Markets trim opening losses; trade flat with positive bias in early deals

Indian equity benchmarks made negative start on Thursday tracking weakness across global markets amid concerns that latest economic data might do nothing to push the Fed off track from its aggressive interest rate hiking cycle. Though, soon markets trimmed most of their losses and are trading flat with positive bias in early deals on account of buying in Power, Utilities and Energy stocks. Initially, traders were concerned as the Ministry of Finance said the gross GST (Goods and Services Tax) revenue for the month of May crossed over Rs 1.40 lakh crore, a 16.6 per cent drop in comparison to April when GST collections were at a record high. Meanwhile, investors are also watching out for OPEC+ meeting today, to see if any likely ease in oil prices could come if the group decides to increase production than its previous levels.

On the global front, most of the Asian markets are trading lower following the broadly negative cues overnight from the global markets, as traders are digesting comments from JPMorgan CEO Jamie Dimon, warning of an economic ‘hurricane’ amid soaring inflation, global slowdown and the prospects of aggressive monetary tightening by global central banks. Rising bond yields and soft economic data also weighed on the markets.

Back home, aviation industry and hotel industry stocks were in focus as Jet fuel prices were cut by 1.3 per cent -- the first reduction after 10 rounds of price hikes -- on softening international crude oil rates. Simultaneously, prices of commercial LPG - used by business establishments such as hotels and restaurants - were reduced by Rs 135 per 19-kg cylinder. In stocks specific movement, YES Bank climbed amid reports that the private sector lender is nearing a deal to sell a pool of Rs 48,000 crore in stressed assets to the U.S.-based private equity firm, JC Flowers & Co.

The BSE Sensex is currently trading at 55450.24, up by 69.07 points or 0.12% after trading in a range of 55135.11 and 55451.00. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.26%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Power up by 0.90%, Utilities up by 0.87%, Energy up by 0.73%, IT up by 0.50%, Oil & Gas up by 0.36%, while FMCG down by 0.82%, Telecom down by 0.54%, Auto down by 0.47%, Capital Goods down by 0.39%, Healthcare down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.93%, TCS up by 1.12%, Indusind Bank up by 1.00%, SBI up by 0.84% and Axis Bank up by 0.82%. On the flip side, Hindustan Unilever down by 1.43%, Bharti Airtel down by 1.12%, Power Grid down by 1.11%, HDFC down by 1.00% and Larsen & Toubro down by 0.91% were the top losers.

Meanwhile, Icra Ratings in its report has said that manufacturing sector capital expenditure is on course for a leg-up with overwhelming responses to the government's production-linked incentives schemes, especially for lithium-ion battery, pharma and solar module segments. So far the PLI (Production-Linked Incentive) scheme has received robust response in green initiative spaces such as renewable energy as well as ACC (Advanced Chemistry Cell) battery manufacturing. This shows that the scheme is on track to revive the manufacturing capex (capital expenditure).

The government has extended the scheme for a second round on the back of encouraging response in a few sectors. Also, it has increased or is planning to increase the outlay for some sectors. In the renewables space, the government raised the outlay for solar PV modules to Rs 24,000 crore in the FY23 budget after witnessing an encouraging response in the first round of the scheme with an initial outlay of Rs 4,500 crore. According to Rohit Ahuja, head of research and outreach at Icra, the success of the scheme indicates that the government is on track to enhance manufacturing capex. There is a high probability of the outlay for certain sectors, especially in green initiative space, being expanded. He warned however in the wake of rising input costs and the anti-inflationary measures, execution delays in certain sectors can be a concern.

As per the wait list from the first round of bidding, it seems the entire Rs 24,000 crore PLI outlay would be well covered. The report said a similar response was visible in the ACC batteries PLI scheme, where the applications were received for 110 gw against 50 gw envisaged, and added that the government may look at increasing the outlay for this sector too. It said the PLI scheme for semiconductors has received applications for 80% of the total outlay of Rs 76,000 crore in the first round, despite an aggressive timeline for application submissions. Several other sectors such as pharma, automobile and food products have also received positive responses. It added sunrise sectors like drone manufacturing have also received encouraging responses and attracted enough applications over the 20 days period.

The CNX Nifty is currently trading at 16524.25, up by 1.50 points or 0.01% after trading in a range of 16443.05 and 16535.35. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 2.11%, Coal India up by 1.15%, TCS up by 1.08%, Cipla up by 0.84% and UPL up by 0.78%. On the flip side, Apollo Hospital down by 4.29%, Hero MotoCorp down by 3.25%, HDFC Life Insurance down by 2.03%, SBI Life Insurance down by 1.95% and Hindustan Unilever down by 1.34% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 lost 20.83 points or 0.08% to 27,437.06, Straits Times fell 14.07 points or 0.43% to 3,229.93, Hang Seng slipped 358.66 points or 1.68% to 20,936.28, Taiwan Weighted declined 72.34 points or 0.43% to 16,602.75, KOSPI plunged 26.44 points or 0.98% to 2,659.46 and Jakarta Composite was down by 15.80 points or 0.22% to 7,133.17, while Shanghai Composite was up by 3.36 points or 0.11% to 3,185.52.