Domestic markets trade firm in early deals

Indian equity benchmarks extended their previous session’s gains with optimistic start on Tuesday tracking gains in Asian peers. Markets are trading higher with notable gains of around 0.80% each in early deals on account of buying in all the sector indices led by Consumer Durables, IT and Metal. Some support came in with the southwest monsoon entering Madhya Pradesh, Chhattisgarh, coastal Andhra Pradesh, Odisha, west Bengal, Jharkhand and Bihar on Monday, cumulative rainfall deficiency so far has been reduced to 5% from 25% reported on June 16. The India Meteorological Department (IMD) has predicted an intense spell of rainfall along the west coast in the next five days. Meanwhile, the government took stock of credit growth and the performance of public sector banks (PSBs) on parameters including asset quality, financials, and recoveries from bad loans. State-owned lenders have been asked to expedite the resolution of non-performing assets (NPAs). However, upside remained capped as the finance ministry cautioned the re-emergence of the twin deficit problem in the economy, with higher commodity prices and rising subsidy burden leading to an increase in both fiscal deficit and current account deficit.

\Global cues remained supportive with all the Asian markets trading higher following the positive cues from European markets overnight, with traders picking up stocks at a bargain after the recent sell-off in global markets, the worst since 2020. However, traders remained worried about a recession amid bets of bigger interest-rate hikes from major central banks. Back home, telecom stocks were in focus as the government extended the productivity-linked incentive (PLI) scheme for the telecom industry by another year and has expanded its scope to cover design-led manufacturing. In stock specific development, KEC International rose after the company said it won new orders worth Rs 1,092 crore across its various businesses.

The BSE Sensex is currently trading at 51999.68, up by 401.84 points or 0.78% after trading in a range of 51808.76 and 52036.32. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.04%, while Small cap index was up by 1.22%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.10%, IT up by 1.64%, Metal up by 1.48%, TECK up by 1.48%, Industrials up by 1.30%, while there was no loser on the BSE sectroal front.

The top gainers on the Sensex were Titan Company up by 3.47%, Infosys up by 1.71%, Dr. Reddy's Lab up by 1.67%, Wipro up by 1.56% and HCL Technologies up by 1.50%. On the flip side, Reliance Industries down by 0.38% and Hindustan Unilever down by 0.14% were the only losers.

Meanwhile, the finance ministry in its monthly economic review report has said that India is facing near-term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation and containing the current account deficit but the country is relatively better placed to weather these headwinds compared to other nations. It added near-term challenges need to be managed carefully without sacrificing the hard-earned macroeconomic stability. It said ‘Many countries around the world, especially developed countries, face similar challenges. India is relatively better placed to weather these challenges because of its financial sector stability and its vaccination success in enabling the economy to open up’.

As per the report, India's medium-term growth prospects remain bright as pent-up capacity expansion in the private sector is expected to drive capital formation and employment generation in the rest of this decade. Observing that the capex budget for 2022-23 is expected to underpin growth, the report said an upside risk to the budgeted level of gross fiscal deficit has emerged following cuts in excise duties on diesel and petrol. It said an increase in the fiscal deficit may cause the current account deficit to widen, compounding the effect of costlier imports, and weaken the value of the rupee thereby, further aggravating external imbalances, creating the risk (admittedly low at this time) of a cycle of wider deficits and a weaker currency.

However, the momentum of economic activities sustained in the first two months of the current financial year augurs well for India to continue to be the quickest growing economy among major countries in 2022-23. The report also said that the world is looking at a distinct possibility of widespread stagflation, but India is at low risk of stagflation, owing to its prudent stabilisation policies. Stressing that the Indian economy in 2021-22 has indeed fully recovered the pre-pandemic real GDP level of 2019-20, it said the real GDP growth in 2021-22 stands at 8.7 per cent, 1.5 per cent higher than the real GDP of 2019-20. India's GDP in nominal terms is now Rs 236.65 lakh crore or $3.2 trillion in 2021-22 compared to the pre-pandemic nominal GDP of $2.8 trillion in 2019-20.

The CNX Nifty is currently trading at 15473.15, up by 123.00 points or 0.80% after trading in a range of 15419.85 and 15489.50. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 3.78%, Tata Motors up by 2.25%, Hindalco up by 2.16%, Infosys up by 1.73% and JSW Steel up by 1.68%. On the flip side, Reliance Industries down by 0.38%, BPCL down by 0.12%, Hindustan Unilever down by 0.07% and Kotak Mahindra Bank down by 0.01% were the few losers.

All the Asian markets are trading in green; Nikkei 225 surged 527.04 points or 2.05% to 26,298.26, Straits Times rose 21.86 points or 0.71% to 3,118.26, Hang Seng jumped 318.82 points or 1.51% to 21,482.73, Taiwan Weighted soared 309.58 points or 2.01% to 15,677.16, KOSPI added 21.77 points or 0.91% to 2,412.80, Jakarta Composite advanced 37.40 points or 0.54% to 7,013.78 and Shanghai Composite was up by 5.81 points or 0.18% to 3,321.24.