Benchmarks trade firm on sustained buying activities

Indian equity benchmarks continued to trade firm in morning session on sustained buying activities by funds and retail investors amidst positive global cues which lifted both Sensex and Nifty above psychologically crucial 50,050 and 14,900 levels respectively. Investors remained optimistic with the corporate affairs ministry stating that the latest amendments to the insolvency law by way of an ordinance are aimed at providing an efficient alternative resolution framework for Micro, Small and Medium Enterprises (MSMEs). Pre-packaged insolvency resolution process has been introduced for stressed MSMEs. Additional support also came with Chief Economist of the International Monetary Fund (IMF) Gita Gopinath’s statement that the Reserve Bank of India (RBI)’s quantitative easing measures are a welcome move. Gopinath also said that this fiscal stance is also appropriate for India overall and that it is good that support isn’t being pulled back. She added there is evidence of normalisation of economic activities in India. Besides, appreciation in Indian rupee coupled with bouts of buying in Consumer Durables, Metal, IT and TECK sector stocks, too supported the market.

On the global front, Asian markets are trading mostly in green after the minutes from the US Federal Reserve's latest monetary policy meeting indicated the central bank plans to maintain its ultra-loose monetary policy despite massive stimulus packages. However, traders continue to be cautious amid the surge in coronavirus cases in the region and extension of lockdown restrictions in several markets. Back home, on the sectoral front, Auto component industry’s stocks remained in watch as rating agency ICRA said the auto component industry is likely to see a lower contraction in revenue at 6-8 per cent for last fiscal as against earlier forecast of 12-15 per cent, aided by better-than-expected demand pick up across most of the sectors.

The BSE Sensex is currently trading at 50061.97, up by 400.21 points or 0.81% after trading in a range of 49832.35 and 50091.16. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.80%, while Small cap index was up by 1.01%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.12%, Metal up by 1.78%, IT up by 1.59%, TECK up by 1.54% and Basic Materials up by 1.52%, while Power down by 0.46%, Energy down by 0.24% and Utilities down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 3.79%, Titan Co up by 2.16%, HDFC up by 1.71%, TCS up by 1.61% and Bajaj Finserv up by 1.59%. On the flip side, Bajaj Finance down by 0.35%, Bajaj Auto down by 0.29% and Reliance Industries down by 0.14% were the top losers.

Meanwhile, the International Monetary Fund (IMF) has said India's debt-to-GDP ratio increased from 74 percent to 90 percent during the COVID-19 pandemic, noting that it expects this to drop down to 80 percent as a result of the country's economic recovery.

IMF's Fiscal Affairs Department, Deputy Director, Paolo Mauro said in the case of India, the debt ratio at the end of 2019, prior to the pandemic, was 74 percent of Gross Domestic Product (GDP), and at the end of 2020, it is almost 90 percent of GDP. So, that's a very large increase, but it is something that other emerging markets and advanced economies have experienced as well.

Mauro said ‘for the case of India going forward, in our baseline forecast, we expect that the debt ratio will gradually come down as the economy recovers. In our baseline forecast under the assumption of healthy economic growth in the medium term, we see debt returning to about 80 percent over time.’

The CNX Nifty is currently trading at 14943.75, up by 124.70 points or 0.84% after trading in a range of 14864.55 and 14949.60. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 4.10%, Hindalco up by 2.39%, Tata Motors up by 2.18%, Titan Co up by 2.13% and Eicher Motors up by 2.12%. On the flip side, SBI Life Insurance down by 0.33%, Bajaj Finance down by 0.30%, Reliance Industries down by 0.20%, Britannia Industries down by 0.18% and Bajaj Auto down by 0.09% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 238.70 points or 0.83% to 28,913.50, Taiwan Weighted strengthened 74.27 points or 0.44% to 16,889.63, Jakarta Composite soared 17.55 points or 0.29% to 6,054.17, Shanghai Composite gained 6.56 points or 0.19% to 3,486.19 and Straits Times advanced 1.70 points or 0.05% to 3,197.46.

On the flip side, KOSPI fell 1.54 points or 0.05% to 3,135.87 and Nikkei 225 slipped 94.11 points or 0.32% to 29,636.68.