Benchmarks trade flat with positive bias in early deals

Indian equity benchmarks made optimistic start on Tuesday tracking gains in Asian peers. Soon, markets turned volatile and are trading flat with positive bias in early deals. Buying in Realty, Oil & Gas and Capital Goods stocks were aiding in indices. Some support came in with report that a day after surging past the 150,000-mark, India's count of active cases has dropped to 148,882. On Monday, the country registered 10,792 fresh Covid-19 cases, taking its the caseload tally to 11,015,863. Besides, the latest RBI policy minutes show that Governor Shaktikanta Das opined that growth momentum needs to be strengthened for a sustained revival of the economy and quick return to the pre-Covid trajectory while pitching for a status quo on rates. However, some cautiousness spread as investment through participatory notes (P-notes) in the Indian capital market dipped marginally to Rs 84,976 crore as on January 31 after hitting 31-month high value at the end of the preceding month.

On the global front, most of the Asian markets were trading higher despite a weak lead from Wall Street where stocks struggled for support overnight amid concerns a swift economic recovery might stoke inflation. Traders took note of report that the rollout is ‘going according to plan’, according to Deputy Chief Medical Officer Michael Kidd. The Japanese market is closed on account of Emperor's Birthday.

Back home, banking sector stocks were in focus as India Ratings revised its outlook on the overall banking sector from negative to stable for FY22. According to the agency, substantial systemic measures have reduced COVID-linked stress below expected levels. It has also steeply upgraded its credit growth estimates for the current fiscal. In scrip specific development, Oil companies were moving higher as oil prices jumped by more than $1 per barrel in Asian trade to extend overnight gains on a tight global supply outlook.

The BSE Sensex is currently trading at 49761.92, up by 17.60 points or 0.04% after trading in a range of 49659.85 and 50128.85. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.51%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Realty up by 2.29%, Oil & Gas up by 2.07%, Capital Goods up by 1.46%, Industrials up by 1.11%, Energy up by 1.07%, while Consumer discretionary down by 0.51%, Auto down by 0.43%, Healthcare down by 0.23%, IT down by 0.14%, TECK down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 5.64%, Larsen & Toubro up by 1.96%, Bajaj Finance up by 0.94%, ICICI Bank up by 0.90% and Bajaj Finserv up by 0.90%. On the flip side, Asian Paints down by 2.82%, Kotak Mahindra Bank down by 2.08%, Maruti Suzuki down by 1.72%, Tech Mahindra down by 1.31% and Mahindra & Mahindra down by 1.26% were the top losers.

Meanwhile, domestic rating agency ICRA in its latest report has said that residential real estate is witnessing a K-shaped recovery on account of accelerated consolidation, where access to credit and demand consolidation has helped large players grow handsomely even as their smaller sized rivals struggle. The smaller sized real estate companies' woes will ‘weigh heavily’ on the sector as a whole and such players hold an 80 percent market share. It also pointed out that the large, listed players almost doubled their market share in the current year to above 21 percent in the first nine months of the financial year 2021 (FY21) as against the financial year 2020 (FY20).

According to the report, a 'K-shaped recovery' is representative of inherent inequalities, where the rich get richer, even as the marginalised slide down. It said the phrase has been used a lot by observers in the aftermath of the pandemic, which has hurt the most for the poor and migrant populations. It also said home-buyers had been leaning towards developers with an established track record of on-time and quality project completion even prior to the onset of the pandemic. It added that this had resulted in large, listed players reporting healthy sales and collections in recent years, despite the prevailing liquidity crisis and unfavourable supply-demand dynamics.

For the broader market, the agency said COVID-19 triggered one of the worst demand crashes in recorded history, with housing sales volumes witnessing a Y decline of 62 per cent during Q1FY21 across the top eight cities of the country, which came down to 24 per cent by Q3. It noted that overall operating cash flows for most developers, including the listed players, are expected to witness moderation in the current financial year, resulting in increased reliance on available liquidity and/or refinancing to meet committed outflows.

The CNX Nifty is currently trading at 14715.25, up by 39.55 points or 0.27% after trading in a range of 14651.85 and 14782.35. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were ONGC up by 6.73%, Tata Motors up by 4.12%, GAIL India up by 3.26%, BPCL up by 3.12% and IOC up by 1.73%. On the flip side, Asian Paints down by 2.76%, Kotak Mahindra Bank down by 2.04%, Tech Mahindra down by 1.73%, Bajaj Auto down by 1.30% and UPL down by 1.21% were the top losers.

Asian markets were trading mostly in green; Straits Times rose 18.17 points or 0.63% to 2,899.38, Hang Seng surged 426.09 points or 1.41% to 30,745.92, KOSPI lost 9.80 points or 0.32% to 3,069.95, Jakarta Composite added 1.80 points or 0.03% to 6,257.11, and Shanghai Composite was up by 12.33 points or 0.34% to 3,654.77, while Taiwan Weighted fell 41.24 points or 0.25% to 16,368.92.