Domestic indices trade in fine-fettle after gap-up opening

Indian equity benchmarks made gap-up opening on Thursday tracking firm global cues. Markets are trading in high spirit in early deals with gains of over a percent. Buying in all the sector indices, led by Realty, Bankex and Telecom stocks, supporting the domestic indices. sentiments got a boost with the Reserve Bank of India’s (RBI) statement that India’s current account balance (CAB) recorded a surplus of $19.8 billion -- 3.9 percent of GDP -- in the June quarter of FY21, up from the surplus of $0.6 billion in the preceding quarter (Q4FY20), on the back of lower trade deficit. Market participants took note of Commerce and Industry Minister Piyush Goyal’s statement that the government is opening up the economy for greater participation of the private sector and has been working in different ways to remove entry barriers for new investments. Traders overlooked report that the contraction in core sector output again worsened in August. Output declined by 8.5 per cent, following July's 8 per cent fall as an acute demand slump and the continuing liquidity crisis affected most industries.

On the global front, Asian markets are trading mostly higher in holiday-thinned trade following the positive cues overnight from Wall Street amid optimism about US fiscal stimulus after Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi said they will continue talks on a new coronavirus relief bill. The Tokyo Stock Exchange in Japan has suspended trading due to a technical issue, while the markets in China, South Korea, Taiwan and Hong Kong are closed for holidays. Back home, cinema and leisure related stocks were in focus after the central government allowed reopening of cinema halls, theatres, and multiplexes with effect from October 15 with a maximum of 50 per cent capacity. Oil & gas sector stocks were in limelight with report that natural gas price in India touched the lowest rate on record after the government slashed the price by 25 per cent to $1.79, denting revenues of producers like ONGC.

The BSE Sensex is currently trading at 38487.24, up by 419.31 points or 1.10% after trading in a range of 38410.20 and 38551.60. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.89%, while Small cap index was up by 0.98%.

The top gaining sectoral indices on the BSE were Realty up by 2.02%, Bankex up by 1.93%, Telecom up by 1.51%, Auto up by 1.38%, Metal up by 1.30%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Bajaj Auto up by 4.60%, Indusind Bank up by 4.48%, Bajaj Finance up by 3.14%, Axis Bank up by 2.37% and SBI up by 2.29%. On the flip side, ONGC down by 1.52%, Titan Company down by 0.54% and Nestle down by 0.27% were the few losers.

Meanwhile, the Reserve Bank of India (RBI) has said that India's current account surplus increased to $19.8 billion or 3.9 percent of GDP in Q1 (April-June) of FY21. It noted that the surplus in the current account in Q1FY21 was on account of a sharp contraction in the trade deficit to $10.0 billion due to steeper decline in merchandise imports relative to exports on a year-on-year basis. The current account surplus stood at $0.6 billion or 0.1 percent of GDP in the March quarter while there was a current account deficit of $15 billion or 2.1 percent of GDP in the year-ago period. The current account balances, which represents the net of the country's export and import of goods and services and also payments made to foreign investors or inflows from them, are considered as an important indicator of a country's external sector.

According to the central bank, net services receipts remained stable at $20.5 billion, as against $20.1 billion in the year-ago period, primarily on the back of net earnings from computer services. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $18.2 billion which is a decline of 8.7 percent from their level a year ago. Net outgo from the primary income account, primarily reflecting net overseas investment income payments, increased to $7.7 billion from $6.3 billion a year ago.

RBI further said in the financial account, net foreign direct investment recorded outflow of $0.4 billion as against inflows of $14.0 billion in Q1 of 2019-20. Net foreign portfolio investment was $0.6 billion as compared to $4.8 billion in Q1 of 2019-20 as net purchases in the equity market were offset by net sales in the debt segment. With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of $1.1 billion in Q1 of 2020-21, as against an inflow of $6.0 billion a year ago. Net inflow on account of non-resident deposits increased to $3 billion in the June quarter, as against $2.8 billion in Q1 of 2019-20.

The CNX Nifty is currently trading at 11373.30, up by 125.75 points or 1.12% after trading in a range of 11347.05 and 11380.50. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 5.11%, Indusind Bank up by 4.20%, Bajaj Finance up by 3.14%, Axis Bank up by 2.54% and Bajaj Finserv up by 2.27%. On the flip side, ONGC down by 1.73%, Titan Company down by 0.79%, Grasim Industries down by 0.62%, Britannia Industries down by 0.53% and Dr. Reddy’s Lab down by 0.48% were the top losers.

Asian markets were trading mostly in green; Straits Times rose 32.37 points or 1.31% to 2,498.99 and Jakarta Composite fell 44.23 points or 0.91% to 4,914.27, while Nikkei 225 dropped 0.19 points to 23,184.93.