Markets trade firm in early deals on positive IIP, CPI data

Indian equity benchmarks extended their previous session gains and made optimistic start on Wednesday. Markets are trading firm in early deals with gains of around half a percent each, on account of buying in all the sector indices led by auto, industrials and utilities. Investors reacted positively to macro-economic data. The government data showed India's retail inflation eased again in September, falling to a five-month low, thanks to a favourable comparison with last year and moderating food prices that offset a surge in the cost of crude oil and fuel. The government data also showed that the Index of Industrial Production has risen 11.9% year-on-year for the month of August as against 11.5% in July. As per the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the manufacturing sector's output surged 9.7% in August 2021. Adding more optimism, the International Monetary Fund (IMF) retained its projection for India’s economic growth in the current financial year at 9.5 per cent, even as it has moderately scaled down its forecast for the world economy during 2021 by 10 basis points to 5.9 per cent in view of worsening Covid dynamics and supply disruptions.

On the global front, Asian markets are trading mixed amid negative cues overnight from Wall Street, as traders looked to pick up stocks at reduced levels following the recent sell-offs. Concerns about the uncertainty on the outlook for the markets following the volatility seen throughout early October weighed on the markets along with surging crude oil prices leading to inflation and interest rate worries. Meanwhile, a storm has led to the cancellation of morning trading in Hong Kong. Back home, fertilizer industry stocks were buzzing as the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved nutrient-based subsidy rates for phosphatic & potassic fertilisers for FY22. Net subsidy for the rabi season to be at Rs 28,665 crore. In scrip specific development, Tata Motors jumped on reports that TPG will invest $1 billion in its electric vehicle subsidiary.

The BSE Sensex is currently trading at 60576.72, up by 292.41 points or 0.49% after trading in a range of 60452.29 and 60621.72. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.90%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Auto up by 3.38%, Industrials up by 2.13%, Utilities up by 1.79%, Power up by 1.45%, Telecom up by 1.09%, while there was no loser.

The top gainers on the Sensex were Mahindra & Mahindra up by 4.16%, Power Grid up by 1.58%, Larsen & Toubro up by 1.29%, Titan Company up by 1.19% and Ultratech Cement up by 0.91%. On the flip side, Nestle down by 0.41%, Hindustan Unilever down by 0.32%, HCL Technologies down by 0.30%, Maruti Suzuki down by 0.25% and Dr. Reddy's Lab down by 0.03% were the top losers.

Meanwhile, with good performance by manufacturing, mining and power sectors that surpassed the pre-COVID level, India’s Industrial production grew 11.9 per cent in August mainly due to a low-base effect. The Index of Industrial Production (IIP) had contracted by 7.1 per cent in August 2020. The factory output grew 11.5 per cent in July this year. For the month of August 2021, the Quick Estimates of IIP with base 2011?12 stood at 131.1 compared to 117.2 points in the same month last year. The index stood at 126.2 points in August 2019. The data showed that industrial production recovered and surpassed the pre-pandemic level of August 2019.

The manufacturing sector, which constitutes 77.63 per cent of the IIP, grew 9.7 per cent in August 2021. The manufacturing sector had recorded a contraction of 7.6 per cent in August 2020. The mining sector output rose 23.6 per cent in August, while power generation increased 16 per cent. The mining sector output fell 8.7 per cent in the same month. The electricity generation had declined 1.8 per cent in August 2020. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of August 2021 stand at 103.8, 130.2 and 188.7 respectively.

The output of capital goods, which is a barometer of investment, grew 19.9 per cent in August 2021. It had witnessed a contraction of 14.4 per cent in the year-ago period. Consumer durables manufacturing increased 8 per cent in the month under review against a decline of 10.2 per cent in August 2020. Consumer non-durable goods production grew 5.2 per cent in August over a 3 cent contraction in the year-ago period. As per Use?based classification, the indices stand at 127.3 for Primary Goods, 91.0 for Capital Goods, 142.7 for Intermediate Goods and 145.2 for Infrastructure/ Construction Goods for the month of August 2021. Further, the indices for Consumer durables and Consumer non?durables stand at 118.3 and 147.3 respectively for the month of August 2021.

The CNX Nifty is currently trading at 18108.50, up by 116.55 points or 0.65% after trading in a range of 18050.75 and 18111.85. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 16.59%, Mahindra & Mahindra up by 4.09%, Adani Ports & SEZ up by 2.65%, Tata Consumer Products up by 2.42% and Power Grid up by 1.47%. On the flip side, ONGC down by 1.07%, Coal India down by 0.59%, Nestle down by 0.44%, Hindustan Unilever down by 0.38% and HCL Technologies down by 0.32% were the top losers.

Asian markets are trading mixed; Straits Times jumped 44.64 points or 1.43% to 3,156.69, KOSPI surged 31.00 points or 1.06% to 2,947.38 and Jakarta Composite rose 34.90 points or 0.54% to 6,521.17. On the other hand, Nikkei 225 declined 39.31 points or 0.14% to 28,191.30, Taiwan Weighted fell 120.89 points or 0.73% to 16,341.95 and Shanghai Composite was down by 12.51 points or 0.35% to 3,534.43.