Domestic markets trade in fine-fettle in early deals

Indian equity benchmarks made gap-up opening on Monday tracking gains in global peers. Markets are trading in fine-fettle with gains of over a percent each in early deals on account of buying in all the sector indices led by Realty, IT up and TECK. Domestic indices are looking ahead to the FY23 Economic Survey that the government to table today, ahead of the Union Budget on Tuesday. The Economic Survey will be tabled in Parliament to present the state of the economy and suggest policy prescriptions. Sentiments got a boost with a survey by industry body Ficci showing a sharp improvement in manufacturing outlook in Q3 (October-December 2021-22) after some revival in the first half of 2021-22. Some support also came in as RBI data showed bank credit grew 8.01 per cent to Rs 115 lakh crore and deposits rose 9.28 per cent to Rs 159.83 lakh crore in the fortnight ended January 14.

Asian markets are trading mostly higher with a few closed for Lunar New Year holidays, following the broadly positive cues from Wall Street on Friday, with the continued spike in crude oil prices and as traders continued to pick up stocks at a bargain after a big sell-off earlier last week amid hawkish Fed comments. Meanwhile, worries about the fast spreading coronavirus Omicron variant's impact on global economic growth continues to impact market sentiment. South Korea, Taiwan and China are closed for the Lunar New Year holidays.

Back home, metal stocks were in focus as worldsteel stated that India's crude steel production rose by nearly 18 per cent to 118 million tonne (MT) in 2021, while world leader China recorded a 3 per cent decline to 1 032.8 MT. In scrip specific development, Adani Total Gas traded higher as it won Gas supply agreements 3 each in Assam and Chhattisgarh, 4 in Maharashtra including Amravati, 1 each in Jharkhand and Odisha and 2 in Madhya Pradesh.

The BSE Sensex is currently trading at 57991.84, up by 791.61 points or 1.38% after trading in a range of 57746.15 and 58032.40. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.46%, while Small cap index was up by 1.16%.

The top gaining sectoral indices on the BSE were Realty up by 2.55%, IT up by 2.24%, TECK up by 2.15%, Consumer Disc up by 1.64%, Telecom up by 1.63%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Tech Mahindra up by 3.63%, Wipro up by 2.59%, Infosys up by 2.36%, Bajaj Finance up by 2.35% and HCL Technologies up by 2.30%. On the flip side, Indusind Bank down by 1.80% and Larsen & Toubro down by 0.14% were the only losers.

Meanwhile, the Federation of Indian Chambers of Commerce & Industry (FICCI) in its latest quarterly survey on Manufacturing revealed that the outlook for India’s manufacturing sector seems to have improved in the October-December 2021 quarter even as the cost of doing business remains a cause for concern and hiring prospects remain subdued. The findings of the latest survey also reflect sustained economic activity in the sector, with existing average capacity utilisation in the range of 65 to 70 per cent. It also highlighted that manufacturers are looking forward to the upcoming Union Budget to enhance growth and investments in the sector. The Budget will be presented on February 1.

FICCI noted that the percentage of respondents reporting higher production in the third quarter of 2021-22 (October-December 2021-22) was around 63 per cent, almost double than the year-round period (around 33 per cent). This assessment is also reflective in order books as 61 per cent of the respondents in October-December 2021-22 had a higher number of orders as against July-September 2021-22. It said high raw material prices, high cost of finance, the uncertainty of demand, shortage of working capital, high logistics cost, low domestic and global demand due to supply chain disruptions are some of the major constraints that are affecting the expansion plans of the respondents.

The survey assessed the performance and sentiments of manufacturers for Q3 (October-December 2021-22) for 12 major sectors namely automotive, capital goods, cement, chemicals, fertilisers and pharmaceuticals, electronics & electricals, medical devices, metal & metal products, paper products, textiles, textiles machinery and miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME (small and medium enterprise) segments with a combined annual turnover of over Rs 2.7 lakh crore. Around half of the participants expect a rise in their exports for Q3 2021-22 as against the same quarter of the previous year.

On the survey FICCI stated that ‘Hiring outlook for the manufacturing sector remains subdued as around 75 per cent of the respondents mentioned that they are not likely to hire additional workforce in the next three months’. However, an average interest rate paid by the manufacturers has reduced slightly to 8.4 per cent per annum as against 8.7 per cent during last quarter and the highest rate remains as high as 15 per cent. It highlights that cuts in repo rate in the last few months by RBI have not led to a proportional reduction in the lending rate as reported by around 60 per cent of the respondents. High raw material prices, increased transportation and logistics cost, and rise in the prices of diesel, LPG, natural gas, power, and fuel has been the main contributor to the increasing cost of production.

The CNX Nifty is currently trading at 17344.00, up by 242.05 points or 1.42% after trading in a range of 17269.20 and 17352.00. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.75%, Divi's Lab up by 3.07%, Wipro up by 2.85%, ONGC up by 2.46% and Infosys up by 2.44%. On the flip side, Indusind Bank down by 1.43% and Coal India down by 0.12% were the only losers.

Asian markets are trading in green; Nikkei 225 surged 376.17 points or 1.41% to 27,093.51, Straits Times rose 19.69 points or 0.61% to 3,266.02, Hang Seng jumped 385.84 points or 1.64% to 23,935.92 and Jakarta Composite was up by 0.46 points or 0.01% to 6,645.97.