Sensex, Nifty rally in early deals on upbeat global cues

Indian equity benchmarks made gap-up opening on Thursday, after previous session’s sell-off, tracking upbeat cues from global peers. Markets are trading in fine-fettle in early deals with gains of around a percent each on account of buying in all the sector indices led by Metal, Auto and IT. Sentiments got a boost with the commerce ministry’s statement that India’s services exports set a new record of $254.4 billion (about Rs 19 lakh crore) in 2021-2022. It said the exports also hit an all-time monthly high of $26.9 billion in March. Adding more optimism, Reserve Bank Governor Shaktikanta Das said recent trade agreements and geopolitical conditions open up potential market opportunities for India. Traders took note of Chief Economic Adviser V Anantha Nageswaran’s statement that India’s growth is expected to be in the range of 7-8.5 per cent given the global uncertainties. Also, firm opening in Indian rupee aided the market sentiments.

On the global front, Asian stock markets are trading mostly higher, following the broadly positive cues overnight from Wall Street, as investors' sentiment was boosted on US Fed chair Jerome Powell ruling out aggressive interest rate hikes, as feared earlier, after the 50 basis points hike announced. The markets in South Korea and Japan are closed for Children's Day, while Indonesia is closed for Eid-ul-Fitr.

Back home, auto stocks were trading higher despite automobile dealers' body FADA’s statement that the increase in repo rate will ‘apply certain amount of brakes’ on the industry's growth, especially the two-wheeler segment which is already reeling under a severe slowdown. In scrip specific development, Kotak Mahindra Bank gained as it posted a 65% jump in its standalone profit in the quarter ended March.

The BSE Sensex is currently trading at 56220.22, up by 551.19 points or 0.99% after trading in a range of 55976.39 and 56319.93. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.78%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Metal up by 1.64%, Auto up by 1.61%, IT up by 1.52%, PSU up by 1.51%, TECK up by 1.49%, while there was no loser on BSE sectoral front.

The top gainers on the Sensex were Tech Mahindra up by 2.71%, Tata Steel up by 2.46%, Infosys up by 2.37%, SBI up by 2.14% and Bajaj Finserv up by 2.08%. On the flip side, Nestle down by 0.90%, Reliance Industries down by 0.19% and Titan Company down by 0.11% were the few losers.

Meanwhile, Reserve Bank Governor Shaktikanta Das has said recent trade agreements and geopolitical conditions open up potential market opportunities for India. Observing that India’s external sector has remained resilient amidst formidable global headwinds, he said provisional data suggest that merchandise exports remained strong in April 2022 and services exports reached a new high in March 2022. He said ‘Potential market opportunities have opened up due to geopolitical conditions and the recent trade agreements. Strong revenue guidance by major information technology (IT) companies also bodes well for the overall external sector outlook in 2022-23’.

He noted that the worsening of terms of trade, driven by high commodity prices could have implications for the current account deficit in 2022-23, but it is expected to be comfortably financed. He said ‘Net foreign direct investment flows have remained robust, despite some recent moderation. Long term flows such as external commercial borrowings also remain stable. India’s foreign exchange reserves are sizeable with net forward assets providing a strong back-up. The external debt to GDP ratio remains low at 20 per cent’. With regard to liquidity, Das assured that the RBI will ensure adequate liquidity in the system to meet the productive requirements of the economy in support of credit offtake and growth.

Quoting from April policy, he said several liquidity management measures were taken in alignment with the shift in the monetary policy stance, including restoration of a symmetric LAF corridor around the policy repo rate and the introduction of the standing deposit facility (SDF). He said these measures operationalise the primacy accorded to maintaining price stability, while keeping in mind the objective of growth. Monetary policy has to engender an environment in which inflation persistence is broken and inflation expectations are re-anchored. He added headroom for this reordering of priorities is becoming available with the receding of the pandemic and the steady broad basing of growth as economic activity regains and surpasses pre-pandemic levels.

The CNX Nifty is currently trading at 16836.20, up by 158.60 points or 0.95% after trading in a range of 16778.85 and 16863.25. There were 45 stocks advancing against 5 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 4.35%, ONGC up by 3.08%, Tech Mahindra up by 3.03%, SBI Life Insurance up by 2.60% and Tata Steel up by 2.33%. On the flip side, Tata Consumer Products down by 1.57%, Nestle down by 0.86%, Reliance Industries down by 0.45%, Titan Company down by 0.30% and Hindustan Unilever down by 0.03% were the top losers.

Asian markets are trading mostly in green; Hang Seng surged 145.31 points or 0.70% to 21,014.83, Taiwan Weighted rose 115.58 points or 0.70% to 16,681.41 and Shanghai Composite was up by 33.71 points or 1.11% to 3,080.77, while Straits Times fell 3.92 points or 0.12% to 3,345.35.