Benchmarks trade higher with marginal gains in early deals

Indian equity benchmarks made slightly positive start on Friday but soon turned volatile amid weakness in Asian peers. Though, markets managed to trade above water with marginal gains in early deals on account of buying in Utilities, Power and IT stocks. Sentiments got a boost with India Ratings and Research’s statement that outbound shipments from India, which have been languishing for quite some time, can benefit from the favourable trade growth outlook of 2021 and consolidate further from the level achieved in the first quarter of this fiscal. Some optimism came in as Chief Economic Advisor K V Subramanian said headline inflation will come down under the 6 percent mark in July itself but will stay at an elevated level of over 5 percent for some time. However, upside remained capped as 3 southern states report spike in new infections. Kerala reported more than 22,000 fresh Covid-19 cases for the third day straight: the spike prompting the state to announce a weekend lockdown. Karnataka and Tamil Nadu recorded a rise in new infections on Thursday as well, taking India’s daily case count to nearly 45,000, the highest in 22 days.

On the global front, most of the Asian markets were trading lower ignoring the broadly positive cues overnight from Wall Street as traders continue to be worried about the alarming spread of the highly contagious coronavirus variants in the region as it will impact the pace of the global economy recovery from the pandemic. Back home, oil and gas sector stocks were in focus as the government permitted 100 per cent foreign investment under the automatic route in oil and gas PSUs which have received in-principle approval for strategic disinvestment. In scrip specific development, Tech Mahindra traded higher as its Q1 FY22 net profit came in at Rs 1,353 crore, up 39.2 per cent year-on-year (YoY) 25 per cent sequentially.

The BSE Sensex is currently trading at 52736.55, up by 83.48 points or 0.16% after trading in a range of 52555.39 and 52798.00. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Utilities up by 1.10%, Power up by 0.96%, IT up by 0.92%, Realty up by 0.88%, Auto up by 0.84%, while Bankex down by 0.32%, Metal down by 0.26%, Capital Goods down by 0.11%, Telecom down by 0.11%, Energy down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 7.83%, HCL Technologies up by 3.02%, Power Grid Corp up by 2.93%, Dr. Reddy's Lab up by 1.67% and NTPC up by 1.54%. On the flip side, Bajaj Finserv down by 2.09%, SBI down by 1.22%, Bajaj Finance down by 0.75%, Bharti Airtel down by 0.71% and ICICI Bank down by 0.61% were the top losers.

Meanwhile, Chief Economic Advisor (CEA) K V Subramanian has said headline inflation will come down under the 6 percent mark in July itself but will stay at an elevated level of over 5 percent for some time. Such an outcome will get the price rise back into the upper-end of the target band given to RBI, he said, adding that consumer price inflation had breached the mark for three consecutive quarters last fiscal because of supply side issues like challenges in movement of goods.

He said ‘With reasonable probability, I expect this month the (inflation) print to come less than 6 percent.’ Right after data for May showing inflation at 6.4 percent had come out, Subramanian said he had predicted it will cool down in internal meetings and also during deliberations with the regulator. He added the sequential momentum in the number is range-bound despite the challenges posed by factors like commodity price rises.

He said in FY21, inflation was impacted because of the first wave of the pandemic which lasted longer, while the second wave saw distributed lockdowns and did not have a deep impact on inflation. The RBI has been holding rates to aid growth despite the surge in inflation. However, after the recent data prints, concerns have been expressed over the price rise. The next monetary policy meeting of the central bank will be held during August 4 - 6. On the growth front, he said the FY22 number should be within the ballpark of 10.5 percent as estimated by the finance ministry earlier. It can be noted that the RBI had revised down its estimate to 9.5 percent given the reverses of the second wave.

The CNX Nifty is currently trading at 15808.15, up by 29.70 points or 0.19% after trading in a range of 15744.85 and 15818.45. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 7.37%, HCL Tech. up by 3.25%, Power Grid Corp up by 2.96%, NTPC up by 2.23% and Adani Ports & SEZ up by 1.94%. On the flip side, Bajaj Finserv down by 1.82%, SBI Life Insurance down by 1.55%, SBI down by 1.30%, Bajaj Finance down by 0.98% and Bharti Airtel down by 0.93% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 436.32 points 1.57% to or 27,346.10, Hang Seng slipped 530.75 points or 2.02% to 25,784.57, Taiwan Weighted fell 58.49 points or 0.34% to 17,344.32, KOSPI lost 35.56 points or 1.10% to 3,207.09 and Shanghai Composite was down by 18.12 points or 0.53% to 3,393.60. On the other hand, Straits Times rose 1.58 points or 0.05% to 3,182.19 and Jakarta Composite added 18.35 points or 0.30% to 6,139.08.