Indices trim initial gains in morning deals

Indian equity benchmarks trimmed their initial gains in morning deals, on back of negative trend in Asian markets. Some cautiousness also came with a private report that the pandemic-induced shocks to the economy which have already shaved off 15.7 per cent of the GDP from the previous year, will delay the ambitious target of becoming the third largest economy by three years to 2031-32 now. Traders also took a note of the Reserve Bank of India’s (RBI) statement that the government has decided to cancel its Rs 20,000 crore borrowing scheduled for March 26, 2021 on review of cash balance position. This means, the government would be borrowing Rs 20,000 crore less than its target of Rs 12.8 lakh crore announced in the Budget on February 1 for the current fiscal. Meanwhile, former RBI Deputy Governor Rakesh Mohan pitched for changing the central bank's inflation target band of 2-6 per cent, saying inflation will not take off as long as the government is doing proper macroeconomic management.

On the global front, Asian markets were trading mostly in red as concerns persisted about a recent surge in global bond yields and the prospects of a global economic recovery. Back home, on the sectoral front, logistic stocks remained in focus as India Ratings and Research (Ind-Ra) said that India’s logistics sector looks stable in financial year 2021-22 as a recovering economy builds demand, citing the commissioning of a dedicated freight corridor.

The BSE Sensex is currently trading at 49845.79, up by 74.50 points or 0.15% after trading in a range of 49826.31 and 50115.24. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.91%, while Small cap index up by 0.70%.

The gaining sectoral indices on the BSE were Industrials up by 1.43%, Power up by 1.19%, Capital Goods up by 0.80%, Auto up by 0.50%, Consumer Disc up by 0.46% while, Telecom down by 0.33%, Oil & Gas down by 0.31%, PSU down by 0.14%, Metal down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.58%, Maruti Suzuki up by 1.48%, Titan Company up by 1.24%, Ultratech Cement up by 1.00% and Nestle up by 0.88%. On the flip side, Power Grid down by 1.27%, Tech Mahindra down by 0.87%, NTPC down by 0.86%, Sun Pharma down by 0.84% and Kotak Mahindra Bank down by 0.72% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has said India’s logistics sector looks stable in next financial year (FY22) as a recovering economy builds demand. It estimates an 8 per cent year-on-year improvement in volumes for Indian ports in FY22, compared to an estimated 4 per cent year-on-year decline in FY21. The 8 per cent year-on-year rise will be led by private ports, which in five years have displayed a median multiplier (vs real GDP growth rate) of 1.4x, thus outperforming growth from major ports. India’s ports volumes closely follow the country’s GDP growth, with container growth coming in 2x of overall cargo volumes.

Domestic air travel, which has continued to recover in 2HFY21, is expected to strengthen in FY22, though the risk to this view arises from a second wave of Covid-19. Both corporate and domestic travel demand are already showing signs of revival, which has helped support load factors and yields, while cargo volumes are expected to rise amid stronger macro-economic fundamentals and e-commerce push. Ind-Ra forecasts domestic passenger numbers to rise 10 per cent in FY22 (over FY20) implying a GDP multiplier of 0.9x, lower than the 2.4x (median estimate) for the FY15-FY20 period.

For inland container depot/container freight station operators, it forecasts a healthy pickup in volumes though competition remains intense and realisations remain soft. The reduced dwell time after the commissioning of Dedicated Freight Corridor and increased double stacking volume will support higher operating efficiencies, which is likely to support EBITDA margins in FY22-FY23. For warehouses, Goods and Services Tax led consolidation and rationalisation of occupancy rates could continue in FY22.

The CNX Nifty is currently trading at 14763.35, up by 26.95 points or 0.18% after trading in a range of 14743.40 and 14843.95. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 4.25%, Tata Motors up by 1.63%, Shree Cement up by 1.58%, Indusind Bank up by 1.52% and Maruti Suzuki up by 1.48%. On the flip side, Indian Oil Corp. down by 2.52%, Power Grid down by 1.34%, GAIL India down by 1.10%, Tech Mahindra down by 1.09% and Sun Pharma down by 0.88% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 339.63 points or 1.18% to 28,545.71, Nikkei 225 slipped 137.05 points or 0.47% to 29,037.10, Shanghai Composite declined 40.88 points or 1.19% to 3,402.56, KOSPI fell 26.64 points or 0.88% to 3,008.82 and Jakarta Composite lost 11.71 points or 0.19% to 6,289.42.

On the flip side, Straits Times advanced 7.84 points or 0.25% to 3,135.92 and Taiwan Weighted strengthened 11.62 points or 0.07% to 16,200.84.