Benchmarks trade flat with positive bias

Indian equity benchmarks continued to trade near neutral line with positive bias in afternoon session. Selling in frontline blue chip stocks such as HCL Tech, Infosys and Asian Paints restricted the markets to go up. Traders took some solace with private report that economic activity continued with its pace of normalisation and the festivities helped narrow the deficits as compared to the year-ago period in December. It also revised up wits FY21 GDP forecast to a contraction of 6.7 per cent, as against the official estimate of a 7.7 per cent contraction in the pandemic-impacted fiscal year. However, upside remain capped as Fitch Ratings said that the Indian economy will suffer lasting damage from the coronavirus crisis and after an initial strong rebound in FY22 (fiscal year ending March 2022) growth will slow to around 6.5 per cent a year over FY23-FY26.

On the global front, Asian markets were trading mostly higher buoyed by expectations of a US stimulus package even as political events in Washington culminated in the impeachment of President Donald Trump. Back home, in scrip specific development, government’s sale of its 5 per cent shareholding in steelmaker SAIL was subscribed by over 20 per cent in the early hours of trade on Thursday. Over 4.13 crore shares were sought in the first three hours of trade on BSE, stock exchange data showed.

The BSE Sensex is currently trading at 49562.33, up by 70.01 points or 0.14% after trading in a range of 49182.37 and 49576.46. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.27%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.60%, Energy up by 1.13%, Oil & Gas up by 0.89%, Industrials up by 0.82% and FMCG was up by 0.79%, while Metal down by 1.04%, IT down by 0.86%, TECK down by 0.81%, Basic Materials down by 0.55% and Consumer Durables was down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.39%, Larsen & Toubro up by 1.78%, TCS up by 1.70%, Reliance Industries up by 1.31% and ITC was up by 1.07%. On the flip side, HCL Tech down by 3.15%, Infosys down by 1.96%, Asian Paints down by 1.65%, Tech Mahindra down by 1.65% and Ultratech Cement was down by 1.47% were the top losers.

Meanwhile, rating agency ICRA has said the textile industry's performance will recover to pre-Covid levels in the next fiscal on account of boost in demands from domestic as well as export markets. The agency assigned outlook for the sector as ‘stable’ for FY2022. It added that the recovery in the domestic textile sector, that picked up pace in Q3 FY2021, is likely to continue in the upcoming quarters. This will be supported by the opening up of economies and markets, improved consumer confidence levels and continued pick up in discretionary spending.

After witnessing a major setback in Q1 FY2021 following the Covid-19 pandemic and the ensuing lockdowns, the domestic textile sector started reporting a gradual recovery from Q2 FY2021 onwards. This was supported by opening up of the markets and resumption of activity across the value chain. As per the report, based on an analysis for samples of large, listed players across segments, ICRA expects cotton spinning and apparel export segments to report relatively lower contraction in FY2021 vis-a-vis other segments (including fabrics and domestic apparels), considering higher dependence of these segments on exports.

Similarly, the recovery is slated to be faster for these segments in FY2022. It added that revenues for the cotton spinning and the apparel export segments in FY2022 are likely to grow by 15-20 per cent, following a contraction in mid-teens, estimated for FY2021. While operating margins for spinners are likely to revert closer to pre-Covid levels, those for apparel exporters may remain marginally lower than the pre-Covid levels amid a competitive operating environment, wherein buyers could be expected to negotiate for steeper discounts. For fabric and domestic apparel categories, the revenue growth in FY2022 is projected at 30-35 per cent and 35-40 per cent, respectively, with these segments estimated to report steeper contraction vis-a-vis other segments in FY2021.

The CNX Nifty is currently trading at 14583.85, up by 19.00 points or 0.13% after trading in a range of 14471.50 and 14587.25. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were UPL up by 4.33%, Indusind Bank up by 3.40%, GAIL India up by 2.19%, Britannia Inds up by 1.79% and TCS was up by 1.70%. On the flip side, HCL Tech down by 3.13%, Wipro down by 2.08%, Infosys down by 1.91%, JSW Steel down by 1.85% and Tech Mahindra was down by 1.85% were the top losers.

Asian markets were trading mostly higher; Jakarta Composite soared 23.32 points or 0.36% to 6,458.53, Nikkei 225 surged 241.67 points or 0.85% to 28,698.26, KOSPI rose 1.64 points or 0.05% to 3,149.93, Straits Times advanced 15.08 points or 0.51% to 2,992.59 and Hang Seng was up by 159.86 points or 0.57% to 28,395.46.

On the flip side; Taiwan Weighted dropped 62.79 points or 0.4% to 15,707.19 and Shanghai Composite was down by 22.69 points or 0.63% to 3,575.96.