Domestic indices trade in fine-fettle in early deals; IT stocks leads

Indian equity benchmarks extended their previous session’s gains with gap-up opening on Friday following a relief rally in the US markets overnight. Markets are trading in fine-fettle with gains of around a percent each in early deals on account of board based buying in IT stocks which are up around 2-3%. Sentiments got boost as SBI Research projected the Indian economy to grow at 7.5 per cent in 2022-23, an upward revision of 20 basis points from its earlier estimate. It said ‘given the high inflation and the subsequent upcoming rate hikes, we believe that real GDP will incrementally increase by Rs 11.1 lakh crore in FY23’. Adding more optimism, the commerce ministry said India's merchandise exports rose by 15.46 per cent to $37.29 billion in May on account of healthy performance by sectors like petroleum products, electronic goods and chemicals, even as the trade deficit widened to $23.33 billion during the month. Traders also took note of Food Secretary Sudhanshu Pandey’s statement that retail prices of wheat, rice, sugar and edible oils are showing a declining trend after the measures taken by the government, including curbs on exports of wheat and sugar.

Asian markets are trading higher following the broadly positive cues from Wall Street overnight, fueled largely by strength in materials and energy stocks amid higher commodity prices. Technology stocks also gained to mirror their peers on the tech-heavy Nasdaq. Besides, the services sector in Japan continued to expand in May, and at a faster rate, the latest survey from Jibun Bank revealed on Friday with a services PMI score of 52.6. That's up from 50.7 in April, and it moves further above the boom-or-bust line of 50. Markets in China, Hong Kong and Taiwan are closed for the Dragon Boat Festival.

Back home, investors are eyeing services PMI data to be out later in the day. On the sectoral front, oil industry stocks were in focus after the OPEC+ announced it will increase oil production by 648,000 barrels per day in both July and August, steering away from its previous levels of around 4,00,000 only. Besides, Aether Industries is likely to debut on the bourses today. In stock specific development, Tech Mahindra jumped after it announced a tie-up with Anritsu to form an Internet of Things (IoT) experience lab at Fremont, California.

The BSE Sensex is currently trading at 56359.75, up by 541.64 points or 0.97% after trading in a range of 56241.33 and 56432.65. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.72%.

The top gaining sectoral indices on the BSE were IT up by 2.21%, TECK up by 1.80%, Energy up by 1.13%, Capital Goods up by 0.73%, Realty up by 0.71%, while Power down by 0.57%, Utilities down by 0.53%, Basic Materials down by 0.39%, FMCG down by 0.15%, Auto down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.88%, Tech Mahindra up by 2.77%, Wipro up by 2.63%, HCL Technologies up by 2.62% and Infosys up by 2.60%. On the flip side, Ultratech Cement down by 2.72%, Nestle down by 0.92%, NTPC down by 0.91%, Maruti Suzuki down by 0.72% and Bharti Airtel down by 0.59% were the top losers.

Meanwhile, SBI Research in its latest report has projected the Indian economy to grow at 7.5 per cent in 2022-23, an upward revision of 20 basis points from its earlier estimate. SBI chief economist Soumyakanti Ghosh said ‘Given the high inflation and the subsequent upcoming rate hikes, we believe that real GDP will incrementally increase by Rs 11.1 lakh crore in FY23. This still translates into a real GDP growth of 7.5 per cent for FY23, up by 20 basis points over our previous forecast’. As per the government data, the economy grew by 8.7 per cent in FY22, net adding Rs 11.8 lakh crore in the year to Rs 147 lakh crore, the report said, adding this was however only 1.5 per cent higher than the pre-pandemic year of FY20.

Ghosh said nominal GDP expanded by Rs 38.6 lakh crore to Rs 237 lakh crore, or 19.5 per cent annualised. In FY23 also, as inflation remains elevated in the first half, nominal GDP will grow 16.1 per cent to Rs 275 lakh crore. The report basis its optimism on the rising corporate revenue and profit and the growing bank credit coupled with ample liquidity in the system. On rising corporate growth, the report noted that in FY22, around 2,000 listed companies reported 29 per cent top line growth and 52 per cent jump in net profit over the previous year. Construction sectors including cement, steel, etc reported impressive growth in both revenue as well as net income with 45 per cent and 53 per cent, rise respectively in revenue.

Interestingly, the order book position remains strong, with construction major L&T reporting 9 per cent growth in order book position at Rs 3.6 lakh crore as of March, supported by 10 per cent growth in order inflow of Rs 1.9 lakh crore in FY22 and Rs 1.7 lakh crore in FY21. Similarly, the sector-wise data for April indicates that credit offtake has happened in almost all sectors led by personal loans registering 14.7 per cent demand spike in April and contributing around 90 per cent of the incremental credit in the month, primarily driven by housing, auto and other personal loans as customers, expecting interest rate hikes, have been front-loading their purchases.

On the liquidity front, the report expects the central bank to be supportive of growth by only gradually hiking repo rates, but mostly frontload it in June and August with a 50 basis points repo hike and 25 basis points CRR (cash reserve ratio) hike in the forthcoming June policy. Core systemwide liquidity declined from Rs 8.3 lakh crore in the beginning of the year to Rs 6.8 lakh crore now while net LAF (liquidity adjustment facility) absorption declined from Rs 7.5 lakh crore to Rs 3.3 lakh crore.

The CNX Nifty is currently trading at 16766.65, up by 138.65 points or 0.83% after trading in a range of 16750.35 and 16793.85. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 2.89%, Tech Mahindra up by 2.77%, Infosys up by 2.62%, HCL Technologies up by 2.61% and Wipro up by 2.59%. On the flip side, Shree Cement down by 3.45%, Ultratech Cement down by 2.68%, Grasim Industries down by 2.49%, Britannia Industries down by 1.34% and Apollo Hospital down by 1.05% were the top losers.

Asian markets are trading in green; Nikkei 225 jumped 311.89 points or 1.14% to 27,725.77, Straits Times surged 0.85 points or 0.03% to 3,227.57, KOSPI added 8.84 points or 0.33% to 2,667.83 and Jakarta Composite advanced 62.34 points or 0.87% to 7,211.06.