Sensex, Nifty back in green terrain

Indian equity benchmarks cut all of their losses in late morning deals to come back in green terrain, with both Sensex and Nifty trading higher, despite mixed cues from other Asian markets. Traders got relief, after India's services sector expanded in August at the fastest pace in one-and-a-half years amid strong inflows of new work and improved demand conditions. The seasonally adjusted India Services Business Activity Index rose from 45.4 in July to 56.7 in August, as the reopening of several establishments and increased consumer footfall boosted sales.

Some support also came after the Ministry of Health and Family Welfare said that more than 4.36 crore balance and unutilised COVID-19 vaccine doses are still available with the states and union territories to be administered.  Over 65 crore vaccine doses have been provided to states and union territories so far through all sources and a further 1,20,95,700 doses are in the pipeline.

On the global front, Asian markets were trading mixed, after China's service sector signaled a renewed fall in business activity in August as rising coronavirus infection at home and abroad weighed on operations and demand. The survey results from IHS Markit showed that the Caixin services Purchasing Managers' Index fell to 46.7 in August from 54.9 in July. A reading below 50 indicates contraction in the sector.

The BSE Sensex is currently trading at 57887.15, up by 34.61 points or 0.06% after trading in a range of 57764.07 and 58115.69. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.35%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Energy up by 1.49%, Metal up by 1.13%, Oil & Gas up by 1.05%, Auto up by 0.92% and PSU up by 0.89%, while Bankex down by 0.32% and FMCG down by 0.21% were the only losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.65%, Reliance Industries up by 1.55%, Titan Co up by 1.43%, Bajaj Auto up by 1.40% and Tata Steel up by 0.85%. On the flip side, Hindustan Unilever down by 1.01%, Axis Bank down by 0.99%, HDFC down by 0.85%, HDFC Bank down by 0.74% and Bajaj Finserv down by 0.63% were the top losers.

Meanwhile, Ratings agency ICRA has revised its outlook from 'stable' to 'positive' for the domestic steel sector, as all major listed steel companies have delivered healthy financial performance during the April-June 2021 quarter. After the outbreak of the COVID-19 pandemic in 2020, ICRA had assigned a 'negative' outlook on the sector expecting a record fall of 20 per cent in domestic steel demand during the financial year ended March 2021. However, it later upgraded its outlook for the sector to 'stable' on the back of improving demand and prices.

ICRA said ‘It has revised the steel sector's outlook to 'positive' from 'stable' following all large listed steel companies reporting their best-ever quarterly performance in Q1 (April-June period) of financial year 2022, and the earnings outlook remaining healthy for the remaining months of FY2022.’ Given the strong earnings growth and capital expenditure (capex) curtailments following the pandemic-related uncertainty, steelmakers started to aggressively de-leverage since the second quarter of FY2021. This trend is reflected by the industry's consolidated debt levels declining to Rs 2 lakh crore in July-end 2021, from Rs 2.6 lakh crore in July-end 2020, registering a sharp decline of over 21 per cent.

The industry's consolidated borrowings today are at their lowest levels since March 2012. On taking a closer look at the industry's consolidated borrowing per metric tonne of installed capacity, it stood at $180 per tonne in July 2021, shrinking by almost half from $350 per tonne prevailing in November 2008. ICRA said this suggests that domestic steel companies are now significantly less leveraged than in FY2009, when the last steel supercycle ended, following the global financial crises.

The CNX Nifty is currently trading at 17260.15, up by 26.00 points or 0.15% after trading in a range of 17212.20 and 17311.95. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.82%, Eicher Motors up by 2.71%, Hero MotoCorp up by 2.40%, Indian Oil Corp. up by 2.22% and Coal India up by 2.19%. On the flip side, HDFC Life Insurance down by 3.27%, SBI Life Insurance down by 1.12%, Hindustan Unilever down by 1.11%, HDFC down by 0.85% and Tata Consumer Products down by 0.71% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 531.54 points or 1.86% to 29,075.05, Taiwan Weighted strengthened 179.39 points or 1.04% to 17,499.15, KOSPI rose 20.32 points or 0.64% to 3,196.17 and Jakarta Composite soared 8.34 points or 0.14% to 6,086.57. On the flip side, Shanghai Composite declined 5.51 points or 0.15% to 3,591.53, Straits Times trembled 6.33 points or 0.2% to 3,082.51 and Hang Seng decreased 142.15 points or 0.54% to 25,948.28.