Sensex, Nifty turn positive in late morning deals

Indian equity benchmarks cut all of their losses and turned positive in late morning deals, with both Sensex and Nifty trading higher, despite mixed cues from other Asian markets. Traders were getting relief, as Finance Minister Nirmala Sitharaman said the industry is in recovery mode and several Budget proposals are on course, including disinvestment, despite a fresh wave of coronavirus infections and local lockdowns. Adding more comfort among market participants, Chief Economic Adviser K V Subramanian said the impact of the second wave of COVID-19 on the Indian economy may not be ‘very large’. He also said predicting the second wave was a real problem for researchers across the globe.

On the global front, Asian markets were trading mixed, after Singapore's consumer prices rose in March. The data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed that the consumer price index rose 1.3 percent year-on-year in March, following a 0.7 percent increase in February.  This latest consumer prices outcome was largely due to a rise in core inflation and prices for private transportation cost. MAS core CPI, which excludes costs of accommodation and private road transport, grew 0.5 percent annually in March, following a 0.2 percent increase in the preceding month.

The BSE Sensex is currently trading at 48248.90, up by 168.23 points or 0.35% after trading in a range of 47743.43 and 48265.39. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.97%, while Small cap index was up by 1.24%.

The top gaining sectoral indices on the BSE were Power up by 2.38%, Utilities up by 2.14%, PSU up by 1.37%, Bankex up by 1.09% and Consumer Durables up by 0.82%, while FMCG down by 0.37%, Healthcare down by 0.11% and TECK down by 0.06% were the only losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 4.20%, NTPC up by 2.82%, Axis Bank up by 2.66%, Indusind Bank up by 2.64% and Bajaj Finserv up by 1.80%. On the flip side, Dr. Reddy’s Lab down by 1.32%, Hindustan Unilever down by 1.31%, Nestle down by 0.65%, Tech Mahindra down by 0.59% and Mahindra & Mahindra down by 0.54% were the top losers.

Meanwhile, Fitch Ratings in its latest report has said the resurgence of COVID-19 infections may delay India’s economic recovery, but won’t derail it. The rating agency has affirmed India’s sovereign rating at ‘BBB-’ and maintained a negative outlook, reflecting ‘lingering uncertainty around the debt trajectory’. It projected a 12.8 per cent recovery in GDP in the fiscal year ending March 2022 (FY22), moderating to 5.8 per cent in FY23, from an estimated contraction of 7.5 per cent in 2020-21. Fitch had in June last year revised outlook for India to ‘negative’ from ‘stable’ on grounds that the coronavirus pandemic had significantly weakened the country’s growth outlook and exposed the challenges associated with a high public debt burden.

India enjoyed ‘BBB-’ rating since the upgrade in August 2006, but the outlook has oscillated between stable and negative. It said ‘India’s rating balances a still strong medium-term growth outlook and external resilience from solid foreign-reserve buffers, against high public debt, a weak financial sector and some lagging structural factors. The Negative Outlook reflects lingering uncertainty around the debt trajectory following the sharp deterioration in India’s public finance metrics due to the pandemic shock from a previous position of limited fiscal headroom.’ Wider fiscal deficits and the government plans for only a gradual narrowing of the deficit put greater onus on India’s ability to return to high levels of GDP growth over the medium term to stabilise and bring down the debt ratio.

Fitch said the recent surge in coronavirus cases poses increasing downside risks to the FY22 outlook. The report said ‘This second wave of virus cases may delay the recovery, but it is unlikely in Fitch’s view to derail it. In particular, the strong rebound in 2H FY21 and ongoing policy support underpin our expectations for recovery.’ It said ‘We expect pandemic-related restrictions to remain localised and less stringent than the national lockdown imposed in 2Q20, and the vaccine rollout has been stepped up’. It also said ‘Fiscal metrics have deteriorated sharply in the context of the macroeconomic shock and efforts to support health outcomes and the economic recovery. We estimate a general government deficit of 14 per cent of GDP in FY21 (excluding divestment) from 7.3 per cent in FY20, consistent with a deficit of 9.5 per cent for the central government’.

The CNX Nifty is currently trading at 14444.15, up by 38.00 points or 0.26% after trading in a range of 14319.05 and 14461.15. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 4.25%, NTPC up by 3.03%, Axis Bank up by 2.78%, Indusind Bank up by 2.48% and SBI Life Insurance up by 1.90%. On the flip side, Britannia down by 1.51%, Hindustan Unilever down by 1.35%, Cipla down by 1.33%, Dr. Reddy’s Lab down by 1.09% and Shree Cement down by 0.91% were the top losers.

Asian markets were trading mixed; Hang Seng jumped 209.76 points or 0.73% to 28,965.10, Taiwan Weighted rose 117.55 points or 0.69% to 17,214.52, Jakarta Composite added 10.57 points or 0.18% to 6,004.75 and Shanghai Composite was up by 1.57 points or 0.05% to 3,466.68. On the flip side, Nikkei 225 declined 221.54 points or 0.76% to 28,966.63, Straits Times fell 5.89 points or 0.18% to 3,181.89 and KOSPI lost 3.30 points or 0.10% to 3,174.22.