Sensex, Nifty trim gains in late morning deals

Indian equity benchmarks trimmed their gains in late morning deals, however both Sensex and Nifty managing to trade in green terrain. Mixed cues from other Asian markets impacted the sentiments over the street. Traders got some relief after Union minister Nitin Gadkari said that the Micro, Small and Medium Enterprises Ministry is contemplating fresh plans and laws to find a solution of the receivables issue as outstanding dues are creating working capital problem for the sector. The MSME and Road Transport minister acknowledged that the receivables issue continues to be a major problem. On the global front, Asian markets were trading mixed, as consumer confidence in South Korea tumbled in December, the Bank of Korea said on Tuesday after its Composite Consumer Sentiment Index (CCSI) came in with a score of 89.8 - down sharply from 97.9 in November. Consumer sentiment regarding current living standards was three points lower than in November at 86, and that concerning the future outlook for living standards was five points lower at 89. Sentiment related to future household income was three points lower than in November at 93, and that concerning future household spending was five points lower at 99.

The BSE Sensex is currently trading at 47458.38, up by 104.63 points or 0.22% after trading in a range of 47361.90 and 47714.55. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.17%, while Small cap index was down by 0.07%.

The only gaining sectoral indices on the BSE were Bankex up by 0.77%, IT up by 0.57% and TECK up by 0.39%, while Metal down by 1.15%, Power down by 0.86%, Capital Goods down by 0.69%, Realty down by 0.65% and Telecom down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.03%, Tech Mahindra up by 1.67%, HDFC up by 1.34%, HCL Tech up by 1.29% and Axis Bank up by 1.03%. On the flip side, NTPC down by 1.54%, Nestle down by 1.45%, Larsen & Toubro down by 1.27%, ONGC down by 0.96% and Hindustan Unilever down by 0.89% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that the Centre's export subsidy for the October-September sugar season 2020-21 (SS21) will help sustain the commodity's exports at almost last year's level. Recently, the Cabinet Committee on Economic Affairs approved export subsidy of Rs 3,500 crore for up to 6 million tonne - around Rs 5.8 per kg - for SS21. The agency said this subsidy together with stable domestic demand, higher contribution from ethanol due to higher cane diversion for ethanol production, and increased ethanol prices, will lead to a 100-200 basis points (bps) increase in the operating margin of sugar mills to 10.5-11.5 per cent this fiscal.

A study of 24 Crisil-rated players indicates that these factors will also keep inventory levels for mills almost flattish in SS21, despite sugar production increasing to 30-31 million tonne from 27 million tonne in SS20. Besides, debt levels are expected to remain in check, supporting credit profiles. It added ‘Though lower than the Rs 10.4 per kg subsidy announced for SS20, the current subsidy, in tandem with ruling international prices, will help domestic mills cover the cost of production, rendering exports viable’. Accordingly, Crisil expects export volumes in SS21 to be in the 5-5.5 million tonnes range (5.7 million tonnes in SS20), slightly below the target of 6 million tonnes, due to the smaller export window available.

The agency said ‘Further, a bulk of exports may need to take place by April 2021 given the likelihood of resumption of sugar exports by Brazil’. It noted ‘In contrast, sugar exports by Indian mills last season continued until September 2020’. In addition, the agency expects domestic consumption in SS21 is likely to sustain at last year's level of 25.5-26 million tonnes due to higher industrial demand, which accounts for 60 per cent of total demand - driven by increased consumption of packaged foods such as biscuits, chocolates and confectionery that contribute over 30 per cent of total industrial demand - and stable household demand. It added ‘Demand from the hotels, restaurant and cafes, however, remains tepid with consumers exercising caution with respect to dining out’.

The CNX Nifty is currently trading at 13901.80, up by 28.60 points or 0.21% after trading in a range of 13859.90 and 13967.60. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.21%, Tech Mahindra up by 1.71%, HDFC up by 1.31%, HCL Tech up by 1.19% and Axis Bank up by 1.04%. On the flip side, NTPC down by 1.49%, Hindalco down by 1.42%, Nestle down by 1.33%, Tata Motors down by 1.29% and Larsen & Toubro down by 1.25% were the top losers.

Asian markets were trading mixed; Taiwan Weighted dropped 31.02 points or 0.21% to 14,452.05, Jakarta Composite lost 17.80 points or 0.29% to 6,075.75, Shanghai Composite declined 11.15 points or 0.33% to 3,386.14 and KOSPI fell 6.01 points or 0.21% to 2,802.59. On the flip side, Straits Times advanced 6.65 points or 0.23% to 2,846.79, Hang Seng increased 275.99 points or 1.05% to 26,590.62 and Nikkei 225 surged 622.65 points or 2.32% to 27,476.68.