Benchmarks trade flat with positive bias in morning deals

Swinging between gains and losses, Indian equity benchmarks were now trading flat with positive bias in morning deals, led by gains in Telecom, Auto and FMCG stocks. Traders took some support with Union Finance Minister Nirmala Sitharaman’s statement that with licence quota raj prevailing during the 70 years of Congress regime, the policy change brought in by the central government under Prime Minister Narendra Modi has created new opportunities for the private sector by allowing them to manufacture products that were normally made by public sector units (PSUs). Some support also came with private report stated that improving business sentiment has boosted the overall hiring demand which witnessed a 15 per cent year-on-year growth in April, led by banking, financial services and insurance sector as well as recovery in the retail sector. However, gains remain capped as some concern came with a private report that Indian retail inflation likely surged to an 18-month high in April, largely driven by rising fuel and food prices and staying well above the Reserve Bank of India's upper tolerance limit for a fourth consecutive month.

On the global front, Asian markets were trading mostly in red as fears increased that US rate hikes to fight inflation might stall economic growth. The Federal Reserve is trying to cool inflation that is running at a four-decade high, but investors worry that might trigger a US downturn. That adds to pressure from Russia's war on Ukraine and a Chinese slowdown. Back home, metal stocks remained in focus as Crisil in a report stated that steel prices, which have been on a song for the past two years, are finally set to correct on weak seasonality, and may trade at around Rs 60,000/tonne by the end of the current fiscal year, down from the Rs 76,000/tonne peak it scaled last month.

The BSE Sensex is currently trading at 54519.80, up by 49.13 points or 0.09% after trading in a range of 54269.59 and 54644.06. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.53%, while Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were Telecom up by 0.85%, Auto up by 0.77%, FMCG up by 0.67%, Capital Goods up by 0.20% and Bankex up by 0.17%, while Consumer Durables down by 1.67%, Metal down by 1.32%, Utilities down by 0.99%, Energy down by 0.85% and Power down by 0.77% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.21%, Bharti Airtel up by 1.95%, Hindustan Unilever up by 1.69%, Asian Paints up by 1.55% and HDFC up by 1.23%. On the flip side, Tata Steel down by 1.77%, Titan Company down by 1.71%, Reliance Industries down by 1.16%, Sun Pharma down by 0.76% and Infosys down by 0.61% were the top losers.

Meanwhile, Crisil in its latest report has said that steel prices, which have been on a song for the past two years, are finally set to correct on weak seasonality, and may trade at around Rs 60,000/tonne by the end of the current fiscal year, down from the Rs 76,000/tonne peak it scaled last month. It said price corrections are likely due to the onset of monsoon next month which will pull down demand as constructions will be on hold along with the likely lower premium realisation that domestic mills may get from exports.

Further, it stated prices are still holding high because of the continuing uncertainty over supply disruptions, decarbonization measures globally, especially in China and geopolitical risks stemming from the Russia-Ukraine war, which has driven up raw material costs. Moreover, it mentioned flat steel prices could rise 3-5 per cent this fiscal year after surging over 50 per cent in 2021-22. It said despite a moderation in demand in January-March, steel prices inched up owing to higher input costs and buoyant exports.

Also, domestic supply stayed tight, eliminating the differential between global landed and domestic prices, which was once nearly Rs 15,000/tonne. On the other hand, export realization premia surged to USD75/tonne in early May. While steel mills made the best use of elevated global prices, domestic demand began to waver. Soaring construction costs, and multiple price hikes by companies in the auto, consumer appliances and durables space drove down demand in Q4FY22.

The CNX Nifty is currently trading at 16308.30, up by 6.45 points or 0.04% after trading in a range of 16243.50 and 16352.50. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 2.29%, Bharti Airtel up by 2.02%, Bajaj Auto up by 1.73%, Hindustan Unilever up by 1.67% and Asian Paints up by 1.66%. On the flip side, ONGC down by 3.95%, Apollo Hospital down by 2.12%, Coal India down by 1.94%, Titan Company down by 1.77% and Tata Steel down by 1.75% were the top losers. 

Asian markets were trading mostly in red; Taiwan Weighted dropped 13.70 points or 0.09% to 16,035.22, Jakarta Composite lost 199.98 points or 2.89% to 6,709.77, Straits Times trembled 43.11 points or 1.32% to 3,231.96, KOSPI fell 15.65 points or 0.6% to 2,595.16, Nikkei 225 slipped 139.52 points or 0.53% to 26,179.82 and Hang Seng decreased 565.23 points or 2.83% to 19,436.73.

On the flip side, Shanghai Composite gained 5.08 points or 0.17% to 3,009.22.