Domestic markets trade higher with modest gains in early deals

Indian equity benchmarks made slightly positive start on Wednesday tracking overnight gains on Wall Street. Markets are trading higher with modest gains in early deals on account of buying in consumer discretionary, capital goods and PSU stocks. Sensex and Nifty are trading above their crucial 61,400 and 18,250 levels, respectively, Traders took encouragement as a survey by the National Council of Applied Economic Research (NCAER) showed that as the second wave of Covid-19 eased off, business sentiment in the country hit an over two-year high in the September quarter (Q2) of the current financial year (FY22). Adding optimism, Finance Minister Nirmala Sitharaman said the government’s social protection and economic stimulus packages, along with timely structural reforms in various sectors, have been pivotal in India’s economic recovery process. Meanwhile, the government is planning to come up with a semiconductor design-linked incentive policy to promote domestic manufacturing as well as attract global electronic chip companies to the country.

Most of the Asian markets traded lower despite the positive cues overnight from Wall Street, as traders reacted to the tensions between Washington and Beijing after the U.S. licence of one of China's biggest telecoms companies was revoked citing national security concerns as well as the jump in Australian core inflation. Concerns about slowing growth amid supply chain bottlenecks are also weighing on market sentiment. Back home, auto stocks were in focus as India Ratings and Research (Ind-Ra) revised downwards the domestic passenger vehicle growth estimates to 15-18 per cent this fiscal, citing semiconductor shortage that could extend to 2022. In scrip specific development, Cipla traded higher as its September quarter net up 7 per cent YoY at Rs 711 crore, on the back of 10 per cent YoY jump in revenue at Rs 5,520 crore.

The BSE Sensex is currently trading at 61430.93, up by 80.67 points or 0.13% after trading in a range of 61315.24 and 61559.81. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.57%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were Consumer discretionary up by 1.01%, Capital Goods up by 0.82%, PSU up by 0.70%, FMCG up by 0.68%, Healthcare up by 0.52%, while Metal down by 0.64%, Bankex down by 0.19% were the only losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 5.70%, SBI up by 1.69%, Nestle up by 1.05%, Sun Pharma up by 0.98% and Dr. Reddy's Lab up by 0.90%. On the flip side, Axis Bank down by 3.76%, Bajaj Finance down by 3.22%, Tata Steel down by 0.84%, Tech Mahindra down by 0.76% and Power Grid down by 0.58% were the top losers.

Meanwhile, signalling an improvement in sentiments over the pre-pandemic period, think-tank -- the National Council of Applied Economic Research (NCAER) has said its Business Confidence Index (BCI) increased by 90 per cent in the July-September this financial year over the first quarter, indicating signs of improvement. It highlighted that after the second COVID-19 wave, business sentiments recovered in the second quarter of 2021-22, compared to those prevailing in the preceding three months. The BCI increased by 90 per cent on a quarter-on-quarter (q-o-q) basis and by about 80 per cent on a year-on-year (y-o-y) basis. National Council of Applied Economic Research (NCAER) carried out its 118th Round of its Business Expectations Survey (BES) in September 2021. The BCI is also higher than what it was in 2019-20:Q2.

Poonam Gupta, Director-General, NCAER, said ‘The current BES survey points to a recovery in business sentiments post the second wave of the pandemic. The recovery is broad-based across firm size, ownership, and industrial sectors.’ Barring the West zone, business sentiments have improved for all the regions. The BCI decreased in the West by nearly 10 per cent in 2021–22:Q2, whereas it increased in the East (Kolkata), North (National Capital Region of Delhi), and South (Chennai and Bengaluru). NCAER said the upward movement in BCI was driven by an improvement in sentiments for all the four components of the BCI -- overall economic conditions will improve in the next six months; the financial position of firms will improve in the next six months; present investment climate is positive as compared to six months ago and present capacity utilisation is close to or above the optimal level.

NCAER said sentiments improved in the second quarter of the current fiscal about production, domestic sales, exports, new orders, imports of raw materials, and pre-tax profits. Sentiments about costs, especially ones related to raw materials, remained elevated with two-thirds of the firms expecting the costs of raw materials per unit of output to go up in the next six months as compared to 54 per cent in the first quarter of 2021-22. NCAER Political Confidence Index (PCI) increased by nearly 110 per cent (109.4 per cent) in the July-September period 2021-22 over the previous quarter, and by more than 60 per cent as compared to the corresponding quarter of the last year.

The CNX Nifty is currently trading at 18293.05, up by 24.65 points or 0.13% after trading in a range of 18258.85 and 18331.30. There were 32 stocks advancing against 17 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Asian Paints up by 5.26%, SBI up by 1.69%, Divi's Lab up by 1.44%, SBI Life Insurance up by 1.42% and HDFC Life Insurance up by 1.34%. On the flip side, Axis Bank down by 3.74%, Bajaj Finance down by 3.34%, Tata Motors down by 2.00%, Hindalco down by 1.03% and ONGC down by 0.89% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 fell 165.00 points or 0.57% to 28,941.01, Hang Seng slipped 406.94 points or 1.56% to 25,631.33, Taiwan Weighted lost 36.13 points or 0.21% to 16,998.21, KOSPI declined 27.32 points or 0.90% to 3,021.76, Jakarta Composite plunged 44.42 points or 0.67% to 6,612.52 and Shanghai Composite was down by 32.93 points or 0.92% to 3,564.71, while Straits Times rose 16.75 points or 0.52% to 3,221.32.