Sensex, Nifty remain volatile in late morning session

Indian equity benchmarks remained volatile in late morning session, with both Sensex and Nifty trading in green terrain. Negative cues from other Asian markets impacted domestic sentiments. Traders were cautious, as a gauge of India’s services sector eased but remained in the expansion zone. The India Services Business Activity Index, compiled by IHS Markit, stood at 55.2 in September compared with 56.7 in August. A reading above 50 indicates expansion in business activity. Besides, ICRA Ratings in its latest report has stated that total infrastructure credit by banks and NBFC-Infrastructure Finance Companies (NBFC-IFCs) remained sluggish in the first quarter of the current fiscal (Q1FY22) due to the disruptions caused by the second wave of the COVID-19 pandemic.

On the global front, Asian markets were trading mostly in red, after overall consumer prices in the Tokyo region of Japan were up 0.3 percent on year in September, the Ministry of Internal Affairs and Communications said on Tuesday. That was in line with expectations following the 0.4 percent contraction in August. Core CPI, which excludes volatile food prices, was up 0.1 percent on year - shy of expectations for an increase of 0.2 percent following the flat reading in the previous month.

The BSE Sensex is currently trading at 59303.94, up by 4.62 points or 0.01% after trading in a range of 59127.04 and 59335.48. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.16%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.27%, Telecom up by 2.21%, Power up by 1.93%, Utilities up by 1.56% and Capital Goods up by 1.22%, while Realty down by 1.13%, Healthcare down by 0.55%, IT down by 0.53%, Bankex down by 0.40% and TECK down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.20%, Asian Paints up by 1.52%, Larsen & Toubro up by 1.39%, Indusind Bank up by 1.30% and Maruti Suzuki up by 1.02%. On the flip side, Dr. Reddy's Lab down by 1.04%, Sun Pharma down by 0.88%, ICICI Bank down by 0.86%, SBI down by 0.67% and Tech Mahindra down by 0.56% were the top losers.

Meanwhile, rating agency ICRA has revised its energy demand growth outlook upwards from 6 per cent to 8-8.5 per cent for 2021-22. As per ICRA, low base last fiscal and faster-than-expected recovery in demand after the second wave of COVID-19 seen in April and May 2021 have supported this outlook upgrade. It said the all-India electricity demand during the period from April 2021 to September 2021 has increased by 12.7 per cent to 707 billion units (BU) on a year-on-year (YoY) basis supported by a lower base, improvement in economic activity and lower than normal monsoons leading to higher demand from the agriculture segment during July and August 2021.

The energy demand in H1 FY2022 (April to September) also, remained higher by 2.9 per cent against the same in H1 FY2020 (pre-COVID), led by relatively sharper recovery in the energy demand as reflected from 8.4 per cent growth in Q2 FY2022 (July September) against Q2 FY2020. ICRA had earlier estimated an energy demand growth forecast of 6 per cent for FY2022 in January 2021. Notwithstanding the recovery in electricity demand, it said the all India average thermal PLF level is likely to remain subdued, at below 60 per cent in the current fiscal. Thus, the sector outlook on the thermal power generation segment is negative.

This is also because of the lack of visibility in signing of new power purchase agreements (PPAs) for thermal independent power producers (IPPs) and an upward pressure on cost of power generation with the strengthening in fuel price levels and tighter environmental compliance requirements. As a result, a sustained improvement in electricity demand growth as well as thermal PLF level (above 60 per cent) remain the critical factors to monitor, from the outlook perspective on thermal generation. The spot power tariffs on day ahead market of the Indian Energy Exchange witnessed a sharp recovery to Rs. 3.7 per unit in 6M FY2022 from about Rs. 2.8 per unit in FY2021 led by better than expected recovery in electricity demand and coal supply constraints witnessed in August and September 2021.

The CNX Nifty is currently trading at 17704.10, up by 12.85 points or 0.07% after trading in a range of 17640.90 and 17709.00. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were ONGC up by 7.25%, Indian Oil Corporation up by 2.93%, Bharti Airtel up by 2.30%, UPL up by 2.20% and Coal India up by 1.92%. On the flip side, Cipla down by 2.30%, Shree Cement down by 1.31%, Hindalco down by 1.00%, Dr. Reddy's Lab down by 0.97% and Sun Pharma down by 0.84% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 649.89 points or 2.28% to 27,795.00, Jakarta Composite lost 57.52 points or 0.91% to 6,285.17, KOSPI fell 53.77 points or 1.78% to 2,965.41, Straits Times trembled 23.72 points or 0.77% to 3,065.93 and Taiwan Weighted dropped 20.65 points or 0.13% to 16,387.70. On the flip side, Hang Seng increased 76.27 points or 0.32% to 24,112.64.