Domestic indices trade higher in early deals; Telecom index leads gainers

Indian equity benchmarks made positive start on Tuesday and soon slipped below neutral lines. But, regained momentum and are trading higher in early deals with notable gains on account of buying in Telecom, Consumer Durables and Healthcare stocks. Sentiments got a boost as Minister of State for Finance Pankaj Chaudhary said India's gross domestic product (GDP) is projected to grow at 9.2 per cent to Rs 147.5 lakh crore in 2021-22. Chaudhary said the government has implemented several major reforms in recent years to boost investment and GDP growth. Though, upside remained capped with Fitch Ratings’ statement that higher fiscal deficits and lack of clarity on consolidation plans in the Budget add risks to its projection of lowering of India's debt-to-gross domestic product (GDP) ratio. Investors are eyeing the RBI MPC meeting which is slated to begin today.

Asian markets traded mixed amid mostly negative cues from Wall Street overnight, as traders looked ahead to the release of the U.S. inflation data and the minutes of the U.S. Federal Reserve's latest monetary policy meeting, for directional clues.

Back home, sugar stocks were in focus as the All India Sugar Trade Association (AISTA) said Indian mills have signed contracts to export 4.6 million tonnes of sugar in the 2021/22 marketing year without government subsidies. In scrip specific development, TVS Motor traded higher as it posted a 9 per cent YoY rise in net profit for Q3FY22 at Rs 288 crore when compared with Rs 266 crore in the corresponding quarter of FY21. Besides, Adani Wilmar will make its debut on the bourses today. The IPO had garnered 17.4 times subscription, and the company had fixed its issue price at Rs 230 per share.

The BSE Sensex is currently trading at 57746.74, up by 125.55 points or 0.22% after trading in a range of 57481.52 and 57925.82. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.19%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were Telecom up by 0.97%, Consumer Durables up by 0.90%, Healthcare up by 0.45%, Consumer discretionary up by 0.42%, Energy up by 0.42%, while Utilities down by 1.04%, Power down by 0.78%, PSU down by 0.65%, Oil & Gas down by 0.23%, IT down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 2.16%, Titan Company up by 1.73%, Bajaj Finance up by 1.11%, Dr. Reddy's Lab up by 1.08% and Bharti Airtel up by 0.92%. On the flip side, Power Grid down by 1.05%, SBI down by 0.98%, NTPC down by 0.85%, TCS down by 0.54% and Infosys down by 0.41% were the top losers.

Meanwhile, Fitch Ratings has said higher fiscal deficit and lack of clarity on consolidation plans in the Budget add risks to its projection of lowering of India's debt-to-gross domestic product (GDP) ratio. The degree to which planned higher capex (capital expenditure) supports GDP growth and offsets these risks is an important consideration for the sovereign rating. Risks around the sustainability of the downward debt trajectory were a key factor behind Fitch's decision to maintain a 'negative' outlook on sovereign when it affirmed India's 'BBB-' rating in November 2021.

The agency said the Budget presented by the government on February 1 continued to emphasise support for growth over fiscal consolidation. It added that deficit targets were ‘slightly higher than we had anticipated when we affirmed the rating’. The Budget pegged a revised deficit of 6.9 per cent of GDP for the fiscal year ending March 2022 (FY22), against Fitch's forecast of 6.6 per cent. It added that ‘The planned 6.4 per cent of GDP FY23 deficit is also higher than our 6.1 per cent forecast’.

It noted ‘The borrowing allowance for states, which was maintained at 4.0 per cent of gross state domestic product in FY23, keeping it above the pre-pandemic level of 3 per cent, poses further risk to our fiscal forecasts’. India's public debt-GDP ratio at about 87 per cent in FY21 (ended March 2021) is well above the median of around 60 per cent for 'BBB'-rated sovereigns. It added ‘we revised the outlook on India's rating to Negative, from Stable, in June 2020, partly owing to our assumptions about the impact of the pandemic on public finance metrics. The government has little fiscal headroom at its current rating level to respond to possible shocks to growth.’

The CNX Nifty is currently trading at 17236.95, up by 23.35 points or 0.14% after trading in a range of 17176.20 and 17306.45. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 1.91%, Titan Company up by 1.60%, Bajaj Finance up by 1.12%, Eicher Motors up by 1.02% and Bharti Airtel up by 1.02%. On the flip side, Power Grid down by 1.10%, NTPC down by 1.07%, SBI down by 0.95%, ONGC down by 0.90% and Tata Consumer Products down by 0.82% were the top losers.

Asian markets are trading mixed; Nikkei 225 rose 67.81 points or 0.25% to 27,316.68, Straits Times gained 21.89 points or 0.65% to 3,388.37, Taiwan Weighted advanced 106.34 points or 0.59% to 18,006.64 and KOSPI was up by 19.47 points or 0.71% to 2,764.53. On the other hand, Hang Seng declined 369.27 points or 1.50% to 24,210.28, Jakarta Composite fell 18.81 points or 0.28% to 6,786.13 and Shanghai Composite was down by 30.86 points or 0.90% to 3,398.72.