Benchmarks continue to trade higher in morning session

Indian equity benchmarks continued their firm trade in morning session led by broad-based buying across key sectors. In line with the larger peers, the broader markets too maintained their firm trade in morning deals. Sentiments remained up-beat with report that the International Monetary Fund stands ready to strengthen its dialogue and scale-up its technical collaboration with India, observing that the human tragedy is a stark reminder that the pandemic continues to be a grave threat globally. Meanwhile, the government has notified rules pertaining to amended insurance laws that seek to raise foreign direct investment (FDI) limit in the insurance sector to 74 per cent from the current 49 per cent. Besides, with an aim to provide relief to taxpayers in view of the severe pandemic, the government has extended the due date of filing income tax returns for 2020-21 for individuals by two months till September 30.

On the global front, Asian markets were trading mixed, as investors tempered fears about hot inflation and the prospects of an early tapering of stimulus by the Federal Reserve. Back home, on the sectoral front, auto industry’s stocks remained in watch as ratings agency ICRA in its latest report stated that India’s second Covid-19 wave has derailed the recovery momentum of the domestic auto industry, which was poised for a comeback in the current fiscal after witnessing the two consecutive challenging years.  

The BSE Sensex is currently trading at 50158.58, up by 593.72 points or 1.20% after trading in a range of 49832.72 and 50192.17. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.99%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were Bankex up by 2.03%, Realty up by 1.85%, Telecom up by 1.19%, Metal up by 1.16% and Oil & Gas up by 1.07%, while there was no loser.

The top gainers on the Sensex were Indusind Bank up by 3.25%, ICICI Bank up by 2.38%, HDFC Bank up by 2.29%, HDFC up by 1.89% and Kotak Mahindra Bank up by 1.88%. On the flip side, Power Grid down by 0.96% and Dr. Reddys Lab down by 0.55% were the few losers.

Meanwhile, ratings agency ICRA in its latest report has said that India’s second Covid-19 wave has derailed the recovery momentum of the domestic auto industry, which was poised for a comeback in the current fiscal after witnessing the two consecutive challenging years. It said unlike the first wave where infections were largely localised to urban clusters, the second wave has seen deeper and wider penetration, including into rural hinterlands. Accordingly, it said outlook for various segments has been revised downwards.

According to the report, while pick-up in the vaccination drive is expected to support flattening of the curve going forward, an elongated recovery cycle or possibility of a third wave offers further downside risks to ICRA's volume estimates. It noted that many auto original equipment manufacturers (OEMs) and auto ancillaries resorted to plant shutdowns as a restrictive measure. It stated that the automotive dealerships across regions have also not been operational in light of regional restrictions imposed by various states and local authorities in order to curb the pandemic. As per an ICRA note, while these would cause near-term supply disruptions in the sector, the larger and prolonged impact is likely to be on account of the impact on various demand drivers. Accordingly, it has revised the growth estimates for most of the different automotive segments downwards.

Segment-wise, ICRA said, the two-wheeler volumes are expected to be the most impacted, with the target consumer segment's affordability and demand sentiment sharply hit by the second wave. Accordingly, domestic two-wheeler volumes in 2021-22 are expected to grow 10-12 per cent now as against 16-18 per cent earlier. The passenger vehicle segment may see a lower growth of 17-20 per cent now as against 22-25 per cent expected earlier, as per ICRA estimates. Overall, the commercial vehicle (CV) segment is expected to grow 21-24 per cent (albeit on a low base) in 2021-22 now, compared with 27-30 per cent that was expected earlier.

The CNX Nifty is currently trading at 15075.35, up by 169.30 points or 1.14% after trading in a range of 14985.85 and 15084.15. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.20%, ICICI Bank up by 2.38%, HDFC Bank up by 2.35%, Kotak Mahindra Bank up by 1.91% and HDFC up by 1.89%. On the flip side, Power Grid down by 0.94%, Dr. Reddys Lab down by 0.58%, Indian Oil down by 0.43%, Grasim Industries down by 0.32% and SBI Life Insurance down by 0.12% were the top losers.

Asian markets were trading mixed; Hang Seng decreased 58.40 points or 0.21% to 28,391.89, Jakarta Composite lost 23.42 points or 0.4% to 5,774.18, Shanghai Composite declined 15.90 points or 0.45% to 3,491.04, KOSPI fell 3.36 points or 0.11% to 3,158.92, while Straits Times advanced 2.91 points or 0.09% to 3,112.72, Taiwan Weighted strengthened 184.15 points or 1.15% to 16,226.51 and Nikkei 225 surged 232.07 points or 0.83% to 28,330.32.