Markets trade slightly higher after negative start

Indian equity benchmarks made negative start on Wednesday, amid mixed Asian cues, but soon markets wiped out all the losses to enter into green territory. Domestic indices are trading slightly higher in early deals supported by buying in Energy, Consumer Durables and Auto stocks. Some support came in with report that companies garnered more than Rs 1 lakh crore from the capital markets in August, a surge of 64 percent from the preceding month, with private placement of debt instruments emerging as the most preferred route for financing business needs. The funds have been mopped-up mainly for business expansion plans, loan repayments and working capital requirements. Traders took note of report that the Reserve Bank of India (RBI) is widely expected to keep rates steady when its two-day monetary policy committee (MPC) meeting concludes on October 09. The RBI said it will hold the MPC meeting from October 7 to October 9, having delayed it by a week in order to give the government time to appoint three new external members to the panel. Meanwhile, the coronavirus cases in India jumped to 7,722,746 with over 69,000 new infections reported across the country. With 991 fatalities in 24 hours, India's death toll stands at 104,591.

On the global front, Asian markets were trading mixed following the negative cues overnight from Wall Street after US President Donald Trump said he is ending negotiations with Democrats on a new fiscal stimulus package until after the November 3 presidential election. Earlier in the day, Federal Reserve Chairman Jerome Powell warned that the U.S. economic recovery remained far from complete and the economy needed more fiscal support. The markets in China remain closed for the National Day holiday. Back home, banking stocks were trading under pressure with Fitch Ratings’ report that Indian banks are likely to face a tough operating environment in the near term as stressed loans and write-offs are set to increase due to the economic fallout from the coronavirus pandemic. In scrip specific developments, TCS and Majesco gained ahead of their earnings releases.

The BSE Sensex is currently trading at 39648.01, up by 73.44 points or 0.19% after trading in a range of 39450.82 and 39669.49. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index lost 0.28%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Energy up by 1.76%, Consumer Durables up by 1.54%, Auto up by 0.84%, FMCG up by 0.63%, Consumer discretionary up by 0.58%, while Power down by 0.91%, Metal down by 0.76%, Bankex down by 0.66%, Capital Goods down by 0.65%, Realty down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 3.17%, Reliance Industries up by 2.20%, Maruti Suzuki up by 1.47%, Mahindra & Mahindra up by 1.08% and Bajaj Auto up by 0.91%. On the flip side, Bajaj Finance down by 3.87%, Bajaj Finserv down by 1.80%, Indusind Bank down by 1.47%, ICICI Bank down by 1.01% and Kotak Mahindra Bank down by 0.98% were the top losers.

Meanwhile, Fitch Ratings in its new report titled `Spotlight: Indian IT Services Sector' has said that IT services sector is likely to resume high single-digit revenue growth in 2021-2022 on the back of higher demand for digital transformation after a flattish 2020. It said the impact of the coronavirus pandemic is seen to be only moderate and short term, as customers focus on transforming their businesses digitally, moving services and work platforms online, and minimize spending on legacy services.

According to the report, pandemic will accelerate digital IT spends. It also said most companies have reported robust deal wins that should support growth in 2021-2022, despite the revenue decline in the second quarter of 2020. It expected the Indian industry to continue to take advantage of its low-cost operations and maintain its strong foothold in the global IT landscape. It added that the industry will continue to remain export-driven as it mainly serves US and Europe-based clients.

The report further said that the industry has seen an average growth rate of about 8 percent during 2014-2019. It also said the impact from the US ban on new H1B and L1B visa applications is manageable. It noted that profitability -- as measured by Earnings Before Interest Tax Depreciation and Amortisation or EBITDA margins -- is likely to remain stable. It also stated that strong demand for the services, Indian rupee depreciation and cost-control measures, such as salary freezes during downturns, support the stable profitability.

The CNX Nifty is currently trading at 11684.60, up by 22.20 points or 0.19% after trading in a range of 11629.35 and 11690.05. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 3.47%, UPL up by 2.74%, Reliance Industries up by 2.42%, Hero MotoCorp up by 1.73% and Maruti Suzuki up by 1.66%. On the flip side, Bajaj Finance down by 3.88%, Bajaj Finserv down by 1.92%, Indusind Bank down by 1.44%, BPCL down by 1.36% and GAIL India down by 1.20% were the top losers.

Asian markets were trading mixed; Hang Seng jumped 111.42 points or 0.46% to 24,092.07, Taiwan Weighted gained 29.72 points or 0.23% to 12,733.95 and KOSPI rose 9.16 points or 0.39% to 2,375.06. On the other hand, Nikkei 225 slipped 50.77 points or 0.22% to 23,382.96, Straits Times fell 1.44 points or 0.06% to 2,527.82 and Jakarta Composite was down by 25.87 points or 0.52% to 4,973.35.