Benchmarks trade in high spirit in early deals; Sensex reclaims 50K mark

Indian equity benchmarks extended their previous session’s gains on Tuesday with gap-up opening. Markets are trading in fine-fettle with gains of over a percent each in early deals as the latest data revealed another dip in daily COVID-19 cases coupled with strong gains in Asian peers. Buying in almost all the sector indices except Telecom supported the domestic indices. Traders took encouragement as India recorded daily cases below 3 lakh for the second straight day. The fresh case count in the last 24 hours stood at 2.63 lakh versus 2.81 lakh. Some support also came with the RBI data showing that India Inc's foreign investment in the first month of this current fiscal jumped by more than two-times year-on-year to $2.51 billion. Though, there was some cautiousness as Moody's Investors Service said if the second wave of the pandemic does not decline to more manageable levels and results in a prolonged and wider lockdown, it will have a more severe effect on companies' earnings recovery.

On the global front, most of the Asian markets were trading higher as traders ignored the negative cues overnight from Wall Street and the deeper-than-expected local GDP contraction in the first quarter in Japan. Traders remain concerned about the recent acceleration in inflation and look ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting and comments on the economy on Wednesday.

Back home, jewellery industry stocks were in focus as Gem and Jewellery Export Promotion Council said the demand for gem and jewellery is back in major export markets, as the overall shipments of gems and jewellery surged to Rs 25,226.11 crore year-on-year in April 2021. In scrip specific developments, Federal Bank surged after reporting a 58 percent jump in its Q4 net profit. HCL Technologies gained after announcing expansion plans in the U.K.

The BSE Sensex is currently trading at 50098.02, up by 517.29 points or 1.04% after trading in a range of 49986.68 and 50240.10. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index jumped 1.27%, while Small cap index was up by 0.92%.

The top gaining sectoral indices on the BSE were Metal up by 2.54%, Power up by 2.24%, Utilities up by 1.76%, Basic Materials up by 1.67%, Capital Goods up by 1.40%, while Telecom down by 0.76% was the sole losing index on BSE.

The top gainers on the Sensex were Bajaj Finance up by 3.32%, Power Grid up by 2.45%, Indusind Bank up by 2.36%, Bajaj Auto up by 2.08% and ONGC up by 1.88%. On the flip side, Bharti Airtel down by 1.38% was the sole losers.

Meanwhile, Moody’s Investors Service in its latest report has said if the second wave of the pandemic does not decline to more manageable levels and results in a prolonged and wider lockdowns, it will have a more severe effect on companies’ earnings recovery. It said the resurgence of coronavirus infections in India that has led to regional lockdowns will put the brakes on rated companies’ earnings recovery seen in recent months.

Earnings have seen a rising trend since October 2020 following the easing of national and state-level lockdowns. But renewed restrictions in many states will weaken demand for goods and services, and disrupt the recent recovery trajectory. It expects the negative impact on economic activity to be limited to June quarter, and that the economy will rebound in the second half of the year. However, if infections fail to decline to more manageable levels, lockdowns may be prolonged and increase in scope. It added this situation would severely weaken rated companies’ earnings and derail the recovery seen over the last six months.

It said ‘another nationwide lockdown would have severe disruptions for the whole country, compared with the more contained, state-level restrictions in effect now. A national lockdown scenario would restrict personal mobility on a large scale, lower demand for goods and services, as well as lead to supply-chain disruptions and aggravate labour shortages.’ It mentioned widespread movement restrictions will lower demand for transportation fuel and reduce the capacity utilization for oil refiners. Similarly, demand will decline in sectors such as automobiles and real estate as consumers postpone their purchases amid limitations on movement. Lower domestic demand in end-user industries will also reduce capacity utilization for heavy industries like steel, cement, and metals and mining.

The CNX Nifty is currently trading at 15088.35, up by 165.20 points or 1.11% after trading in a range of 15048.75 and 15124.50. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.45%, Bajaj Finance up by 3.25%, Tata Steel up by 3.12%, Power Grid up by 2.89% and Indusind Bank up by 2.35%. On the flip side, Bharti Airtel down by 1.27%, UPL down by 0.71%, Britannia Industries down by 0.32%, Divis Lab down by 0.11% and Tata Consumer Products down by 0.11% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 622.74 points or 2.24% to 28,447.57, Straits Times jumped 43.33 points or 1.41% to 3,123.02, Hang Seng advanced 354.48 points or 1.26% to 28,548.57, Taiwan Weighted soared 722.08 points or 4.70% to 16,075.97, KOSPI rose 36.53 points or 1.17% to 3,171.05 and Shanghai Composite was up by 2.86 points or 0.08% to 3,520.48, while Jakarta Composite lost 26.10 points or 0.45% to 5,807.76.