Benchmarks trade slightly higher in early deals; Metal stocks shine

Indian equity benchmarks made cautious start on Thursday amid weakness in Asian peers. But soon markets gather momentum and are trading higher with slightly gains in early deals on account of buying in Metal, Basic Materials and Capital Goods stocks. Sentiments got some support as the World Bank said Narendra Modi government’s Production-Linked Incentive (PLI) Scheme will likely help India’s economy grow at 8.7% in the next financial year 2022-23, beating emerging market peers including China. Though, gains remained capped amid subdued macro-economic data. India’s industrial production growth remained subdued for the third straight month and expanded by 1.4 per cent in November, mainly due to the waning low base effect. Also, rising prices of essential kitchen items pushed the retail inflation to a six-month high of 5.59 per cent in December, close to the Reserve Bank’s upper tolerance limit of 6 per cent.

On the global front, Asian markets are trading mostly lower despite the positive cues overnight from Wall Street, as traders digested the latest US inflation data and remained concerned about the resurging coronavirus cases in the country. Japan's daily new COVID-19 cases exceeded 13,000 on Wednesday for the first time in over four months, spurred by the fast-spreading coronavirus omicron variant.

Back home, textile industry stocks were in limelight with a report that the country's exports of textiles and apparel, including handicrafts, rose to $29.8 billion during April-December this fiscal as compared to $21.2 billion in the same period last year. In scrip specific development, Infosys and TCS traded higher as they delivered robust December quarter results in line with estimates. However, Wipro traded under pressure as it missed revenue growth estimates.

The BSE Sensex is currently trading at 61339.42, up by 189.38 points or 0.31% after trading in a range of 61122.34 and 61348.57. 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 0.22%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Metal up by 2.72%, Basic Materials up by 1.07%, Capital Goods up by 0.97%, PSU up by 0.76%, Power up by 0.70%, while Realty down by 0.59%, Bankex down by 0.28%, Consumer Durables down by 0.14%, Auto down by 0.14%, FMCG down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.67%, Power Grid up by 2.47%, Sun Pharma up by 1.80%, NTPC up by 1.53% and Infosys up by 1.41%. On the flip side, Wipro down by 4.95%, HDFC Bank down by 1.24%, Mahindra & Mahindra down by 0.72%, Asian Paints down by 0.66% and Titan Company down by 0.45% were the top losers.

Meanwhile, rating agency ICRA has said it expects a miss in the disinvestment target to cause the government's fiscal deficit to print at Rs 16.6 lakh crore or 7.1 per cent of the GDP in current fiscal (FY22), overshooting the budgeted target. It stated with the state governments' fiscal deficit projected at a relatively modest 3.3 per cent of GDP in FY22, the general government fiscal deficit is estimated at around 10.4 per cent of the GDP. In the base case for FY23, it sees the government's fiscal deficit moderating to Rs 15.2 lakh crore or 5.8 per cent of GDP.

It said although the planned ceasing of GST compensation could cause the state governments' fiscal deficit to rise to the cap of 3.5 per cent of the GSDP set by the Fifteenth Finance Commission, the general government deficit will still compress to 9.3 per cent of the GDP in FY23.

ICRA's chief economist Aditi Nayar said that with a palpable buoyancy in tax collections, the government's gross tax receipts is expected to overshoot the budgeted amount by a healthy Rs 2.5 lakh crore in FY22. However, she said the net tax revenue gains to the government will be nullified by the expected large miss on receipts from disinvestment and back-ended spending, especially on those items that were included in the Second Supplementary Demand for Grants, such as food and fertiliser subsidies, equity infusion into Air India Assets Holding Limited, etc.

The CNX Nifty is currently trading at 18264.20, up by 51.85 points or 0.28% after trading in a range of 18201.75 and 18272.25. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 4.11%, Coal India up by 2.79%, JSW Steel up by 2.50%, Power Grid Corp up by 2.49% and Sun Pharma up by 2.09%. On the flip side, Wipro down by 5.30%, HDFC Bank down by 1.14%, HCL Technologies down by 0.85%, Tata Motors down by 0.77% and Asian Paints down by 0.70% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 268.11 points or 0.93% to 28,497.55, Straits Times fell 0.95 points or 0.03% to 3,254.03, KOSPI lost 8.18 points or 0.28% to 2,964.30, Jakarta Composite declined 9.98 points or 0.15% to 6,637.09 and Shanghai Composite was down by 11.14 points or 0.31% to 3,586.29. On the other hand, Hang Seng rose 30.12 points or 0.12% to 24,432.29 and Taiwan Weighted was up by 21.67 points or 0.12% to 18,397.07.