Domestic indices trade lower after slightly positive start

Indian equity benchmarks made flat-to-positive start on Wednesday tracking firm global cues. But, failed to hold the gains and soon slipped below neutral lines. Markets are trading lower with marginal cut due to selling in metal, utilities and power stocks. Some cautiousness prevailed in the markets with a private report that current account leading to higher imports and a rise in current account deficit, which is likely to print at 1.3 per cent of the GDP or $40 billion, up from 0.9 per cent surplus last fiscal. Adding more pessimism, International Monetary Fund downgraded its 2021 economic growth forecast for Asia after the highly infectious Covid-19 delta variant caused a spike in cases in parts of the region. Meanwhile, GST Council is likely to consider one single tax rate for online gaming, racecourses, casinos and that could be as high as 28%. Though, downside remained capped as Services Export Promotion Council (SEPC) said the country’s services exports are expected to reach over $240 billion during 2021-22 on account of healthy performance by segments such as professional and management consulting services, audio visual, freight transport services, and telecommunications.

On the global front, most of the Asian markets traded higher following the broadly positive cues overnight from Wall Street, as traders reacted positively to some upbeat earnings news from top U.S. firms and rising crude oil prices. Meanwhile, concerns about slowing growth amid supply chain bottlenecks are weighing on market sentiment. Indonesia is closed on account of Mawlid holiday.

Back home, fertiliser industry stocks were in focus amid a private report that Chinese authorities are imposing new hurdles for fertilizer exporters amid growing concerns over surging power prices and food production, move likely to impact India. In scrip specific development, Nestle India jumped on reporting a 5.15% YoY rise in net profit at Rs 617.37 crore for the third quarter ended September 2021, driven largely by a high single-digit volume and mix growth in the domestic market across brands. On the other hand, IRCTC fell by over 15% on the BSE and NSE.

The BSE Sensex is currently trading at 61660.68, down by 55.37 points or 0.09% after trading in a range of 61489.69 and 61872.70. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.89%, while Small cap index was down by 1.36%.

The few gaining sectoral indices on the BSE were Telecom up by 1.19%, FMCG up by 0.34%, TECK up by 0.09%, Capital Goods up by 0.01%, while Metal down by 1.50%, Utilities down by 1.36%, Power down by 1.19%, Basic Materials down by 1.15%, Consumer Durables down by 1.13% were the top losing indices on BSE.

The top gainers on the Sensex were Nestle up by 2.57%, Bharti Airtel up by 1.87%, SBI up by 0.99%, HCL Technologies up by 0.76% and Hindustan Unilever up by 0.48%. On the flip side, Indusind Bank down by 1.44%, Bajaj Finserv down by 1.07%, Axis Bank down by 0.83%, Bajaj Auto down by 0.76% and Bajaj Finance down by 0.72% were the top losers.

Meanwhile, with healthy performance by segments such as professional and management consulting services, audio visual, freight transport services, and telecommunications, Services Export Promotion Council (SEPC) has said that India’s services exports are expected to reach over $240 billion during 2021-22. It is also seeking incentives from the government. SEPC Chairman Maneck Davar said that during the first five months of the current fiscal year, exports from the sector increased 14 per cent to $95 billion. He noted that services exports may increase even further when the tourism sector is opened up later in the year.

In 2020-21, services exports dipped by three per cent to $206 billion. He added that the recovery of the service sector is largely based on the performance of sectors such as professional and management consulting services, audio visual and related services, freight transport services, telecommunications, computer and information services. He also said the target of $1 trillion services exports by 2030 set by the government is feasible but there is a need to look at sectors other than IT and ITeS for growth. The need of the hour is to provide a level-playing field with manufacturing and incentives to tide over the pandemic.

Davar said ‘Unless the government focuses on the sector in the forthcoming Foreign Trade Policy (FTP) by announcing scheme-based export incentives and provides interim relief by continuing with the existing schemes in the short run, the sector will lose the momentum it has gained in the first five months of 2021-22’. He added that services exports to an extent grow in line with merchandise exports as many services work as a facilitator for goods exports, such as transport and logistics services, distribution services, banking and insurance services, and aviation.

The CNX Nifty is currently trading at 18395.35, down by 23.40 points or 0.13% after trading in a range of 18326.95 and 18458.20. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Nestle up by 2.74%, Britannia Industries up by 2.27%, Bharti Airtel up by 1.88%, Tata Motors up by 1.55% and Divi's Lab up by 1.06%. On the flip side, Hindalco down by 2.93%, Eicher Motors down by 2.05%, Coal India down by 1.82%, Hero MotoCorp down by 1.47% and Indusind Bank down by 1.38% were the top losers.

Asian markets traded mostly in green; Nikkei 225 rose 106.11 points or 0.36% to 29,321.63, Straits Times added 1.50 points or 0.05% to 3,200.51, Hang Seng surged 338.90 points or 1.31% to 26,126.11, Taiwan Weighted inched up 0.82 points to 16,901.49 and Shanghai Composite was up by 1.23 points or 0.03% to 3,594.38, while KOSPI fell 3.29 points or 0.11% to 3,025.75.