Benchmarks trade slightly higher in early deals; Auto, Utilities lead

Indian equity benchmarks made flat-to-negative start on Monday tracking some gains in Asian peers despite weakness on Wall Street on Friday. But, soon markets managed to recoup losses and were trading tad above the neutral lines in early deals. Buying in auto, utilities and power stocks aided domestic indices. Early cautiousness came in as former Reserve Bank Governor C Rangarajan said India becoming a $5 trillion economy by 2025 is impossible under the current circumstance and the country needs to grow at nine per cent per annum for the next five years in order to achieve that. However, some support came in as Commerce and Industry Minister Piyush Goyal said the country’s exports are growing at a healthy rate and now exporters can aim for $450-500 billion of outbound shipments during the next fiscal year. He added exports have touched $197 billion during April-September this fiscal. Traders took some support as the World Bank in its latest report said that buoyed by an increase in public investment and incentives to boost manufacturing, India's economy is expected to grow by 8.3 per cent in the fiscal year 2021-22.

Most of the Asian markets are trading higher ignoring the negative cues from Wall Street on Friday on disappointing monthly jobs data out of the U.S., with surging crude oil prices providing support, even as traders continue to express concerns that the coronavirus situation in the region and other countries, particularly in the U.S., could dent the pace of global economic recovery. The South Korean market is closed for Hangul Day holiday and Taiwan market is closed for National Day holiday.

Back home, fertilizer industry stocks were in focus after Fertiliser Minister Mansukh Mandaviya directed all manufacturers not to increase retail prices of DAP and other phosphatic fertilisers as part of the government’s efforts to ensure the availability of crop nutrients at affordable prices during the ongoing Rabi season. In scrip specific development, Tata Consultancy Services (TCS) plunged after the company's September quarter net profit missed street expectations. The company posted a slightly lower-than-expected, 14.1 per cent year-on-year growth in net profit and 16.8 per cent YoY rise in revenue, in the second quarter (Q2) of financial year 2021-22 (FY22).

The BSE Sensex is currently trading at 60159.28, up by 100.22 points or 0.17% after trading in a range of 59811.42 and 60160.52. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.87%.

The top gaining sectoral indices on the BSE were Auto up by 2.20%, Utilities up by 2.00%, Power up by 1.84%, Metal up by 1.43%, PSU up by 1.24%, while IT down by 2.31%, TECK down by 2.25%, Telecom down by 0.75% were the few losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.08%, NTPC up by 2.87%, Power Grid up by 2.40%, Kotak Mahindra Bank up by 2.26% and Bajaj Finserv up by 1.63%. On the flip side, TCS down by 5.70%, Infosys down by 1.55%, HCL Technologies down by 1.16%, Tech Mahindra down by 0.87% and Bharti Airtel down by 0.71% were the top losers.

Meanwhile, World Bank in its latest report South Asia Economic Focus titled ‘Shifting Gears: Digitization and Services-Led Development’ has said that India’s economy is expected to grow by 8.3 per cent in the fiscal year 2021-22, buoyed by an increase in public investment and incentives to boost manufacturing, though it is less than the previous projection early this year before the country was hit by the second wave of the COVID-19 pandemic. World Bank Chief Economist for the South Asia Region Hans Timmer said that when one looks at the high frequency data, they see that as a result of the second wave of the COVID-19 pandemic, the recovery paused, and some indicate that the recovery actually declined briefly.

He said ‘we project for this fiscal year 8.3 per cent (growth rate for Indian economy) that is less than we projected early in the year before the health crisis caused by the second wave.’ He added ‘Given the sharp contraction of the economy last year, it might not look like a lot, but in my view, that is actually very positive news, given the violent second wave and the severity of the health crisis’. According to Timmer, what is remarkable and what is the positive part of that number is that the pause was short lived, and the hit on the economy was by far enough, not even comparable as large as a year earlier. He noted ‘That’s how we ended up with 8.3 per cent growth’.

Timmer said that mitigated some of the impacts on the vulnerable parts of India. It is time now to shift gears and to start focusing on medium-term growth, and added that India has already done some reforms during the crisis that go in that direction. Observing that labour reforms and agricultural reforms are still debated at the moment, he said that they are going in a direction that the Bank thinks is necessary. He said it is opening up parts of the economy, where there was unutilised potential. Timmer said that he is especially very interested in the labour reforms that attempt to create funds to set up social protection systems, not just for the people in the formal sector, but also for informal workers and for migrant workers.

One of the main focuses of the latest World Bank report is to unleash the potential of the services sector where it is possible to make services the driver of development in India, and there is still an unfinished agenda, because the current formal services sector is still very regulated, and very protected to international competition. Meanwhile, the report projects the South Asia region to grow by 7.1 per cent in 2021 and 2022.

The CNX Nifty is currently trading at 17946.25, up by 51.05 points or 0.29% after trading in a range of 17839.10 and 17951.55. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 7.02%, Coal India up by 3.10%, NTPC up by 2.87%, Maruti Suzuki up by 2.86% and Power Grid up by 2.45%. On the flip side, TCS down by 5.68%, Wipro down by 1.54%, Infosys down by 0.95%, HCL Technologies down by 0.92% and Tech Mahindra down by 0.74% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 jumped 431.29 points or 1.54% to 28,480.23, Straits Times rose 3.26 points or 0.10% to 3,116.07, Hang Seng surged 542.55 points or 2.18% to 25,380.40 and Shanghai Composite was up by 13.59 points or 0.38% to 3,605.76, while Jakarta Composite fell 14.13 points or 0.22% to 6,467.64.