Benchmarks trade higher in early deals after cautious start

Indian equity benchmarks made cautious start on Tuesday but soon gained momentum. Markets are trading higher with marginal gains in early deals, on account of buying in Realty, Basic Materials and Auto stocks. Early cautiousness came in amid fear of inflationary pressures due to higher energy costs after OPEC+ nations called off talks on output levels. However, some respite came as India recorded 34,067 new infections, lowest since March 18. The total caseload has surged to 30,618,939, while 29,744,831 have recovered. Some support also came in as data from the Reserve Bank of India showed the government's Emergency Credit Line Guarantee Scheme (ECLGS) significantly boosted credit growth for the micro, small and medium enterprises (MSMEs) in the financial year ending March 2021 even as concerns about asset quality of this segment grew.

On the global front, most of the Asian markets were trading higher despite the absence of fresh cues from Wall Street, which was closed overnight for a holiday, on a jump in crude oil prices and optimism for continued economic recovery. This offset concerns about the rising spread of the delta variant of the coronavirus in the region and growing worries about China's crackdown on local tech companies. Back home, Oil marketing companies (OMCs) were in the spotlight in amid the oil price surge. Aviation stocks also were in focus as the government increased the seating capacity of domestic airlines to 65 percent from the current 50 percent. In scrip specific development, Maruti Suzuki India gained as it produced 1,65,576 units in June 2021, against 50,742 units in June last year.

The BSE Sensex is currently trading at 52930.82, up by 50.82 points or 0.10% after trading in a range of 52805.88 and 52963.70. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.25%, while Small cap index was up by 0.45%.

The top gaining sectoral indices on the BSE were Realty up by 0.58%, Basic Materials up by 0.56%, Auto up by 0.52%, Consumer discretionary up by 0.50%, Metal up by 0.47%, while Power down by 1.03%, Utilities down by 0.27%, Capital Goods down by 0.15%, Energy down by 0.06%, IT down by 0.03% were the top  losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.25%, HDFC Bank up by 1.06%, Bajaj Finance up by 0.76%, Indusind Bank up by 0.57% and Tata Steel up by 0.52%. On the flip side, Tech Mahindra down by 1.16%, Hindustan Unilever down by 0.56%, Reliance Industries down by 0.54%, TCS down by 0.47% and Nestle down by 0.46% were the top losers.

Meanwhile, SBI Research in its latest report said that household debt has sharply jumped to 37.3 per cent of the Gross domestic product (GDP) in the pandemic year (FY21) from 32.5 per cent in FY20, confirming the deeper financial impact of COVID-19. It also warned that the ratio may rise further this fiscal due to the second wave of the pandemic.

In fact, household debt has been steadily increasing ever since the GST implementation in July 2017, which was preceded by demonetisation in November 2016. In four years since FY18, the household debt has jumped by 720 bps -- from 30.1 per cent in FY18 which was the year of GST implementation, to 31.7 per cent in FY19, 32.5 per cent in FY20 and to a massive 37.3 per cent in FY21.

However, it added India's household debt to GDP ratio is still lower than most other countries (highest at 103.8 per cent in Korea, 90 per cent in Britain, 79.5 per cent in the US, 65.3 per cent in Japan, 61.7 per cent in China, and the lowest in Mexico at 17.4 per cent). Household debt includes retail loans, crop loans and business loans from financial institutions like banks, credit societies, non-banks and housing finance companies.

The CNX Nifty is currently trading at 15865.80, up by 31.45 points or 0.20% after trading in a range of 15808.70 and 15866.40. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.36%, Tata Motors up by 2.27%, Ultratech Cement up by 2.27%, Shree Cement up by 2.20% and Adani Ports & SEZ up by 1.80%. On the flip side, Tech Mahindra down by 1.25%, Tata Consumer Products down by 0.67%, Hindustan Unilever down by 0.65%, NTPC down by 0.63% and Reliance Industries down by 0.62% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 96.34 points or 0.34% to 28,694.53, Straits Times gained 35.89 points or 1.14% to 3,176.91, Taiwan Weighted added 17.29 points or 0.10% to 17,936.62, KOSPI rose 11.62 points or 0.35% to 3,304.83 and Jakarta Composite improves 35.16 points or 0.59% to 6,040.77. On the other hand, Hang Seng fell 154.71 points or 0.55% to 27,988.79 and Shanghai Composite was down by 18.68 points or 0.53% to 3,515.64.