Local indices trade higher with marginal gains in early deals; RBI policy eyed

Indian equity benchmarks made slightly positive opening on Friday tracking gains in Asian peers. Markets are trading higher with marginal gains of around 0.20% each in early deals ahead of the Reserve Bank of India's (RBI’s) monetary policy outcome later in the day. The central bank is likely to rise rates by 35-50 bps today as India's headline inflation continues to be 7 per cent plus, way above the bank's upper end of the tolerance band. Foreign fund inflows also aided the sentiments in domestic markets. Foreign institutional investors (FIIs) net bought shares worth Rs 1,474.77 crore on August 4, as per provisional data available on the NSE. Meanwhile, Commerce and industry minister Piyush Goyal is likely to meet export promotion councils on Friday to discuss the country's export performance, targets and various trade agreements India is currently negotiating. However, upside remained capped with the report by the SBI Research Ecowrap stating that India's fiscal deficit in the current financial year is expected to come around 6.5 per cent, as against the budget estimate of 6.4 per cent.

On the global front, most of the Asian markets are trading higher, following the mixed cues from Wall Street overnight, as traders mostly make their moves, tracking quarterly earnings updates. They also seem cautious in making significant moves ahead of the release of the US Labor Department's closely watched monthly jobs report later in the day, which could impact the outlook for interest rates. Back home, telecom industry stocks were in focus with report that within days of conducting 5G auctions, Telecom Minister Ashwini Vaishnaw stated the government has completed the spectrum harmonisation process, paving the way for players' holdings to be streamlined within a particular band for greater efficiency. In stock specific developments, Gujarat State Petronet gained on healthy quarterly results. However, BEML declined after it posted consolidated loss at Rs 82.36 crore for quarter ended June 2022.

The BSE Sensex is currently trading at 58429.96, up by 131.16 points or 0.22% after trading in a range of 58330.15 and 58562.28. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.21%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.02%, Telecom up by 0.97%, TECK up by 0.66%, Metal up by 0.55%, IT up by 0.48%, while Oil & Gas down by 0.58%, Energy down by 0.41%, Utilities down by 0.15%, Auto down by 0.11%, Consumer Durables down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.17%, Bharti Airtel up by 1.77%, SBI up by 1.07%, Wipro up by 0.93% and ICICI Bank up by 0.91%. On the flip side, Reliance Industries down by 0.96%, Maruti Suzuki down by 0.66%, Indusind Bank down by 0.58%, Power Grid down by 0.32% and HDFC down by 0.24% were the top losers.

Meanwhile, the SBI Research Ecowrap in its latest report has stated that India's fiscal deficit in the current financial year (FY23) is likely to come around 6.5 per cent, as against the budget estimate of 6.4 per cent. Fiscal deficit for Q1FY23 has reached 21.2 per cent of the annual target compared to 18.2 per cent in Q1 FY22. Tax revenue has been robust with record high GST revenues which have been possible because of increased compliance and higher economic activity.

On the expenditure side, the government has incurred higher capital expenditure (23.4 per cent of BE in FY23 compared to 20.1 per cent of BE during the same period in FY22) which bodes well for growth potential. The report has also revised current account deficit (CAD) estimates from 3.2 per cent of GDP to 3.7 per cent of GDP in the current financial year.

The goods and services (GST) in this year has remained above Rs 1.4 lakh crore for the straight five months and the latest numbers of July 2022 showed 28 per cent rise to Rs 1.49 lakh crore from the corresponding month last year. It said ‘Importantly, its estimates of inflation-adjusted GST revenue for FY23 show the average collection has been around Rs 1.20 lakh crore. This is a 26 per cent jump in inflation-adjusted GST from the pre-pandemic level at Rs 95,000 crore’.

The CNX Nifty is currently trading at 17417.85, up by 35.85 points or 0.21% after trading in a range of 17389.30 and 17455.95. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 2.28%, Grasim Industries up by 1.89%, Bharti Airtel up by 1.73%, Shree Cement up by 0.99% and Adani Ports & SEZ up by 0.96%. On the flip side, Reliance Industries down by 1.03%, Cipla down by 0.82%, Maruti Suzuki down by 0.59%, Hero MotoCorp down by 0.56% and Indusind Bank down by 0.55% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 237.32 points or 0.85% to 28,169.52, Straits Times rose 10.50 points or 0.32% to 3,280.36, Hang Seng added 15.17 points or 0.08% to 20,189.21, Taiwan Weighted jumped 292.17 points or 1.99% to 14,994.37, KOSPI advanced 21.19 points or 0.86% to 2,494.30 and Shanghai Composite was up by 9.07 points or 0.28% to 3,198.11, while Jakarta Composite was down by 0.74 points or 0.01% to 7,056.61.