Markets trade flat in early deals on Wednesday

Indian equity benchmarks made positive start on Wednesday but gave up most of initial gains in a choppy session, despite strength across global markets amid easing Russia-Ukraine tensions. Some support came as India’s exports in January rose 25.28 per cent to $34.50 billion on account of healthy performance by sectors such as engineering, petroleum and gems and jewellery. Adding some optimism, an SBI research report stated that India can add $20 billion to its Gross Domestic Product (GDP) if the country can reduce by 50 per cent the dependence on imports from China by leveraging the production linked incentive schemes. However, gains got trimmed as some cautiousness came in with government data showing that exports from special economic zones (SEZs) grew at a slower pace as compared to the growth of overall outbound shipments from the country during the first eight months of the current fiscal year.

On the global front, most of the Asian markets traded higher following the broadly positive cues overnight from Wall Street, amid easing geopolitical concerns following news Russia is pulling back some troops from the Ukrainian border. Traders also picked stocks at a bargain as concerns about a destabilizing conflict between Russia and the Ukraine have weighed on stocks over the past few sessions.

Back home, NBFCs sector stocks were in focus as the Reserve Bank of India (RBI) has given finance companies extra time till September 30, 2022 to have systems ready to implement rule wherein bad loans can be upgraded as standard asset only when entire arrears of interest and principal are paid. In November 2021, RBI had given time till March 31, 2022 to implement the rule. In scrip specific development, Crisil traded higher as its Q3 consolidated net soared 53.2 per cent to Rs 168.63 crore in the quarter ended December 2021 when compared with Rs 110.04 crore in the corresponding quarter a year ago.

The BSE Sensex is currently trading at 58208.10, up by 66.05 points or 0.11% after trading in a range of 58006.72 and 58467.04. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.72%, while Small cap index was up by 1.16%.

The top gaining sectoral indices on the BSE were Realty up by 1.70%, Oil & Gas up by 1.13%, Utilities up by 0.98%, Power up by 0.87%, Telecom up by 0.73%, while Capital Goods down by 0.21%, Metal down by 0.13%, Consumer Durables down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.62%, HDFC up by 1.52%, Bajaj Finserv up by 0.53%, HDFC Bank up by 0.41% and Kotak Mahindra Bank up by 0.41%. On the flip side, Power Grid down by 2.09%, Larsen & Toubro down by 1.04%, Tata Steel down by 0.90%, Titan Company down by 0.59% and Ultratech Cement down by 0.57% were the top losers.

Meanwhile, a SBI research in its Ecowrap report has stated that India can add $20 billion to its Gross Domestic Product (GDP) if the country can reduce by 50 per cent the dependence on imports from China by leveraging the production linked incentive schemes. As per the report, in terms of imports, India continued to reduce its trade deficit with China in FY21. However, share of China in India’s total merchandise imports has been steadily increasing to 16.5 per cent currently. In FY21, out of the $65 billion of imports from China, around $39.5 billion were commodities and goods where PLI scheme has been announced (textile, agri, electronics goods, pharmaceuticals & chemicals).

The report said ‘If, because of the PLI scheme, we can reduce our dependence on China even to the extent of 20 per cent, then we can add around $8 billion to our GDP. Over time, if our dependence is further reduced by 50 per cent, we can add $20 billion to GDP’. In FY22 April-December period, there were 6,367 products with a total value of $68 billion (or 15.3 per cent of the total imports) imported by India from China. The report said it estimated the import dependence of each product on China by checking the share of Chinese imports in India’s overall imports of these categories.

It said ‘The maximum aggregate value ($9.7 billion) is of the products in which our import dependence on China is between 50-60 per cent, although the number of products is lower. Although number wise the imports were highest in the category where our dependence was lowest (0-10 per cent), the value is not that high at around $1,894 million.’ Further, it said most important imports for FY22 so far are personal computers and parts of telephonic and telegraphic equipment, electronic integrated circuits, solar cells, urea and micro-assemblies’ lithium-ion and diammonium phosphate. There are other goods also under the electrical and electronics imports.

It noted that the items in the low value category are a mix of finished goods and intermediate inputs and India has a revealed comparative advantage in most of these imports. It said ‘If India wants to wean itself off its dependence on China, capabilities have to be developed in these areas, especially chemicals, textiles, footwear, so that both inputs and final consumer goods in these low value imports can be manufactured domestically. It added that India should integrate more and more into the Global Value Chains (GVCs).

The CNX Nifty is currently trading at 17360.70, up by 8.25 points or 0.05% after trading in a range of 17320.40 and 17450.00. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were HDFC Life Insurance up by 2.45%, Mahindra & Mahindra up by 1.88%, Adani Ports & SEZ up by 1.65%, BPCL up by 1.61% and IOC up by 1.43%. On the flip side, Power Grid down by 2.09%, Tata Steel down by 1.20%, Larsen & Toubro down by 1.18%, Shree Cement down by 0.67% and ICICI Bank down by 0.64% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 560.16 points or 2.09% to 27,425.35, Hang Seng jumped 299.73 points or 1.23% to 24,655.44, Taiwan Weighted advanced 242.01 points or 1.35% to 18,193.82, KOSPI soared 44.22 points or 1.65% to 2,720.76, Jakarta Composite rose 26.08 points or 0.38% to 6,833.58 and Shanghai Composite was up by 23.76 points or 0.69% to 3,469.85. On the other hand, Straits Times fell 1.52 points or 0.04% to 3,419.86.