Benchmarks erase losses to trade marginally higher in morning deals

Indian equity benchmarks erased early losses and traded marginally higher in morning deals, even as global shares were under pressure. Traders took some support with India Exim Bank stating that the country's total merchandise exports are likely to be at $117.2 billion in the first quarter of FY23, as compared to the total merchandise exports of $95.5 billion in the corresponding quarter of the previous year. Some support also came as ICRA Ratings’ report stated said that non-banking financial companies (NBFCs) and housing finance Companies (HFCs) witnessed an improvement in their asset quality in the fourth quarter of FY22 (Q4FY22) as the impact of the Omicron variant of Covid-19 was minimal and the slippage from the restructured book was lower. Traders also took a note of SBI research report stating that the Reserve Bank is much ahead of the curve in containing inflation, which appeared to have peaked, though it may go for an interest rate hike in August and October.

Asian markets are trading mostly in red amid fears that red-hot inflation in the US might trigger even more aggressive hikes in COVID-era interest rates and hamper economic growth. Back home, stocks related to IT sector remained in focus as report said that the government's spending on information and technology will grow 12.1 per cent to $9.5 billion in 2022. Stocks related to Jute industry also remained in watch as the Indian Jute Mills Association has sought government support for revival and steady growth of the ailing industry, through measures such as bank credit, affordable housing and funds for new technology. The industry body, in a recent representation, had urged the Jute Commissioner to support the sector on which more than 2.5 lakh mill workers and 40 lakh farmers are directly dependent.

The BSE Sensex is currently trading at 52868.90, up by 22.20 points or 0.04% after trading in a range of 52459.48 and 52869.30. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.51%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Utilities up by 1.31%, Power up by 1.29%, IT up by 0.74%, TECK up by 0.67% and Telecom up by 0.63% while, Oil & Gas down by 0.62%, Energy down by 0.54%, Bankex down by 0.11%, Consumer Durables down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.37%, Wipro up by 1.23%, Infosys up by 1.20%, Ultratech Cement up by 1.04% and NTPC up by 1.01%. On the flip side, Reliance Industries down by 0.71%, HDFC down by 0.63%, HDFC Bank down by 0.58%, Indusind Bank down by 0.56% and Asian Paints down by 0.48% were the top losers.

Meanwhile, State Bank of India (SBI) research in its latest report 'Ecowrap' has said that the Reserve Bank of India (RBI) is much ahead of the curve in containing inflation, which appeared to have peaked, though it may go for an interest rate hike in August and October. After rising to a 95-month (almost 8 years) high of 7.79 per cent in April, Consumer Price Index (CPI) based inflation moderated to 7.04 per cent in May. Core CPI also moderated in May to 6.09 per cent compared to 6.97 per cent in April, as per report. In recent times, there have been commentaries that have questioned whether RBI has been behind the curve in controlling inflation.

Further, it said there are expectations that the RBI could factor in a rate hike in August (as inflation in June is likely to come above 7 per cent) and even in October policy, and take it higher than the pre-pandemic level by October to 5.5 per cent. It stated ‘our peak rate at the end of the cycle now has now a higher probability of a lower bound of 5.5 per cent and a lower probability of going up to 5.75 per cent, depending on inflation trajectory.’

However, it added that this is purely data-dependent and subject to revisions. The RBI raised the short-term lending rate by 40 basis points in May and 50 basis points in June, taking the repo rate to 4.9 per cent to tame stubbornly high inflation. It highlighted ‘our average inflation forecast for 2022-23 is 6.7 per cent but our quarterly inflation numbers are slightly different from RBI.’  It added the best thing is that the peak of inflation may have been reached at 7.8 per cent, with a little bit of luck.

Earlier this month, the RBI had revised upwards its inflation projection to 6.7 per cent for the current fiscal from its previous forecast of 5.7 per cent. The central bank expects the first quarter inflation at 7.5 per cent; the second quarter at 7.4 per cent; the third quarter at 6.2 per cent; and the fourth quarter at 5.8 per cent, with risks, evenly balanced.

The CNX Nifty is currently trading at 15784.85, up by 10.45 points or 0.07% after trading in a range of 15659.45 and 15791.20. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Apollo Hospital up by 2.30%, Adani Ports &SEZ up by 1.83%, Tata Consumer Product up by 1.64%, Power Grid Corporation up by 1.24% and Wipro up by 1.17%. On the flip side, BPCL down by 1.53%, Reliance Industries down by 0.71%, Bajaj Auto down by 0.62%, Hero MotoCorp down by 0.61% and UPL down by 0.54% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 440.24 points or 1.63% to 26,547.20, Shanghai Composite declined 51.93 points or 1.6% to 3,203.62, Straits Times trembled 29.54 points or 0.94% to 3,109.81, Hang Seng decreased 191.27 points or 0.91% to 20,876.31, KOSPI fell 24.19 points or 0.97% to 2,480.32 and Taiwan Weighted dropped 43.45 points or 0.27% to 16,027.53.

On the flip side, Jakarta Composite soared 1.04 points or 0.01% to 6,996.48.