Benchmarks trade firm in early deals; RBI policy outcome eyed

Indian equity benchmarks extended their previous session’s gains with positive start on Wednesday tracking rally in global markets. Markets are trading firm in early deals with gains of over one percent each in early deals on account of buying in all the sector indices led by IT, TECK and Telecom stocks. Market participants are looking ahead to the Reserve Bank of India’s (RBI’s) MPC’s decision later in the day following a three-day policy meeting. The RBI's six-member monetary policy committee (MPC), headed by Governor Shaktikanta Das, is likely to maintain key interest rates for a ninth straight meeting, retaining an accommodative stance amid the threat surrounding Omicron coronavirus variant. Traders took note of global rating agency S&P’s statement that the impact of the new coronavirus variant on India's economic outlook would be contained. It expects India's economy to grow 9.5% in FY22 and 7.8% in FY23. Andrew Wood, director, sovereign ratings, S&P said ‘we are seeing a healthy recovery’.

Asian markets traded mostly higher following the broadly positive cues overnight from Wall Street, on rising crude oil prices and easing concerns about the impact of the coronavirus Omicron variant on global economic recovery. Traders also continued to use the recent weakness as an opportunity to pick up stocks at somewhat reduced levels.

Back home, aviation stocks were in focus as rating agency ICRA said continuing on the recovery path, domestic air passenger traffic crossed the 10-million mark in November for the first time since the pandemic hit the aviation industry in March last year but the coronavirus' new variant Omicron has the potential to spoil the party. In scrip specific development, Reliance Industries traded higher as it firmed up its first investment in West Asia with Abu Dhabi Chemical Derivatives Company RSC (trading as TA’ZIZ).

The BSE Sensex is currently trading at 58394.07, up by 760.42 points or 1.32% after trading in a range of 58122.27 and 58399.55. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index jumped 1.02%, while Small cap index was up by 1.32%.

The gaining sectoral indices on the BSE were IT up by 2.23%, TECK up by 2.19%, Telecom up by 1.76%, Energy up by 1.38%, Capital Goods up by 1.24%, while there was no loser.

The top gainers on the Sensex were HCL Technologies up by 2.51%, Infosys up by 2.37%, Bajaj Finance up by 2.29%, Tech Mahindra up by 2.12% and Bharti Airtel up by 1.86%. On the flip side, NTPC down by 0.04% was the sole loser.

Meanwhile, ICRA Ratings in its latest report stated that the cost of debt-funds for the states jumped again as the weighted average cost of borrowings rose by 37 bps to a one-month high of 6.80 per cent in the auction on December 07, 2021, compared to the last week, after falling marginally for two weeks.

According to an analysis by ICRA Ratings, at the weekly auction of state development loans, six states raised just Rs 8,000 crore, which is 41 per cent lower than the indicated Rs13,600 crore, which is the sixth consecutive week of lower-than-indicated issuance.

Aditi Nayar, the chief economist at the rating agency, said the spread between the 10-year state debt and the G-secs eased to a 24 month-low of 45 bps from 51 bps last week, while the weighted average cost of their borrowings jumped by 37 bps to 6.80 per cent over the past week. She said seven of the 13 states that initially indicated their participation in the auction did not raise funds, even as Telangana borrowed Rs 500 crore more than indicated.

The CNX Nifty is currently trading at 17402.80, up by 226.10 points or 1.32% after trading in a range of 17308.95 and 17403.95. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were Wipro up by 2.93%, HCL Technologies up by 2.75%, Infosys up by 2.66%, Bajaj Finance up by 2.28% and Tech Mahindra up by 2.18%. On the flip side, HDFC Life Insurance down by 0.54% and Coal India down by 0.20% were the only losers.

Asian markets are trading mostly in green, Nikkei 225 surged 413.15 points or 1.45% to 28,868.75, Taiwan Weighted rose 74.78 points or 0.42% to 17,871.70, KOSPI jumped 23.71 points or 0.79% to 3,015.43, Jakarta Composite added 17.08 points or 0.26% to 6,619.65 and Shanghai Composite was up by 31.02 points or 0.86% to 3,626.11. On the other hand, Straits Times fell 8.98 points or 0.29% to 3,125.68 and Hang Seng was down by 21.54 points or 0.09% to 23,962.12.