Key indices end higher on firm global cues

Indian equity benchmarks staged a strong recovery in the dying hours of trade to end comfortably in the green on Tuesday, on account of buying in Realty, Metal, Basic Materials and IT stocks. Key gauges traded on a volatile note for the first half of the trading session, as traders remained wary with ICRA Ratings’ report that with the benefits of unlocking measures tapering out, the performance of the high-frequency indicators have become ‘uneven’ since August 2021 especially when compared to the pre-COVID levels. It appears that the temporary boost, provided by the easing of state-wise restrictions after the second wave of COVID-19 ebbed, petered out. Traders also took a note of RBI Deputy Governor M Rajeshwar Rao’s statement that there is a need to mainstream green finance and devise ways for incorporating environment impact into commercial lending decisions. He said addressing climate risk in the financial sector should be the joint responsibility of stakeholders as it would affect the resilience of the financial system in the long run.

However, benchmark indices stabilized in the late afternoon trade, logging a smart rebound post two-days of selling, buoyed by a recovery in overseas markets.  Traders found some support with private report stating that investors have been pouring money into India’s stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years. It added Indian start-ups have raised $10 billion through IPOs so far this year - more money than was raised in the last three years. Some solace also came with Apex exporters' body Federation of Indian Export Organisations (FIEO) said it will focus on new products and markets for diversification with a view to boosting the country's outbound shipments.  Adding to the optimism, Retirement fund body, Employees' Provident Fund Organisation (EPFO) in its latest ‘Provisional Estimate of Net Payroll’ data report has showed that India created 1464782 new jobs in the month of July 2021. Sector wise, sugar sector remains in focused, as the Centre has so far cleared Rs 1,800 crore in subsidy to sugar mills for undertaking a mandated export of 6 million tonnes of the sweetener in the 2020-21 season-ending this month.

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading higher, on lingering hope that China would not let the crisis spiral out of control and waited for any relief measure from the Chinese govt. Traders also waited anxiously for the outcome of central bank policy meetings in the U.S and Japan. Back home, on the sectoral front, IT stocks were in focus as survey released by Reserve Bank indicating that exports of software services, including services delivered by foreign affiliates of Indian companies, recorded 2.1 per cent growth during 2020-21 and stood at $148.3 billion. Stocks related to telecom sector too were in watch as Moody's Investors Service said India's recent reforms are credit positive for telecom companies including Bharti Airtel and Reliance Jio Infocomm (RJIL) because they free up cash flow for reinvestment, enable further investment in next-generation technologies and provide support for a three private plus one state-owned telecom operational structure.

Finally, the BSE Sensex rose 514.34 points or 0.88% to 59,005.27 and the CNX Nifty was up by 165.10 points or 0.95% to 17,562.00.    

The BSE Sensex touched high and low of 59,084.51 and 58,232.54, respectively and there were 24 stocks advancing against 6 stocks declining on the index.  

The broader indices ended in green; the BSE Mid cap index rose 0.79%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Realty up by 3.49%, Metal up by 2.62%, Basic Materials up by 1.48%, IT up by 1.46% and TECK up by 1.46%, while Utilities down by 0.55%, Power down by 0.54%, Auto down by 0.26%, Consumer Durables down by 0.21% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.94%, Indusind Bank up by 4.29%, ITC up by 3.36%, Bajaj Finserv up by 3.18% and Tata Steel up by 3.08%. On the flip side, Maruti Suzuki down by 2.54%, Bajaj Auto down by 1.20%, Nestle down by 0.83%, HDFC Bank down by 0.61% and Power Grid Corporation down by 0.45% were the top losers.

Meanwhile, rating agency Crisil has said the success of the Centre's recently announced national monetisation pipeline (NMP) plan hinges critically on road assets. It also said that the state-owned National Highways Authority of India's asset pool can generate 15 per cent of its potential funding needs over the next five fiscals. Under the ambitious national asset monetisation plan, the government aims to generate Rs 1.6 lakh crore by monetising 26,700 km of four-lane and above national highways.

The rating agency said ‘Monetisation of road assets holds the key here, as it accounts for 27 per cent of the NMP in value terms.’ The agency noted that the NHAI has greatly accelerated its pace of highway construction, from only 2,623 km in fiscal 2017 to 4,175 km in fiscal 2021. It stated ‘successful monetisation of the roads pipeline of Rs 1.6 lakh crore is critical, as it could potentially meet 15 per cent of the NHAI’s fund requirements over fiscal 2022 to 2026, compared with less than 5 per cent over fiscal 2017-2021.’

It said given the ambitious targets under Bharatmala and the construction of high-value expressways, along with higher repayment of borrowings, the NHAI's fund requirements are expected to double to Rs 10 lakh crore over the next five years vis-a-vis the previous 5 years. It added ‘If these funding requirements are met, we estimate that the NHAI could construct 25,000 km of national highways over fiscal 2022-2026, compared with 17,228 km over fiscal 2017- 2021.’

The CNX Nifty traded in a range of 17,578.35 and 17,326.10 and there were 40 stocks advancing against 10 stocks declining on the index.      

The top gainers on Nifty were JSW Steel up by 5.97%, ONGC up by 5.18%, Bajaj Finance up by 5.07%, Indusind Bank up by 4.59% and Tata Steel up by 3.46%. On the flip side, Maruti Suzuki down by 2.45%, BPCL down by 1.47%, Hero MotoCorp down by 1.19%, Bajaj Auto down by 1.17% and Nestle down by 0.90% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 85.48 points or 1.24% to 6,989.39, France’s CAC increased 95.62 points or 1.48% to 6,551.43 and Germany’s DAX increased 232.29 points or 1.54% to 15,364.35.

Asian markets ended mostly higher on Tuesday, despite weakness in the global markets following anxiety surrounding the imminent stimulus tapering and monetary tightening. Concerns over the growth of the world’s second largest economy following liquidity crisis of Chinese property developer Evergrande too adding pressure on market sentiments. Interest payments on the Evergrande’s bonds are due later in the week and S&P Global warned that the company was in the brink of default. Japanese shares declined as trading resumed after holidays. Markets in China, South Korea and Taiwan remained closed due to local holidays.