Benchmarks trade flat with positive bias in early deals

Indian equity benchmarks -- Sensex and Nifty -- made optimistic start for yet another day on Wednesday tracking firm global cues. But, soon markets trimmed gains and are trading flat with positive bias in early deals. Gains in the markets were led by Metal, Auto and Consumer Durables counters. However, some cautiousness prevailed in the markets as a day after reporting less than 50,000 fresh cases, India has now recorded 54,393 in the last 24 hours, taking the country's total coronavirus caseload past 30-million mark. India also recorded a spike in new deaths with 1,129 fatalities being reported yesterday. The death toll now stands at 390,691. Additionally, India’s gene-sequencing consortia has classified the new Delta-plus mutation of coronavirus as a variant of concern, following 22 cases being reported across three states - Maharashtra, Kerala, and Madhya Pradesh.

On the global front, Asian markets were trading higher following the broadly positive cues overnight from Wall Street on easing concerns over the outlook for interest rates. The US Federal Reserve Chair Jerome Powell continued to downplay the risks of inflation during a testimony before the House Select Subcommittee on the Coronavirus Crisis, also noting that the economy has shown sustained improvement recently.

Back home, healthcare industry stocks were in focus as ratings agency Crisil said higher occupancy due to surge in COVID-19 cases would help private hospitals post 15-17 per cent revenue growth this fiscal year, a shade higher than what they attained in 2020-21. In scrip specific developments, Minda Industries advanced as it won bid to acquire 51 percent stake in automotive lighting manufacture UZ Chasys LLC (UZ Chasys) in Uzbekistan. However, Jaypee Infratech slumped after reporting a consolidated net loss of Rs 491.60 crore for the quarter ended March 2021.

The BSE Sensex is currently trading at 52701.32, up by 112.61 points or 0.21% after trading in a range of 52581.69 and 52912.35. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.30%, while Small cap index was up by 0.35%.

The top gaining sectoral indices on the BSE were Metal up by 1.12%, Auto up by 1.07%, Consumer Durables up by 0.97%, Consumer discretionary up by 0.64%, Basic Materials up by 0.48%, while Oil & Gas down by 0.32%, Power down by 0.12%, Energy down by 0.04% were the few losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.67%, Indusind Bank up by 1.45%, Titan Company up by 1.36%, Mahindra & Mahindra up by 0.89% and Tata Steel up by 0.84%. On the flip side, Kotak Mahindra Bank down by 0.66%, Ultratech Cement down by 0.55%, Asian Paints down by 0.31%, HCL Technologies down by 0.18% and Bajaj Finserv down by 0.07% were the top losers.

Meanwhile, SBI’s economists said Indian companies' market capitalization has grown at the fastest pace last year among major economies despite contraction in GDP, flagging the risks to financial stability it poses. Further, economists said retail investors have shown higher interest in markets and their numbers have increased by 1.42 crore in FY21 and another 44 lakh in April and May, wondering if this will be a lasting behavioural change or is transitory.

The economists at the country's largest lender attributed the growth in equity markets to lower returns on other financial instruments amid a low rates regime, increase in global liquidity, and even a tendency to spend more time at home because of mobility restrictions which led many to trade more. The 30-share benchmark index BSE has rallied from 28,000 points in early April 2020, to over 52,000 points at present.

The economists warned ‘The rise in the stock market without significant development in the real economy may raise the issue of financial stability which as per our financial stability index shows modest improvement in April 2021, but lower than the peak witnessed in December 2020. However, it is expected to have declined in May 2021.’ It can be noted that in the past, the Reserve Bank has also expressed risks of financial stability because of the fast growth in stock markets. The note said the 30-share benchmark of BSE grew 1.8 times in the last year, which was the fastest among major economies, beating others like benchmarks in Russia (1.64 times), Brazil (1.60) and China (1.59).

A sector-wise analysis of Nifty-50 reveals that financial services are the clear winners with Rs 157 lakh crore increase in their market cap during the past one year. IT is another major sector whose market value has increased significantly, followed by oil and gas, consumer goods, automobiles, metals and pharma.

The CNX Nifty is currently trading at 15809.90, up by 37.15 points or 0.24% after trading in a range of 15776.40 and 15862.95. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.75%, Hindalco up by 2.30%, Maruti Suzuki up by 1.95%, Indusind Bank up by 1.42% and Titan Company up by 1.33%. On the flip side, Adani Ports & SEZ down by 1.12%, Shree Cement down by 0.75%, Kotak Mahindra Bank down by 0.69%, Ultratech Cement down by 0.64% and UPL down by 0.56% were the top losers.

Asian markets were trading in green; Nikkei 225 rose 26.03 points or 0.09% to 28,910.16, Straits Times increased 6.31 points or 0.20% to 3,115.51, Hang Seng improved 198.59 points or 0.70% to 28,508.35, Taiwan Weighted surged 161.15 points or 0.94% to 17,236.70, KOSPI added 9.23 points or 0.28% to 3,273.11, Jakarta Composite gained 12.24 points or 0.20% to 6,100.08 and Shanghai Composite was up by 2.37 points or 0.07% to 3,559.78.