Benchmarks trade flat with positive bias in early deals

Indian equity benchmarks made cautious start on Wednesday amid mixed global cues. Soon, markets turned volatile and are trading flat with positive bias in early deals on account of buying in Telecom, Bankex and Oil & Gas stocks. Some support came in with the finance ministry’s statement that income taxpayers can file applications before the interim board for settlement of pending tax cases at the Income Tax Settlement Commission (ITSC) level by September 30. The Finance Act, 2021, has amended the provisions of the Income Tax Act, 1961, to provide that the ITSC shall cease to operate with effect from February 1, 2021. Additionally, in a major move towards making domestic markets more liquid, capital markets regulator SEBI, on Tuesday introduced T+1 settlement cycle for completion of share transactions on an optional basis. Though, upside remained capped as Fitch Ratings said India continues to lag way behind in COVID vaccination, and the negative outlook on sovereign rating signifies the rising debt-to-GDP ratio. In April 2021, Fitch affirmed India's sovereign rating at BBB- with a negative outlook. It added vaccination is the key to economic recovery across the world.

Global cues remained lackluster with most of the Asian markets are trading lower following the mixed cues overnight from Wall Street, on sliding crude oil prices and as traders are weighing the likely impact of the spread of the delta variant of coronavirus in the region and some other countries, particularly in the U.S., on the pace of economic recovery. Back home, banking stocks were in limelight as India Ratings and Research (Ind-Ra) maintained a stable outlook on the overall banking sector for the rest of FY22, supported by the continuing systemic support. In scrip specific development, Dr Reddy's Laboratories traded higher as it initiated supply of the first dose component of Russian COVID-19 vaccine Sputnik V to partner hospitals all over the country.

The BSE Sensex is currently trading at 58287.73, up by 8.25 points or 0.01% after trading in a range of 58174.53 and 58372.94. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.65%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were Telecom up by 1.60%, Bankex up by 0.65%, Oil & Gas up by 0.54%, Industrials up by 0.54%, Capital Goods up by 0.45%, while IT down by 0.68%, TECK down by 0.42%, Metal down by 0.30%, Auto down by 0.17%, Healthcare down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.49%, Indusind Bank up by 1.28%, SBI up by 0.78%, Axis Bank up by 0.76% and Kotak Mahindra Bank up by 0.71%. On the flip side, NTPC down by 1.72%, Infosys down by 0.91%, Power Grid Corp down by 0.78%, Bajaj Auto down by 0.72% and Maruti Suzuki down by 0.70% were the top losers.

Meanwhile, Fitch Ratings has said India continues to lag way behind in COVID vaccination, and the negative outlook on sovereign rating signifies the rising debt-to-GDP ratio. In April 2021, Fitch affirmed India's sovereign rating at 'BBB-' with a negative outlook. The outlook was changed to 'negative' from 'stable' in June last year on grounds that the pandemic had significantly weakened the country's growth outlook and exposed the challenges associated with a high public-debt burden. Fitch Ratings Senior Director, Head of Asia-Pacific Sovereign Ratings, Stephen Schwartz said vaccination is the key to economic recovery across the world.

Schwartz said ‘the (APAC) region which was so successful in containing the virus early on, got behind the curve when it came to rollout of vaccines. Singapore really stands out now with 80 per cent of its population being vaccinated. But many countries in the region like Vietnam, Thailand and India continue to lag way behind and as a result continue to have periodic restrictions.’ Over 70 crore vaccine doses have been administered so far in India. The country has administered more than 1 crore doses daily in 3 out of the last 11 days.

Schwartz further said the negative outlook in India's ratings is on account of rise in debt-to-GDP ratio and uncertainty about the trajectories. The debt-to-GDP ratio stood at 72 per cent in 2019 and the agency expects it to rise above 90 per cent of GDP over the next five years. Fitch said there could be a negative trigger for sovereign rating in case of failure to reduce the fiscal deficit to a level consistent with putting government debt-to-GDP ratio on a downward trajectory.

The CNX Nifty is currently trading at 17367.95, up by 5.85 points or 0.03% after trading in a range of 17324.00 and 17383.40. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were HDFC Life Insurance up by 1.68%, Grasim Industries up by 1.46%, Indusind Bank up by 1.39%, BPCL up by 1.21% and Kotak Mahindra Bank up by 1.12%. On the flip side, NTPC down by 1.73%, Divi's Lab down by 1.35%, Eicher Motors down by 1.24%, Wipro down by 1.06% and Infosys down by 0.96% were the top losers.

Asian markets are trading mostly in red; Straits Times declined 21.97 points or 0.71% to 3,086.56, Hang Seng fell 171.54 points or 0.65% to 26,182.09, Taiwan Weighted lost 150.21 points or 0.86% to 17,278.66, KOSPI slipped 28.36 points or 0.89% to 3,159.06 and Jakarta Composite plunged 60.22 points or 0.99% to 6,052.18. On the other hand, Nikkei 225 rose 146.44 points or 0.49% to 30,062.58 and Shanghai Composite was up by 2.59 points or 0.07% to 3,679.18.