Markets trade higher with marginal gains in early deals

Indian equity benchmarks made positive start on Monday amid gains in Asian peers coupled with drop in Covid-19 cases in the country. Markets are trading higher with marginal gains in early deals with board based buying in Power, Utilities and Capital Goods stocks. India reported Covid-19 cases below the 250,000-mark for the second consecutive. The fresh caseload stood at 2.4 lakh. Amid a drop in cases, a few states have hinted at the possibility of easing lockdown from next month onwards. Some support came in with a private report stating that the RBI surprised the Centre with a record Rs 99,122 crore in surplus transfer for FY21 and this will help the government tide over the revenue losses from lockdowns and extend more support to the pandemic hit industries and to the poor people. However, the uneven rollout for the vaccines against COVID-19 remains a factor for markets. The pace of vaccination although is worrying amid shortages of jabs even as a third vaccine -- Sputnik V -- has been added to the inoculation list. Amid a crunch, a few states have suspended vaccination drive for citizens aged 18-45. Also, overseas investors withdrew Rs 4,444 crore from Indian markets in May so far amid concerns over the second wave of the coronavirus pandemic and its possible impact on the Indian economy.

On the global front, most of the Asian markets were trading higher with muted gains ahead of central bank meetings. Several central bank rate decisions are expected in the region this week, in New Zealand, South Korea and Indonesia. However, inflation worries and COVID concerns kept the underlying mood cautious. Back home, power stocks were in focus as total dues owed by electricity distribution companies to power producers fell 3.4 per cent to Rs 78,379 crore in March 2021 as compared to the year-ago period, showing a reversal of discoms' growing outstandings. In scrip specific development, United Spirits rose after it reported sharply higher consolidated profit at Rs 203.3 crore in Q4FY21 against Rs 49.3 crore, revenue rose 12.1 percent to Rs 2,230.4 crore from Rs 1,990.5 crore, YoY. Bharat Parenterals jumped as it received approval from the DCGI for favipiravir oral suspension, to be used for the treatment of COVID-19 patients.

The BSE Sensex is currently trading at 50704.56, up by 164.08 points or 0.32% after trading in a range of 50614.09 and 50855.32. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.55%, while Small cap index up by 0.68%.

The top gaining sectoral indices on the BSE were Power up by 1.80%, Utilities up by 1.26%, Capital Goods up by 1.21%, Healthcare up by 1.12%, Realty up by 0.89%, while Metal down by 1.82%, Basic Materials down by 0.81%, Telecom down by 0.48%, FMCG down by 0.18%, Energy down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.50%, SBI up by 1.51%, Maruti Suzuki up by 1.38%, HDFC Bank up by 1.18% and Larsen & Toubro up by 1.12%. On the flip side, Titan Company down by 1.26%, Mahindra & Mahindra down by 1.14%, Indusind Bank down by 0.98%, Hindustan Unilever down by 0.72% and Ultratech Cement down by 0.65% were the top losers.

Meanwhile, rating agency ICRA said slackening economic momentum driven by the second wave of Covid-19 infections in India has emerged as a concern with bruised sentiment, high healthcare costs and fuel expenses likely to limit discretionary purchases in the immediate term. ICRA’s Chief Economist Aditi Nayar said contact-intensive services can expect cutback in spending. As expected, the shrunken base of nationwide lockdown in April 2020 boosted the pace of year-on-year expansion of several high-frequency indicators in April this year, resulting in a widespread improvement compared to the performance in March.

However, she said the optimism generated by this trend is limited as 8 of the 13 non-financial indicators last month remained below their pre-Covid levels. Moreover, indicators such as GST e-way bills, electricity generation, vehicle registrations and rail freight traffic displayed a slowing sequential momentum, reflecting the rise in Covid-19 cases and imposition of localised restrictions. She stated early data available for May confirms that this trend is continuing as the lockdowns have both been extended and spread to other states to curb the second wave of Covid-19

She mentioned the sharply higher daily infections in second wave of Covid-19 will have a prolonged negative impact on consumer sentiment. Substantial healthcare expenses along with high retail prices of fuels are likely to squeeze disposable incomes in urban as well as rural areas. Moreover, after the satiation of pent-up demand seen during festive season in 2020, demand for many varieties of consumer durables may be low.

The CNX Nifty is currently trading at 15206.00, up by 30.70 points or 0.20% after trading in a range of 15183.00 and 15251.90. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 2.52%, Hero MotoCorp up by 2.34%, IOC up by 2.25%, Cipla up by 1.48% and SBI up by 1.47%. On the flip side, JSW Steel down by 2.89%, Shree Cement down by 2.87%, Hindalco down by 1.68%, Tata Steel down by 1.66% and Titan Company down by 1.18% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 128.29 points or 0.45% to 28,446.12, Straits Times rose 10.67 points or 0.34% to 3,128.56, Taiwan Weighted gained 67.50 points or 0.41% to 16,369.56, Jakarta Composite added 11.68 points or 0.20% to 5,784.80 and Shanghai Composite was up by 5.48 points or 0.16% to 3,492.04. On the other hand, Hang Seng declined 116.29 points or 0.41% to 28,342.15 and KOSPI fell 2.51 points or 0.08% to 3,153.91.