Markets trade in fine-fettle in early deals on firm global cues

Indian equity benchmarks have reversed their previous session’s losses with gap-up opening on Wednesday mirroring gains in global equity markets after oil prices fell in international markets keeping inflation concerns at bay. Markets are trading in fine-fettle with gains of around one and half a percent each in early deals. Traders took encouragement with the Ministry of Finance’s statement that the Indian economy is well prepared to handle any capital outflows caused by external shocks. In its Monthly Economic Review report released the finance ministry's Department of Economic Affairs said India has adequate foreign exchange reserves to absorb the risks posed by the uncertain geopolitical environment. Traders took note of report that the government said it is keeping a close watch on evolving geopolitical developments and would make calibrated interventions to keep fuel prices under control to safeguard the interest of the common man.

Most of the Asian markets are trading higher as Chinese tech shares rebounded after a steep sell-off over the previous three sessions. US stocks rallied overnight as oil and industrial and agricultural commodity prices continued to fall, and a report showed producer prices moderated in February, helping ease fears of inflation and a broad economic slowdown.

Back home, sugar industry stocks were in focus as Abinash Verma, Director General of the Indian Sugar Mills Association said Indian sugar exports are seen climbing to 7.5 million tonnes in the 2021/22 season, up from the prior season’s 7.1 million. In scrip specific development, Dredging Corp of India was up as it signed a contract with Cochin Shipyard (Cochin) for construction of 12,000 cubic meter hopper capacity trailer suction hopper dredger for euro 104 million under the Make in India program.

The BSE Sensex is currently trading at 56607.46, up by 830.61 points or 1.49% after trading in a range of 56402.30 and 56761.01. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index jumped 1.18%, while Small cap index was up by 1.26%.

The top gaining sectoral indices on the BSE were Bankex up by 1.88%, Realty up by 1.80%, Consumer Durables up by 1.54%, Metal up by 1.35%, Basic Materials up by 1.35%, while there was no loser on BSE sectoral front.

The top gainers on the Sensex were Indusind Bank up by 3.74%, Bajaj Finance up by 3.32%, Axis Bank up by 3.29%, Bajaj Finserv up by 3.09% and HDFC up by 3.01%. On the flip side, Sun Pharma down by 0.69% was the sole loser.

Meanwhile, the Finance Ministry in its Monthly Economic Review report has said that the Indian economy is well prepared to absorb any upcoming external shock in terms of capital outflow induced by an uncertain geo-political environment, however inflation remains a concern. The report said India has adequate forex reserves to absorb any upcoming external shock. As per the report, ‘Notwithstanding global developments, India’s forex reserves also stood at record high and large enough to finance more than 12 months of import’. It said despite the challenges, India’s external sector exhibits signs of resilience with robust growth in merchandise exports, which increased to $374.8 billion during April 2021 - February 2022. However it warned that high energy and commodity prices may pose upside risk to the inflation outlook in the near- medium term.

The report said ‘Recent increase in prices of food and energy commodities and metals warrants continued vigil on the inflation front’. It added that ‘The sustained rise in Capex is expected to pump prime private investment and demand. This is evident from capacity utilisation recovering to 68.3 per cent in Q2:2021-22, as compared to 60.0 per cent in the previous quarter’. Capital expenditure increased by 22.0 per cent YoY during April 2021-January 2022 and stood at Rs. 4.4 lakh crore in April-January 2021-22 compared to Rs. 3.6 lakh crore in the corresponding period last year.

It said despite global geopolitical headwinds, recovering consumption demand has catalyzed a healthy investment scenario in the economy. The second Advance Estimates of GDP for 2021-22 has projected consumption to surpass the level in the pre-pandemic year of 2019-20. On the high oil prices, it said ‘Recent sharp increase in the price of crude oil, if sustained well into the new financial year, will pose downside risk to these growth estimates’. It added ‘Given the inherently unsustainable nature of high prices, international commodity prices are expected to level off early with an increase in supplies outside the crisis zone’.

The CNX Nifty is currently trading at 16894.40, up by 231.40 points or 1.39% after trading in a range of 16837.85 and 16942.60. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.57%, Axis Bank up by 3.22%, Bajaj Finance up by 2.98%, HDFC up by 2.91% and Bajaj Finserv up by 2.81%. On the flip side, Cipla down by 1.11%, Sun Pharma down by 0.64% and Tata Consumer Products down by 0.41% were the few losers.

Asian markets are trading mostly in green; Nikkei 225 surged 368.72 points or 1.45% to 25,715.20, Straits Times rose 40.20 points or 1.24% to 3,276.24, Hang Seng jumped 450.31 points or 2.45% to 18,865.39, KOSPI added 21.45 points or 0.82% to 2,642.98, Jakarta Composite increased 42.00 points or 0.61% to 6,960.19 and Shanghai Composite was up by 1.15 points or 0.04% to 3,065.12, while Taiwan Weighted was down by 59.73 points or 0.35% to 16,866.33.