Benchmarks trade firm in early deals; Metal leads sector gainers

Indian equity benchmarks made optimistic start on Tuesday tracking gains in Asian peers. Markets are trading firm in early deals with gains of over half a percent each, on the back of buying in all the sector indices led by Metal, Basic Materials and PSU stocks. Sentiments got a boost with the commerce ministry’s data showing that growing for the second consecutive month, the country's exports rose 6.16 per cent year-on-year to $27.45 billion in January 2021 following healthy growth in pharma and engineering sectors. Trade deficit during the month narrowed to $14.54 billion from $15.3 billion in January 2020. It was $15.44 billion in December 2020. Imports in January 2021 rose 2 per cent to $42 billion. Some support also came in with a private report that economic activity is on the verge of normality after getting severely hit by COVID-19 and Indian GDP will grow at 13.5 per cent in FY22. Meanwhile, the World Health Organization (WHO) has listed AstraZeneca and Oxford University's COVID-19 vaccine for emergency use, widening access to the relatively inexpensive shot in the developing world.

On the global front, Asian markets were trading in green extending gains from the previous session despite the absence of fresh cues from Wall Street, which was closed overnight for a holiday. Expectations for more fiscal stimulus and optimism about swifter economic recovery following a drop in new coronavirus cases and the faster rollout of COVID-19 vaccines across the world lifted the markets. The markets in Taiwan and China remain closed for the Lunar New Year holidays. Back home, IT industry stocks were in focus with industry lobby Nasscom’s statement that the Indian IT industry revenues are set to grow by 2.3 per cent to $194 billion in FY2020-21 and the exports will go up by 1.9 per cent to $150 billion. Besides, Bank of Maharashtra, Bank of India, Indian Overseas Bank, Central Bank of India were in limelight as the government shortlisted these four banks for privatization.

The BSE Sensex is currently trading at 52456.90, up by 302.77 points or 0.58% after trading in a range of 52370.19 and 52516.76. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.52%, while Small cap index was up by 0.76%.

The top gaining sectoral indices on the BSE were Metal up by 3.69%, Basic Materials up by 1.83%, PSU up by 1.47%, Oil & Gas up by 1.33%, Capital Goods up by 1.11%, while there was no loser.

The top gainers on the Sensex were ONGC up by 3.96%, Kotak Mahindra Bank up by 2.56%, Indusind Bank up by 2.16%, Ultratech Cement up by 1.74% and Tech Mahindra up by 1.68%. On the flip side, Nestle down by 1.02%, Bajaj Finserv down by 0.90%, Bajaj Finance down by 0.89%, Axis Bank down by 0.84% and Asian Paints down by 0.77% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that the aggregate fiscal deficit of states is likely to be at 4.3 percent of the gross domestic product (GDP) in 2021-22 compared to 4.6 percent in 2020-21. It had earlier forecast FY21 fiscal deficit of states to be at 4.5 percent but revised it later due to a sharper-than-expected contraction of 6.1 percent y-o-y in the nominal GDP.

The agency has revised the outlook on state finances to stable for FY22 from stable-to-negative. It estimates the nominal GDP to grow 14.5 per cent in FY22, and believes a gradual pick-up in revenue collections could lead to an improvement in the capital expenditure from FY22. It noted that due to the economic downturn, even the union government finances are under pressure, leading to a lower-than-budgeted devolution of Rs 5.50 lakh crore to states in FY21 (revised estimate: RE) as against the budget estimate (BE) of Rs 8.03 lakh crore.

Ind-Ra said although it estimates the aggregate revenue receipt of the states to grow 8.4 per cent y-o-y in FY22 from a decline of 0.6 per cent in FY21 (f), the revenue deficit would persist in FY22. It expects the aggregate revenue deficit of states to come in at 1.5 per cent of GDP in FY22 as against FY21 (f) of 3.2 per cent. The pressure on the debt burden is likely to persist in FY22 due to a combination of revenue deficit, some pick-up in capex and repayment of past market borrowings.

The CNX Nifty is currently trading at 15413.30, up by 98.60 points or 0.64% after trading in a range of 15365.55 and 15431.75. There were 38 stocks advancing against 11 stocks declining, while 1 stock  remain unchanged on the index.

The top gainers on Nifty were Tata Steel up by 4.28%, ONGC up by 4.27%, Hindalco up by 4.07%, JSW Steel up by 3.54% and Kotak Mahindra Bank up by 2.57%. On the flip side, Axis Bank down by 1.19%, Nestle down by 0.87%, Asian Paints down by 0.66%, ICICI Bank down by 0.66% and Bajaj Finserv down by 0.63% were the top losers.

Asian markets were trading higher; NIKKEI 225 surged 544.15 points or 1.81% to 30,628.30, Straits Times gained 9.40 points or 0.32% to 2,940.92, Hang Seng jumped 535.85 points or 1.78% to 30,709.42, KOSPI rose 7.46 points or 0.24% to 3,154.46 and Jakarta Composite was up by 18.57 points or 0.30% to 6,288.89.