Domestic markets trim opening gains in early deals

Indian equity benchmarks extended their previous session’s rally with optimistic start on Friday following strong gains in global markets coupled with easing crude oil prices. Soon, markets trimmed some of their gains but, continued to trade in green with gains of around 0.25% each. Initially, continued buying by FIIs in Indian markets aided the sentiments. Foreign institutional investors (FIIs) have net purchased shares worth Rs 1,799.32 crore, continuing buying for the fourth consecutive session on July 21, as per provisional data available on the NSE. However, traders turned cautious as the FICCI’s quarterly survey showed that the Indian economy is expected to expand 7% in fiscal 2022/23, slower than a previous estimate of 7.4% and the central bank's 7.2% projection. The survey said the war in Ukraine is likely to keep inflation high and dent consumer demand. Also, the Asian Development Bank has slashed its growth forecast for India to 7.2 per cent for FY23 from 7.5 per cent estimated earlier citing higher than anticipated inflation since April and subsequent monetary tightening by the central bank.

Most of the Asian markets are trading higher with marginal gains following the broadly positive cues from Wall Street overnight, with gains from technology stocks were partially offset by weakness from the energy companies. Some support came in as the latest survey from Jibun Bank said the manufacturing sector in Japan continued to expand in July, albeit at a slower pace, with a manufacturing PMI score of 52.2. Traders also digested the latest batch of economic data from the U.S., and the European Central Bank's decision to hike interest rates by 50 basis points, the first rate hike in over a decade. Meanwhile, the Ministry of Internal Affairs and Communications said overall consumer prices in Japan were up 2.4 percent on year in June.

Back home, banking stocks were in focus as S&P Global Ratings said non-performing loans of banks are expected to decline to 5-5.5 per cent of the total advances by March 2024. In stock specific developments, GSFC soared as its Q1FY23 net profit more-than-doubled to Rs 355.83 crore when compared with Rs 137.76 crore in Q1FY22. Reliance Industries remained on buyers’ radar ahead of its Q1 numbers to be out later in the day. As per a private report, the company is likely to report a strong set of numbers in Q1FY23, driven by robust oil earnings.

The BSE Sensex is currently trading at 55832.75, up by 150.80 points or 0.27% after trading in a range of 55791.69 and 56006.22. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.11%, while Small cap index was up by 0.08%.

The top gaining sectoral indices on the BSE were Bankex up by 0.83%, Auto up by 0.38%, Consumer Durables up by 0.29%, Basic Materials up by 0.28%, FMCG up by 0.15%, while IT down by 0.69%, TECK down by 0.69%, Oil & Gas down by 0.38%, Telecom down by 0.29%, Energy down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.73%, HDFC up by 1.09%, HDFC Bank up by 1.07%, Ultratech Cement up by 0.85% and Titan Company up by 0.77%. On the flip side, Infosys down by 1.40%, HCL Technologies down by 0.76%, Wipro down by 0.63%, Larsen & Toubro down by 0.46% and Tech Mahindra down by 0.41% were the top losers.

Meanwhile, amid ongoing geopolitical uncertainties, industry body -- the Federation of Indian Chambers of Commerce & Industry (FICCI) in its Economic Outlook Survey (July 2022) has said that India’s economy is estimated to grow 7 per cent in the current fiscal, lower than the earlier projection of 7.4 per cent. It also said the policy rate of the Reserve Bank of India is expected to reach 5.65 per cent by the end of this fiscal. Currently, the policy rate (repo) is 4.9 per cent. The present round of survey was conducted in June that covered leading economists representing industry, banking and financial services sector.

The survey has projected an annual median GDP growth for 2022-23 at 7 per cent, with a minimum and maximum growth estimate of 6.5 per cent and 7.3 per cent, respectively. FICCI said ‘growth forecast has been downgraded from the 7.4 per cent estimate in previous survey round (April 2022) owing to geopolitical uncertainty and its repercussions for the Indian economy’. The median growth forecast for agriculture and allied activities has been pegged at 3 per cent for 2022-23 while industry and services sectors are anticipated to grow 6.2 per cent and 7.8 per cent, respectively.

It further said ‘Indian economy is not immune to global volatility, as is evident from the deepening inflationary pressures and increasing uncertainty in financial markets. The participants pointed out that these factors are exerting pressure on India’s economic prospects and is likely to delay the recovery’. As per the survey, major risks to India’s economic recovery include rising commodity prices, supply-side disruptions, bleak global growth prospects with the conflict prolonging in Europe.

The survey has pegged the median forecast for CPI-based retail inflation rate at 6.7 per cent for 2022-23, with a minimum and maximum range of 5.4 per cent and 7 per cent, respectively. It added inflation levels are expected to slow down starting September 2022 and fall back into the 4 per cent range only by June 2023. As per the survey, ‘with upside risks to inflation remaining on fore, the government should work out a comprehensive roadmap which may require action at multiple levels’.

The CNX Nifty is currently trading at 16645.30, up by 40.05 points or 0.24% after trading in a range of 16639.55 and 16704.80. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were UPL up by 2.93%, Britannia Industries up by 1.78%, Kotak Mahindra Bank up by 1.69%, Eicher Motors up by 1.39% and HDFC up by 1.11%. On the flip side, Infosys down by 1.69%, HCL Technologies down by 0.96%, Wipro down by 0.95%, ONGC down by 0.86% and Apollo Hospital down by 0.81% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 127.18 points or 0.46% to 27,930.18, Straits Times advanced 24.13 points or 0.77% to 3,176.43, Hang Seng rose 34.56 points or 0.17% to 20,609.19, Taiwan Weighted added 9.55 points or 0.06% to 14,947.25 and Jakarta Composite was up by 18.93 points or 0.28% to 6,883.06. On the other hand, KOSPI fell 6.94 points or 0.29% to 2,402.22 and Shanghai Composite was down by 10.88 points or 0.33% to 3,261.12.