Domestic indices trade flat in early deals

Indian equity benchmarks made cautious start on Monday amid mixed global cues. Markets are hovering around neutral lines and now are trading flat in early deals as buying in Auto, Industrials and Consumer discretionary supporting the markets whereas selling in Metal, Healthcare and Basic Materials kept gains in the markets in check. Traders took encouragement as Commerce and Industry Minister Piyush Goyal assured full government support to leaders of India's top IT companies in pushing the growth of the sector and taking services exports to $1 trillion in a decade. Some support also came in as RBI data showed bank credit grew 9.16 per cent to Rs 116.83 lakh crore and deposits rose 10.28 per cent to Rs 162.41 lakh crore for the fortnight ended December 31, 2021. Though, there was some cautiousness as former World Bank Chief Economist Kaushik Basu said that India’s overall macroeconomic situation is in a recovery mode but the growth is concentrated at the top end, which is a worrying trend. Also, rising coronavirus cases dented sentiments in the markets. India recorded a spike of 257,063 new Covid-19 cases in the past 24 hours, according to Worldometer

On the global front, Asian markets are trading mixed following the mixed cues from Wall Street on Friday, on a spike in crude oil price and as traders focused on recent comments from Federal Reserve officials indicating interest rate hikes are coming as soon as March. Meanwhile, worries about the fast spreading coronavirus Omicron variant's impact on global economic growth continues to impact market sentiment.

Back home, auto stocks were in focus as according to a new Delhi government mandate, aggregators and delivery services would have to ensure that 10 per cent of all new two-wheelers and five per cent of all new four-wheelers are electric vehicles in the next three months. Further, six airbags have been made mandatory in all cars sold from October 1. Meanwhile, latest data by SIAM showed that passenger vehicle exports from India increased 46 per cent in the first nine months of the current fiscal year. In scrip specific development, Shares of HCL Technologies fell after the company Q3 earnings disappointed on the margins front. In Q3, HCL Tech reported a net profit of Rs 3,442 crore, down 13.6 per cent year-on-year (YoY).

The BSE Sensex is currently trading at 61218.00, down by 5.03 points or 0.01% after trading in a range of 61107.60 and 61360.99. There were 13 stocks advancing against 17 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 0.37%.

The top gaining sectoral indices on the BSE were Auto up by 2.11%, Industrials up by 0.69%, Consumer discretionary up by 0.66%, PSU up by 0.52%, Capital Goods up by 0.49%. while Metal down by 0.83%, Healthcare down by 0.80%, Basic Materials down by 0.59%, FMCG down by 0.24%, Realty down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.10%, SBI up by 1.80%, Bajaj Finserv up by 1.18%, Mahindra & Mahindra up by 1.01% and Bajaj Finance up by 0.88%. On the flip side, HCL Technologies down by 5.80%, Ultratech Cement down by 1.70%, Dr. Reddy's Lab down by 1.31%, Sun Pharma down by 0.92% and HDFC Bank down by 0.82% were the top losers.

Meanwhile, the former World Bank Chief Economist Kaushik Basu has said that India's overall macroeconomic situation is in a recovery mode but the growth is concentrated at the top end, which is a worrying trend. Amid the rising inflationary trends, including the sharp increase in retail inflation last month, Basu said the country is facing stagflation and ‘very carefully curated policy interventions’ are required to address the situation. He said while the aggregate economy is growing, ‘the bottom half of India’ is in recession, and noted that it was sad the country's policy over the last few years has been largely focused on big businesses.

He also said the youth unemployment rate in the country touched 23 per cent, among the highest globally, even before the COVID-19 pandemic started. He added workers, farmers and small businesses are seeing negative growth. While India's GDP is estimated to grow 9.2 per cent in 2021-22, Basu said since this comes after a contraction of 7.3 per cent in 2019-20 due to the pandemic, the average growth rate over the last two years is 0.6 per cent per annum. On whether the government should be going for fiscal  consolidation or continue with stimulus measures in the upcoming Budget, Basu said the current situation in India is a big challenge to Finance Minister Nirmala Sitharaman and the entire fiscal policy apparatus.

He said the Indian economy is facing stagflation, which is much more painful and requires very carefully curated policy interventions, and added that 15 years ago, inflation was even higher, close to 10 per cent, but there was one big difference. He pointed out ‘at that time, India's real growth was close to 9 per cent... so, even with the inflation, the average household was becoming better off per capita by 7 or 8 per cent’. According to Basu, what makes the current situation so grim is that the near 5 per cent inflation is occurring over a fall in real per capita income over the last two years. He observed ‘Since this is a stagflation situation, the big task is to create jobs and help small business... the task now is to create jobs while at the same increasing output’.

The CNX Nifty is currently trading at 18263.45, up by 7.70 points or 0.04% after trading in a range of 18228.75 and 18304.45. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 5.01%, Maruti Suzuki up by 3.15%, Tata Motors up by 2.58%, Bajaj Auto up by 1.95% and Eicher Motors up by 1.94%. On the flip side, HCL Technologies down by 5.68%, Ultratech Cement down by 1.93%, Dr. Reddy's Lab down by 1.51%, Shree Cement down by 1.30% and Cipla down by 1.19% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 227.91 points or 0.81% to 28,352.19, Straits Times added 1.15 points or 0.04% to 3,283.12, Taiwan Weighted advanced 85.61 points or 0.47% to 18,488.94 and Shanghai Composite was up by 20.77 points or 0.59% to 3,542.03. On the other hand, Hang Seng declined 140.73 points or 0.58% to 24,242.59, KOSPI fell 37.44 points or 1.28% to 2,884.48 and Jakarta Composite lost 33.20 points or 0.50% to 6,660.20.