Benchmarks trade higher in early deals: Sensex up around 200 points

Indian equity benchmarks continued their gaining momentum with positive start on Friday following broadly positive cues. Markets are trading higher with notable gains in early deals on account of buying in Metal, IT and TECK stocks and ahead of RBI’s policy outcome of the Monetary Policy Committee’s (MPC) three-day deliberations. The central bank is likely to maintain the status quo and keep interest rates low along with its accommodative stance. Sentiments got boost as Ficci said India’s GDP is expected to grow at 9.1 per cent in 2021-22 as economic recovery, post the second wave of the pandemic, seems to be holding ground. Ficci’s Economic Outlook Survey also noted that the ongoing festive season would support this momentum. Adding more optimism, domestic rating agency Crisil ahead of the filing of quarterly earnings by companies said India Inc is set to post an 18-20 per cent revenue growth for July-September as compared to the year-ago period. It said the handsome growth in the topline will be driven by both higher volumes and higher commodity prices.

On the global front, most of the Asian markets are trading higher following firmly positive cues overnight from Wall Street, as traders reacted to news from the U.S. that the lawmakers have reached an agreement to temporarily extend the debt limit, thus avoiding a potential default, and a spike in crude oil prices. The upside is limited as traders remain concerned about the coronavirus situation in the region, which is hindering economic activity.

Back home, aluminum industry stocks were in focus with a private report that an acute coal crunch in India has created a precarious situation for aluminium producers as stockpiles of the fuel plummet to critical levels, according to the country’s top industry group. Also, investor’s focus is on IT stocks as sector major Tata Consultancy Services (TCS) will kick start the September quarter earnings’ season, result to be out later in the day. In scrip specific development, KPI Global Infrastructure traded higher as it signed new long-term Power Purchase Agreement (PPA) with GHCL, Bhilad for sale of 1.25 MW solar power for a period of 20 years under Independent Power Producer (IPP) business vertical.

The BSE Sensex is currently trading at 59871.30, up by 193.47 points or 0.32% after trading in a range of 59830.93 and 59994.75. There were 21 stocks advancing against 8 stocks declining, while 1 stock remain unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.46%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Metal up by 1.60%, IT up by 1.15%, TECK up by 1.05%, Basic Materials up by 0.92%, Auto up by 0.74%, while Realty down by 1.19%, FMCG down by 0.11%, Power down by 0.05% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.13%, Infosys up by 1.08%, Tech Mahindra up by 1.08%, TCS up by 1.06% and Larsen & Toubro up by 0.91%. On the flip side, Hindustan Unilever down by 0.70%, Asian Paints down by 0.50%, HDFC down by 0.35%, SBI down by 0.20% and NTPC down by 0.11% were the top losers.

Meanwhile, Fitch Ratings in its latest report has further lowered India's Gross domestic product (GDP) growth forecast for the fiscal year ending March 2022 (FY22) to 8.7 percent from 10 percent projected in June as a result of the severe second virus wave. But, it raised GDP growth projection for FY23 to 10 percent from 8.5 per cent projected in June, saying the impact of the second wave was to delay rather than derail India's economic recovery.

In its APAC Sovereign Credit Overview, Fitch Ratings said India's ‘BBB-/Negative' sovereign rating balances a still-strong medium-term growth outlook and external resilience from solid foreign- reserve buffers, against high public debt, a weak financial sector and some lagging structural factors. It said the ‘Negative’ outlook reflects uncertainty over the debt trajectory following the sharp deterioration in India's public finances due to the pandemic shock.

Listing negative sensitivities, the report said failure to reduce sufficiently the fiscal deficit to a level consistent with putting the general government debt/GDP ratio on a downward trajectory and a structurally weaker real GDP growth outlook due to continued financial sector weakness or reform implementation that is lacking. On the positive side, implementation of a credible medium-term fiscal strategy to bring general government debt down after the pandemic towards the levels of 'BBB' category peers.

The CNX Nifty is currently trading at 17854.25, up by 63.90 points or 0.36% after trading in a range of 17848.15 and 17892.50. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 3.16%, Tata Motors up by 1.89%, Hindalco up by 1.76%, JSW Steel up by 1.57% and Eicher Motors up by 1.36%. On the flip side, Coal India down by 2.25%, Asian Paints down by 0.63%, Hindustan Unilever down by 0.58%, HDFC down by 0.25% and Bajaj Finance down by 0.23% were the top losers.

Asian markets are trading mostly in green, Nikkei 225 jumped 485.86 points or 1.76% to 28,164.07, Straits Times added 4.81 points or 0.16% to 3,105.96, Jakarta Composite surged 55.17 points or 0.86% to 6,471.57 and Shanghai Composite rose 11.79 points or 0.33% to 3,579.96. On the other hand, Hang Seng fell 43.74 points or 0.18% to 24,657.99, Taiwan Weighted declined 50.18 points or 0.30% to 16,663.68 and KOSPI was down by 1.36 points or 0.05% to 2,958.10.