Benchmarks trade in fine-fettle in early deals

Indian equity benchmarks made positive start on Monday tracking gains in Asian peers. Markets are trading in fine-fettle in early deals with notable gains, on account of buying in Power, Capital Goods and Industrials stocks. Investors are looking forward to the Reserve Bank of India’s Monetary Policy Committee (MPC) meet which will begin from September 29 and end on October 1. The Reserve Bank is likely to keep interest rates unchanged in the forthcoming bilateral monetary policy review in view of the rising retail inflation driven mainly by supply-side issues. Some support came in with the RBI data showing that bank credit grew 5.26 per cent to Rs 102.24 lakh crore while deposits rose 11.98 per cent to Rs 142.48 lakh crore in the fortnight ended September 11. Traders overlooked S&P’s statement that India's economy may experience a record contraction in the current financial year mainly due to the global COVID-19 pandemic, and the real GDP growth is expected to recover from next fiscal onwards. The agency also affirmed its BBB- long-term and A-3 short-term foreign and local currency sovereign credit ratings on India.

On the global front, most of the Asian markets were trading higher following the tech-led rebound on Wall Street Friday. Nevertheless, investors remained cautious ahead of Tuesday's US presidential debate, the rising number of coronavirus cases in Europe, and US-China tensions after the US imposed restrictions on exports to Chinese chipmaker Semiconductor Manufacturing International Corp. or SMIC. Back home, banking stocks were in focus with report that the Finance Ministry is likely to provide capital support from the Rs 20,000 crore fund approved by Parliament in recently concluded session to some Public Sector Banks (PSBs) in the third quarter itself. In scrip specific development, Vodafone Idea shares rallied after U.K. telecom major Vodafone Group won an international arbitration against India.

The BSE Sensex is currently trading at 37775.68, up by 387.02 points or 1.04% after trading in a range of 37544.05 and 37810.37. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.57%, while Small cap index was up by 1.79%.

The gaining sectoral indices on the BSE were Power up by 2.56%, Capital Goods up by 2.44%, Industrials up by 2.31%, PSU up by 2.20%, Bankex up by 2.01%, while IT down by 0.44%, TECK down by 0.25% were the only losing indices on BSE.

The top gainers on the Sensex were ONGC up by 4.50%, Bajaj Finance up by 3.79%, Indusind Bank up by 3.13%, NTPC up by 3.07% and Larsen & Toubro up by 2.95%. On the flip side, TCS down by 0.86% and Infosys down by 0.83% were the only losers.

Meanwhile, economic think-tank National Council of Applied Economic Research (NCAER) in its quarterly review of the economy has said that India’s gross domestic product (GDP) growth is likely to decline by 12.6 percent during the current financial year (FY21) on account of the impact of the coronavirus pandemic on the business activities. The NCAER's May 2020 Quarterly Review of the Economy (QRE) and June 2020 QRE Update had assessed that the economy would contract by 26 percent in the first quarter of the fiscal.

As per the official estimates, India's economy has suffered its worst slump on record in April-June quarter of current fiscal year (Q1FY21), with the gross domestic product (GDP) contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. Therefore, it said ‘we are now forecasting that y-o-y growth will remain negative through Q2, Q3 and Q4 at (-) 12.7 per cent, (-) 8.6 per cent and (-) 6.2 per cent respectively. For the year as a whole, 2020-21 GDP will decline by (-) 12.6 percent.’

The NCAER review said that much will depend on how the spread of the disease plays out, how central and state governments respond to it and how workers and entrepreneurs respond to the disruption. All these factors are major unknowns at this time. It also noted that retail inflation has remained elevated at over 6 per cent, above the Reserve Bank of India's (RBI) target inflation band of 2-6 per cent. It added that elevated inflation along with the steep contraction of the economy requires macroeconomic policy to navigate its way between two competing goals of reviving the economy and containing inflation.

The CNX Nifty is currently trading at 11157.35, up by 107.10 points or 0.97% after trading in a range of 11099.85 and 11177.95. There were 44 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were ONGC up by 4.21%, Bajaj Finance up by 3.70%, NTPC up by 3.01%, Tata Motors up by 2.99% and Adani Ports & SEZ up by 2.81%. On the flip side, TCS down by 1.19%, Infosys down by 1.03%, Cipla down by 0.60%, Hindustan Unilever down by 0.21% and Wipro down by 0.02% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 171.61 points or 0.74% to 23,376.23, Straits Times rose 12.64 points or 0.51% to 2,484.92, Hang Seng gained 165.43 points or 0.71% to 23,400.85, Taiwan Weighted soared 176.14 points or 1.44% to 12,409.05 and KOSPI jumped 31.37 points or 1.38% to 2,310.16. On other hand, Jakarta Composite lost 25.08 points or 0.51% to 4,920.71 and Shanghai Composite was down by 7.15 points or 0.22% to 3,212.27.