Sensex, Nifty trade in green in late morning deals

Indian equity benchmarks were trading in green terrain in late morning session, despite negative cues from other Asian markets. Traders were getting relief, after Finance Minister Nirmala Sitharaman said that banks have sanctioned loans worth Rs 11,168 crore to about 2 lakh borrowers under the credit outreach programme. Besides, Multilateral development bank Asian Infrastructure Investment Bank (AIIB) said it will support India in ramping up its healthcare infra facilities to meet future health challenges. The Beijing-based funding institution said it is working with the Indian government to develop climate resilient infrastructure projects.

On the global front, Asian markets were trading mostly in red, after Hong Kong's merchandise exports grew at a softer pace in September. The data from the Census and Statistics Department showed that exports rose 16.5 percent year-on-year in September, after a 25.9 percent increase in August. Imports gained 23.5 percent annually in September, after a 28.1 percent increase in the previous month.

The BSE Sensex is currently trading at 61498.36, up by 148.10 points or 0.24% after trading in a range of 61315.24 and 61559.81. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.62%, while Small cap index was up by 0.82%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.18%, Telecom up by 1.09%, Realty up by 0.93%, Consumer Disc up by 0.93% and IT up by 0.87%, while Bankex down by 0.20% and Auto down by 0.09% were the only losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 4.92%, Sun Pharma up by 2.30%, ICICI Bank up by 2.03%, SBI up by 1.81% and ITC up by 1.48%. On the flip side, Axis Bank down by 5.17%, Bajaj Finance down by 3.84%, Bajaj Finserv down by 2.45%, Indusind Bank down by 1.59% and Hindustan Unilever down by 0.78% were the top losers.

Meanwhile, citing semiconductor shortage that could extend to 2022, India Ratings and Research (Ind-Ra) has revised downwards the domestic passenger vehicle (PV) growth estimates to 15-18 per cent this fiscal. The agency had earlier forecasted an 18-22 per cent growth for the Indian PV market, now it said further downside risk remains for the segment. It also said ‘any normalisation in production remains contingent on a softening of demand from various end-consumers of chips and an increase in chip production globally’. It added that while certain Indian PV manufacturers have indicated an improvement in production during October 2021 over August and September, the continuing surge in chip demand globally and time lag to set up new capacities could keep the supply limited.

The rating agency said normalisation can only be envisaged to happen by the end of the second half of 2022. Based on its discussions with industry peers, Ind-Ra said the chip shortages could extend to 2022 and the situation remains highly uncertain. Given the time lag and the challenges of expanding chip capacity, the shortages could worsen and the situation may not normalise before 2H 22 (second half 2022). It said ‘In fact, we may experience an oversupply post the planned chip manufacturing capacities come onstream in 2023 and 2024 coupled with the demand normalisation in the personal computer/laptop segment’. The sharp increase in demand for chips and the shorter tenor nature of contracts with the auto sector have allowed chip manufacturers to cater to the technology sector. Sales to the latter provide not only higher realisations but also greater visibility through longer tenor contracts.

On the other hand, to overcome the situation, Ind-Ra said, the automobile manufacturers are focusing on ‘using the available supplies to produce models which are more profitable, reflecting a lower drop in volumes of premium models in the Indian market’. Considering the importance of chips in the overall production, although the cost of chips in a vehicle is minimal at around 1 per cent), OEMs are increasingly negotiating with chip manufacturers and looking at minimising uncertainties through long-term contracts and sourcing. As for electric vehicles, Ind-Ra said ‘It is unlikely that chip shortages would have any material impact in its trajectory, given the challenges pertaining to the high cost of ownership and lack of charging infrastructure’. However, it added that there could be some negative impact on the overall volumes.

The CNX Nifty is currently trading at 18310.95, up by 42.55 points or 0.23% after trading in a range of 18258.85 and 18331.30. There were 32 stocks advancing against 17 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Asian Paints up by 4.67%, Divi's Lab up by 3.67%, SBI Life Insurance up by 2.42%, Sun Pharma up by 2.30% and ICICI Bank up by 1.97%. On the flip side, Axis Bank down by 5.18%, Bajaj Finance down by 3.91%, Bajaj Finserv down by 2.45%, Indusind Bank down by 1.59% and ONGC down by 1.35% were the top losers.

Asian markets were 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. On the flip side, Straits Times rose 16.75 points or 0.52% to 3,221.32.