Domestic indices trade firm in early deals; Nifty surpasses 15,850 mark

Indian equity benchmarks made optimistic start on Tuesday despite mixed cues from global peers. Markets extended their gains and are trading firm in early deals with gains of around half a percent each, on the back of across-the-board buying. Realty, Consumer discretionary and Bankex were leading the sectoral indices. Traders took note of report that India reported the lowest daily spike in infections since 31 March with 62,597 new cases in the last 24 hours. With this, the country's total coronavirus caseload has reached 29,570,035. Some support also came in with report that after making a late entry, the south-west monsoon has progressed steadily and, in the first fortnight, covered almost two-thirds of the country, which is almost 15 days ahead of schedule. Market participants largely overlooked the government report that India's retail inflation shot up to six-month high of 6.3 per cent in May, after easing to a three-month low of 4.23 per cent in April. Inflation, based on Consumer Price Index (CPI), has breached the Reserve Bank of India's (RBI) target range for the first time after five months.

On the global front, Asian markets were trading mixed following the mixed cues from Wall Street overnight. Investors keenly await the U.S. Federal Reserve's monetary policy announcement on Wednesday for cues about global economic recovery before making any major moves. The coronavirus infection rate in the region is also keeping the underlying mood cautious.

Back home, cement industry stocks were in focus as ICRA in its report stated that the second wave of Covid-19 has adversely impacted domestic cement production - the all India production declined 35 percent month-on-month in April 2021 and was lower by 4 percent compared to April 2019. In scrip specific development, JB Chemicals & Pharmaceuticals traded higher as its Q4FY21 consolidated net profit jumped to Rs 100.81 crore from Rs 50.07 crore, while revenue rose to Rs 528 crore from Rs 444 crore, YoY.

The BSE Sensex is currently trading at 52809.63, up by 258.10 points or 0.49% after trading in a range of 52671.29 and 52836.31. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.43%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Realty up by 1.19%, Consumer discretionary up by 0.89%, Bankex up by 0.77%, Consumer Durables up by 0.70%, IT up by 0.56%, while Power down by 0.47%, Utilities down by 0.30%, Healthcare down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.35%, Indusind Bank up by 1.76%, Tech Mahindra up by 1.56%, ICICI Bank up by 0.91% and HDFC Bank up by 0.86%. On the flip side, Dr. Reddys Lab down by 0.52% was the sole losers.

Meanwhile, ICRA in its latest report said the second wave of Covid-19 has adversely impacted domestic cement production - the all India production declined 35 percent month-on-month in April 2021 and was lower by 4 percent compared to April 2019. With most states imposing lockdowns due to the spread of Covid-19 infections to rural regions, (unlike last year wherein mostly urban areas were impacted), the cement off-take in May 2021 is likely to further decline by 35-40 percent on month-on-month basis.

It said the recovery in the rural regions is expected to be gradual. However, the overall pent-up demand is likely to drive the off-take once lockdowns are relaxed. It said while the sales volumes are expected to be lower by 25 percent quarter-on-quarter in Q1 FY2022; the pent-up demand is expected to push the volumes starting Q2 FY2022. The cement companies have undertaken price hikes by an average of 5 percent year-on-year in April 2021. This hike is driven by the increase in the input costs, primarily power and fuel expenses and freight expenses over the last few months.

It mentioned while the cement prices are likely to largely sustain in the near term, the higher input costs, due to the increasing crude oil prices and under absorption of overheads are likely to result in a moderation of EBIDTA/tonne to around Rs 1200 per tonne in Q1 FY2022, lower by 20 percent year-on-year and 6-7 percent quarter-on-quarter. It added in terms of sales trend, the Covid-19 disruption adversely impacted the cement demand in FY2021 resulting in the sharpest de-growth over the last decade.

The CNX Nifty is currently trading at 15885.00, up by 73.15 points or 0.46% after trading in a range of 15842.40 and 15889.60. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 2.42%, Indusind Bank up by 1.91%, Tata Steel up by 1.67%, Tech Mahindra up by 1.32% and UPL up by 1.01%. On the flip side, Adani Ports & SEZ down by 1.37%, Tata Motors down by 0.66%, Coal India down by 0.66%, Divis Lab down by 0.65% and Cipla down by 0.48% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 291.20 points or 1.00% to 29,453.00, Straits Times rose 27.47 points or 0.87% to 3,180.61, Taiwan Weighted jumped 126.66 points or 0.74% to 17,340.18 and KOSPI added 3.02 points or 0.09% to 3,255.15. On the other hand, Hang Seng slipped 215.61 points or 0.75% to 28,626.52, Jakarta Composite fell 9.94 points or 0.16% to 6,070.44 and Shanghai Composite was down by 32.42 points or 0.90% to 3,557.33.