Indian markets maintain upward momentum

Indian equity markets maintained their upward momentum in the afternoon session as sentiment remains positive due to rising coronavirus vaccination rates in many countries. Sentiments were upbeat as bank credit grew by 5.33 per cent to Rs 108.89 lakh crore, and deposits rose 10.94 per cent to Rs 152.15 lakh crore in the fortnight ended April 9, 2021. In the fortnight ended April 10, 2020, bank advances stood at Rs 103.38 lakh crore and deposits were Rs 137.15 lakh crore. Additional support also came as Biden administration seems to have adopted a mission mode approach and removed all bureaucratic hurdles to help India in its fight against deadly COVID-19 pandemic that has spread like wildfire across the country. Healthy buying was observed in blue-chip stocks like Larsen & Toubro, Reliance Industries and HDFC Bank. Besides, broader indices were also trading in green, supporting their larger peers.

On the global front, Asian markets were trading mixed as investors looked ahead to this week’s Federal Reserve meeting for assurance interest rates will be kept ultra-low. Back home, the BSE Sensex is currently trading at 48845.33, up by 458.82 points or 0.95% after trading in a range of 48399.53 and 48880.03. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.72%, while Small cap index was up by 1.23%.

The top gaining sectoral indices on the BSE were Metal up by 2.35%, Telecom up by 1.90%, Energy up by 1.89%, Basic Materials up by 1.77%, Industrials up by 1.63%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.32%, Reliance Industries up by 2.31%, HDFC Bank up by 2.00%, Bajaj Finance up by 1.84% and Bharti Airtel was up by 1.76%. On the flip side, Kotak Mahindra Bank down by 1.40%, NTPC down by 0.54%, Asian Paints down by 0.26%, Nestle down by 0.25% and Tech Mahindra was down by 0.12% were the top losers.

Meanwhile, ratings agency ICRA in its latest report has stated that lockdowns and travel restrictions imposed by states such as Maharashtra, Delhi, Jharkhand and Rajasthan have dampened the sale of auto fuels and aviation turbine fuel, leading to refining and marketing companies reducing throughputs. Going forward, the possibility of such a trend gathering pace, as more and more states resort to lockdowns amid a surging case count and strained healthcare system, cannot be ruled out. ICRA also noted that the benchmark Singapore gross refining margins (GRMs) remain subdued due to the global supply overhang amid a demand slowdown and are unlikely to materially improve in the near-term, owing to the second wave of Covid-19 in certain large economies such as India and Japan.

Additionally, though many countries have put travel restrictions on flights from India, the mutation, thought to be behind India’s second wave, has spread to at least 10 other countries. As more countries witness a virulent second wave, oil demand and GRMs could be dampened. Refining and marketing companies are cutting down on capacity utilisation although the demand slowdown is not as severe as April 2020. Nevertheless, the capacity utilisation and revenues and profitability of the refining and marketing companies are likely to be adversely impacted owing to the demand slowdown. The GRMs are expected to remain muted owing to the disproportionately higher fuel and losses and operating expenses on a per barrel basis at lower capacity utilizations.

Furthermore, it said international crude oil prices have remained elevated due to the active production management by OPEC+ countries, leading to elevated levels of fuel and losses. Besides the impact of low GRMs, the marketing margins of oil marketing companies have remained low as no increase has been done in the retail prices of auto fuels since February 27, despite the international crude oil prices rising significantly during this period. The ratings agency said though it expects the retail prices of auto fuels to be hiked from May onwards, however, the said rise is likely to be calibrated over a period of time, given the resurging pandemic. Accordingly, the operating profitability of the refining and marketing companies is likely to be adversely impacted in Q1FY2022 owing to a decline in capacity utilisations, subdued GRMs and marketing margins.

The CNX Nifty is currently trading at 14624.00, up by 139.00 points or 0.96% after trading in a range of 14484.85 and 14630.25. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 5.73%, Adani Ports up by 3.04%, Larsen & Toubro up by 2.38%, Tata Steel up by 2.33% and Reliance Industries was up by 2.21%. On the flip side, HDFC Life Insurance down by 3.26%, Kotak Mahindra Bank down by 1.43%, SBI Life Insurance down by 1.38%, NTPC down by 0.34% and Nestle was down by 0.30% were the top losers.

Asian markets were trading mixed; Taiwan Weighted strengthened 23.61 points or 0.13% to 17,595.90, Straits Times advanced 4.36 points or 0.14% to 3,209.26, Hang Seng increased 25.12 points or 0.09% to 28,977.95 and Shanghai Composite was up by 0.33 points or 0.01% to 3,441.50.

On the other side; KOSPI fell 1.41 points or 0.04% to 3,216.12, Nikkei 225 slipped 134.34 points or 0.46% to 28,991.89 and Jakarta Composite was down by 0.85 points or 0.01% to 5,963.97.