Benchmarks continue to trade marginally in green in morning deals

Indian equity benchmarks continued to trade marginally in green in morning deals, led by gains in Telecom, Consumer Durables and Auto stocks. Traders took some support with the government data showed India's overall exports, merchandise and services combined, rose to $64.91 billion in June 2022, registering a year-on-year growth of 22.95 per cent. For the April-June 2022 period, the overall exports stood at $189.93 billion, exhibiting a positive growth of 25.16 per cent over the same period last year. However, gains remain capped as some concern came with the Finance Ministry in its monthly economic review report has said that India's current account deficit is likely to deteriorate in the current fiscal (FY23) on account of costlier imports and tepid merchandise exports. The review also said that global headwinds would continue to pose a downside risk to growth as crude oil and edibles, which have driven inflation in India, remain major imported components in the consumption basket.

On the global front, Asian markets are trading mostly in green even as China reported its economy contracted by 2.6% in the last quarter as virus shutdowns kept businesses closed and people at home. Banking stocks remained in watch as RBI data showed bank credit grew by 13.29 per cent to Rs 123.81 lakh crore and deposits by 9.77 per cent to Rs 169.61 lakh crore in the fortnight ended on July 1.

The BSE Sensex is currently trading at 53508.55, up by 92.40 points or 0.17% after trading in a range of 53475.24 and 53755.96. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.43%, while Small cap index was up by 0.25%.

The top gaining sectoral indices on the BSE were Telecom up by 1.10%, Consumer Durables up by 0.92%, Auto up by 0.91%, Realty up by 0.91% and FMCG up by 0.65%, while Metal down by 0.39%, Bankex down by 0.19%, IT down by 0.12% and PSU down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.78%, Titan Co up by 1.64%, Mahindra & Mahindra up by 1.62%, Nestle up by 1.19% and Hindustan Unilever up by 1.05%. On the flip side, Wipro down by 2.00%, HCL Technologies down by 1.23%, Tata Steel down by 0.93%, Axis Bank down by 0.77% and ICICI Bank down by 0.50% were the top losers.

Meanwhile, Fitch Ratings has said mounting repayment pressure for some borrowers, particularly micro, small and medium-sized enterprises, amid India's interest rate hikes will test banks' loan underwriting quality. However, it stated asset-quality risks from higher rates should generally be moderate for most banks.

It underlined that higher rates will also affect securities valuations and could make it harder for banks to raise fresh capital, particularly at state banks, although wider net interest margins (NIM) will have offsetting positive credit effects.

It mentioned ‘We expect rates to rise further, reaching 5.90 per cent by end-2022 and 6.15 per cent by end-2023, then remaining at this level through 2024’.it added banks have been quick to pass on higher rates through loan portfolios, which are mainly floating in nature but have been slower in raising deposit rates. Moreover, it said this trend should support higher NIM, but the lack of competition for deposits may point to relatively muted demand for new credit. The Reserve Bank of India (RBI) raised policy interest rates by 50 bps to 4.90 per cent in June.

The CNX Nifty is currently trading at 15974.35, up by 35.70 points or 0.22% after trading in a range of 15961.70 and 16041.25. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Tata Consumer Products up by 2.08%, Bharti Airtel up by 1.77%, Titan Co up by 1.59%, Mahindra & Mahindra up by 1.58% and Britannia Industries up by 1.28%. On the flip side, Wipro down by 1.86%, HCL Technologies down by 1.13%, Tata Steel down by 0.93%, Axis Bank down by 0.92% and Coal India down by 0.89% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 173.45 points or 0.65% to 26,816.84, Taiwan Weighted strengthened 111.68 points or 0.77% to 14,550.20, Jakarta Composite soared 16.37 points or 0.24% to 6,706.46, Straits Times advanced 11.96 points or 0.39% to 3,102.59 and KOSPI rose 7.49 points or 0.32% to 2,329.81.

On the flip side, Shanghai Composite declined 7.87 points or 0.24% to 3,273.87 and Hang Seng decreased 247.63 points or 1.19% to 20,503.58.