) in FY21, due to slowdown in imports during the pandemic. It also said the crucial number, which is one of the key aspects gauged while determining a country's macroeconomic position, will swing back to a deficit of $15 billion in the next financial year. It added that the deficit stood at $24.6 billion or 0.9 percent of GDP in FY20.

With the domestic and global lockdowns to fight COVID-19 exuding a differentiated impact on exports, imports and remittances, the report expects India to display a sharp current account surplus of $24 billion in H1 FY2021 (April-September). It also said a lagged pickup in domestic non-oil imports, as well as the potential fresh restrictions that may be warranted in some major trading partners to ward off rising COVID-19 infections, are likely to restrict India's current account surplus to $6 billion in the second half of the fiscal year. 

As per to the report, merchandise exports contracted by 36.7 percent to $51.3 billion in Q1 FY21 from $81.1 billion in Q1 FY20, but merchandise imports recorded a much sharper 52.4 percent decline to $60.4 billion in the same period as against $127 billion a year ago on severely constrained demand conditions. It noted that this compressed the merchandise trade deficit to $9.1 billion in the quarter, down from $46.0 billion in the year-ago period. It added that despite a contraction in services exports and imports, the services trade surplus rose to $21 billion in Q1 FY21 from $19.6 billion in Q1 FY20.

The CNX Nifty is currently trading at 11220.05, up by 66.40 points or 0.60% after trading in a range of 11200.75 and 11259.55. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.73%, Wipro up by 2.13%, Reliance Industries up by 1.82%, HCL Technologies up by 1.58% and Britannia Industries up by 1.52%. On the flip side, Bharti Airtel down by 3.14%, Tata Steel down by 2.27%, Power Grid down by 1.48%, JSW Steel down by 1.36% and Grasim Industries down by 1.24% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 86.53 points or 0.37% to 23,273.77, Straits Times inched down 1.20 points or 0.05% to 2,462.09, Hang Seng declined slightly 2.88 points or 0.01% to 23,713.97, Taiwan Weighted lost 68.83 points or 0.54% to 12,576.68, KOSPI fell 12.20 points or 0.52% to 2,320.39 and Jakarta Composite dropped 14.99 points or 0.30% to 4,919.10, while Shanghai Composite was up by 0.79 points or 0.02% to 3,275.09.