Benchmarks close at record closing highs for yet another session

Indian equity benchmarks closed at record closing highs for yet another session driven by gains in index major Reliance Industries amid by largely positive trend in global markets and sustained foreign fund inflows. Benchmarks made positive start, as sentiments got boost with the commerce ministry's provisional data showed that India's exports jumped 45.17 per cent to $33.14 billion in August as against $22.83 billion in the same month last year. Traders also found some support with Union Minister Nitin Gadkari’s statement that the Rs 100 lakh crore-Gatishakti scheme will provide a framework for the National Infrastructure Pipeline programme and make Indian products more competitive by cutting down logistic costs and improving supply chains. He also sought investments in the road sector from insurance and pension funds of the US.

However, benchmarks witnessed volatility in late morning deals due to a consistent rise in the coronavirus cases and fear of a third Covid wave is driving investors towards defensive bets. India reported over 45,000 new cases of Covid-19 in the last 24 hours. This was also the biggest single-day rise in two months. Some concern also came with Ratings agency ICRA’s statement that fiscal balances of 19 states in the quarter ended June of current financial year (Q1FY22) are weaker than pre-Covid levels with milder recovery in revenue and spending. But, markets soon regained positive momentum to end higher as India’s service sector growth resumed in the month of August as the pandemic continued to recede and vaccine access improved. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index stood at 56.7 in August from 45.4 in July. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services – stood at 55.4 in August, from 49.2 in July. Adding to the optimism, a report said hiring activity in India has been on a steady recovery and the hiring rate in July this year was around 65 per cent above the pre-COVID level.

On the global front, Asian markets ended mostly higher on Friday as investors awaited the release of U.S. jobs data for clues about the Fed's timelines for asset tapering and interest rate hikes. European markets were trading mostly in green as final data from IHS Markit showed Eurozone private sector logged another robust growth in August but the momentum faded slightly from July's 15-year peak. The final composite output index fell to 59.0 in August from 60.2 in July, which was the highest since June 2006. The reading stood below the flash 59.5. Back home, on the sectoral front, telecoms stocks were in limelight as regulator Trai directed all telecom service providers to immediately ensure that only tariffs that are reported to it are offered through their channels, distributors or retailers, as it cracked the whip on discounts allegedly being doled out by some channel partners to lure customers from other networks. Stocks related to steel sector were in watch as 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.

Finally, the BSE Sensex rose 277.41 points or 0.48% to 58,129.95, while the CNX Nifty was up by 89.45 points or 0.52% to 17,323.60. 

The BSE Sensex touched high and low of 58,194.79 and 57,764.07, respectively and there were 19 stocks advancing against 11 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 0.41%.

The top gaining sectoral indices on the BSE were Energy up by 3.60%, Oil & Gas up by 2.25%, Metal up by 1.27%, PSU up by 1.19% and Consumer Durables up by 1.05%, while Telecom down by 0.52%, FMCG down by 0.22% and Bankex down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.12%, Titan Company up by 2.59%, Tata Steel up by 1.27%, Bajaj Auto up by 1.18% and Maruti Suzuki up by 1.06%. On the flip side, Hindustan Unilever down by 1.18%, Bharti Airtel down by 1.17%, HDFC Bank down by 0.85%, HDFC down by 0.68% and Indusind Bank down by 0.67% were the top losers.

Meanwhile, Ratings agency ICRA has said that fiscal balances of 19 states in the quarter ended June of current financial year (Q1FY22) are weaker than pre-Covid levels with milder recovery in revenue and spending.  The agency stated citing data from the Comptroller and Auditor General (CAG), the combined revenue receipts were only 2% higher than the pre-Covid level of Rs 4.3 lakh crore but revenue spending increased by a sharper 14% to Rs 4.9 lakh crore from Rs 4.3 lakh crore pre-Covid, possibly reflecting higher social sector spending amid the second wave of Covid-19.

Aditi Nayar, chief economist at ICRA said ‘Accordingly, the 19 states’ combined revenue balance has slipped into a deficit of Rs 0.5 lakh crore in Q1 FY22, in contrast to the small surplus of Rs 0.1 lakh crore in Q1 FY20'.

ICRA noted that the state's own tax revenues (SOTR) in Q1 FY22 trailed the pre-Covid levels by 3 per cent, on account of stamps and registrations (S&R), and excise duty collections, even as sales tax and state goods and services tax (SGST) exceeded their pre-Covid levels.

The CNX Nifty traded in a range of 17,340.10 and 17,212.20 and there were 32 stocks advancing against 17 stocks declining, while 1 stock remain unchanged on the index. 

The top gainers on Nifty were Reliance Industries up by 4.15%, ONGC up by 4.00%, Coal India up by 3.53%, Titan Company up by 2.74% and Indian Oil Corporation up by 2.54%. On the flip side, HDFC Life Insurance down by 3.29%, Cipla down by 1.49%, Bharti Airtel down by 1.32%, Hindustan Unilever down by 1.04% and HDFC down by 0.80% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 14.65 points or 0.2% to 7,178.55 and Germany’s DAX increased 26.19 points or 0.17% to 15,866.78, while France’s CAC decreased 25.20 points or 0.37% to 6,737.88.

Asian markets ended mostly higher on Friday, tracking modest gains on Wall Street overnight as jobless claims and trade balance figures showed that the US economic recovery remains on track. Meanwhile, global investors are waiting for the latest US jobs report, due later in the day for clues about the Fed's timelines for asset tapering and interest rate hikes. Japanese shares gained after reports that Japanese Prime Minister Yoshihide Suga will step down as prime minister later this month after failing to control the Covid-19 outbreak, setting the stage for his replacement after just one year in office. However, Hong Kong shares ended lower amid profit booking despite data showing that the private sector in Hong Kong expanded at a faster pace in August, the latest survey from Markit Economics showed with a PMI score of 53.3, up from 51.3 in July. Chinese shares declined due to concerns about slowdown in the world’s second-largest economy, although brokerage shares outperformed after China announced plans to set up its third mainland stock exchange in its capital, Beijing, to serve small-and medium-sized enterprises.