Benchmarks trade higher in early deals on optimism over economic recovery

Indian equity benchmarks made slightly positive start on Tuesday tracking gains in Asian peers. Markets soon gathered momentum and are trading higher with notable gains in early deals. Sensex and Nifty are trading above their crucial levels of 44,300 and 13,000, respectively. Signs of recovery in India’s economic growth supported the market sentiments. India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on consumer demand bouncing back. Adding more optimism, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed that FDI inflow rose 15 per cent during the April-September period to $30 billion (Rs 2.2 trillion) as compared to inflows of $26 billion during the same period last fiscal, with India being an attractive destination for foreign funds despite the pandemic. Some support also came in with Fitch Solutions’ statement that after a COVID-19 pandemic-led contraction in consumer spending in 2020, household spending will return to growth in 2021, expanding by as much as 6.6 percent. Meanwhile, India has reported a significant drop in the number of fresh Covid-19 cases, taking its tally to 9,463,254. The country's death toll stands at 137,659. Though, upside remained capped as the Union government's fiscal deficit further widened to Rs 9.53 lakh crore, which is nearly 120 per cent of the annual budget estimate, at the end of October of the current financial year. The deficit widened mainly on account of poor revenue realisation. Market participants are looking ahead to the Manufacturing PMI data to be out later in the day.

On the global front, most of the Asian markets are trading higher, with investors shrugging off the weak cues overnight from Wall Street. Continued optimism that progress in development of potential coronavirus vaccines would hasten the pace of economic recovery lifted the markets. Data showing that the manufacturing sector in China continued to expand at a faster pace in November also boosted the markets. Back home, Auto industry stocks were in limelight reacting to their monthly sales numbers. Banking stocks were in focus as Moody's Investors Service said the bank capital will moderately fall in emerging Asia over the next two years, with India seeing larger capital decline without further infusion. In scrip specific development, ICICI Lombard advanced as it received IRDA approval to the draft scheme of arrangement with Bharti AXA General Insurance.

The BSE Sensex is currently trading at 44350.56, up by 200.84 points or 0.45% after trading in a range of 44118.10 and 44470.26. There were 19 stocks advancing against 10 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.46%, while Small cap index was up by 0.72%.

The top gaining sectoral indices on the BSE were Realty up by 2.68%, Basic Materials up by 1.55%, Metal up by 1.13%, Utilities up by 1.03%, IT up by 0.95%, while Consumer Durables down by 0.17% was the sole losing index on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.36%, Infosys up by 2.09%, Indusind Bank up by 1.85%, ICICI Bank up by 1.57% and Tata Steel up by 1.40%. On the flip side, Kotak Mahindra Bank down by 1.11%, Nestle down by 1.04%, Mahindra & Mahindra down by 0.66%, HDFC Bank down by 0.42% and HCL Technologies down by 0.39% were the top losers.

Meanwhile, continuing contracting trend for the eighth consecutive month, the output of eight core infrastructure sectors dropped 2.5 per cent in October, mainly due to decline in production of crude oil, natural gas, refinery products and steel. The production of eight core sectors had contracted 5.5 per cent in October 2019. The output of eight key sectors is in the negative zone since March. In September, the rate of contraction was 0.1 per cent. The ministry of Commerce and Industry in its latest data has showed that the combined Index of Eight Core Industries stood at 124.2 in October, 2020, which declined by 2.5 per cent as compared to the Index of October, 2019. Its cumulative growth during April to October, 2020-21 has been (-) 13.0%. Meanwhile, final growth rate of Index of Eight Core Industries for July 2020 is revised to (-) 7.6%.

Among eight core sectors, Coal production having 10.33 per cent weight increased by 11.6 per cent in October, 2020 over October, 2019. Its cumulative index declined by 3.6 per cent during April to October, 2020-21 over corresponding period of the previous year. Fertilizers production having 2.63 per cent weight increased by 6.3 per cent in October, 2020 over October, 2019. Its cumulative index increased by 4.1 per cent during April to October, 2020-21 over the corresponding period of previous year. Cement production having 5.37 per cent weight increased by 2.8 per cent in October, 2020 over October, 2019. Its cumulative index declined by 21.3 per cent during April to October, 2020-21 over the corresponding period of previous year. Electricity generation having 19.85 per cent weight increased by10.5 per cent in October, 2020 over October, 2019. Its cumulative index declined by 5.6 per cent during April to October, 2020-21 over the corresponding period of previous year.

On the other hand, Crude Oil production having 8.98 per cent weight declined by 6.2 per cent in October, 2020 over October, 2019. Its cumulative index declined by 6.1 per cent during April to October, 2020-21 over the corresponding period of previous year. The Natural Gas production having 6.88 per cent weight declined by 8.6 per cent in October, 2020 over October, 2019. Its cumulative index declined by 12.5 per cent during April to October, 2020-21 over the corresponding period of previous year. Petroleum Refinery production having 28.04 per cent weight declined by 17.0 per cent in October, 2020 over October, 2019. Its cumulative index declined by 16.4 per cent during April to October, 2020-21 over the corresponding period of previous year. Steel production having 17.92 per cent weight declined by 2.7 per cent in October, 2020 over October, 2019. Its cumulative index declined by 22.8 per cent during April to October, 2020-21 over the corresponding period of previous year.

The CNX Nifty is currently trading at 13006.95, up by 38.00 points or 0.29% after trading in a range of 12962.80 and 13064.20. There were 34 stocks advancing against 15 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were GAIL India up by 4.24%, Shree Cement up by 2.37%, Infosys up by 2.15%, Ultratech Cement up by 2.09% and Grasim Industries up by 1.84%. On the flip side, Nestle down by 2.06%, Kotak Mahindra Bank down by 1.80%, Mahindra & Mahindra down by 0.91%, Titan Company down by 0.71% and Bajaj Finance down by 0.57% were the top losers.

Asian markets were trading mostly higher; Nikkei 225 jumped 376.39 points or 1.42% to 26,810.01, Straits Times gained 13.51 points or 0.48% to 2,819.46, Hang Seng surged 225.37 points or 0.86% to 26,566.86, Taiwan Weighted advanced 131.10 points or 0.96% to 13,853.99, KOSPI rose 34.86 points or 1.35% to 2,626.20 and Shanghai Composite soared 44.28 points or 1.31% to 3,436.04. On other hand, Jakarta Composite was down by 9.67 points or 0.17% to 5,602.75.