Markets trade flat in early deals in volatile session

Indian equity benchmarks made slightly positive start on Friday amid mixed Asian cues. Soon, markets turned volatile and are struggling for direction. Domestic indices are trading flat in early deals, with sensex down over 13 points and Nifty inched up by 5 points. Initially, market participants took some support with the Reserve Bank of India’s state of the economy report showing that the fall in consumer price index (CPI)-based inflation to 6.7% in July from 7% in the previous month was a heartening development, and retail inflation may ease to 5% by the Q1 of FY23 before hitting the target of 4%. However, some cautiousness came in as an analysis of industrial output and merchandise exports by India Ratings and Research suggested that the Indian manufacturing sector, which received a fillip in FY22 due to export growth, is likely to be hit by a slump in foreign trade activity in FY23. Also, an RBI article has warned that big bang privatisation of public sector banks can do more harm than good, and asked the government to take a nuanced approach on the issue. Meanwhile, foreign institutional investors (FIIs) turned net sellers for the first time in current month, offloading shares worth Rs 1,706 crore on August 18, as per provisional data available on the NSE.

On the global front, Asian markets are trading mixed, following positive cues from global markets overnight, as traders remain cautious in making large moves amid uncertainty about the near-term outlook for the markets following recent strength. Worries about global economic slowdown and soaring inflation also weighed on sentiment. Back home, shares of OMCs and aviation were in focus as the government again revised the newly-introduced windfall tax. The tax on domestically produced crude oil has been reduced to Rs 13,000 per tonne from Rs 17,750 per tonne, while export taxes on jet fuel has been hiked to Rs 2 per litre from zero. The excise duty on the export of diesel has been hiked to Rs 7 per litre from Rs 5 per litre earlier. The excise duty on the export of petrol continues to be nil. The new rates will be applicable from August 19. In stock specific development, Wipro traded higher as it received a multi-year contract to deliver Service integration and management (SIAM) services to HM Treasury (HMT).

The BSE Sensex is currently trading at 60284.24, down by 13.76 points or 0.02% after trading in a range of 60245.48 and 60411.20. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.03%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were IT up by 0.96%, TECK up by 0.80%, Power up by 0.80%, Utilities up by 0.71%, Capital Goods up by 0.65%, while Realty down by 0.95%, PSU down by 0.48%, Healthcare down by 0.35%, Metal down by 0.26%, Energy down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.14%, Kotak Mahindra Bank up by 1.45%, Larsen & Toubro up by 1.26%, Wipro up by 1.17% and HCL Technologies up by 1.06%. On the flip side, Indusind Bank down by 1.65%, Power Grid down by 1.25%, Bajaj Finance down by 0.81%, ICICI Bank down by 0.69% and NTPC down by 0.68% were the top losers.

Meanwhile, India Ratings and Research in a report on analysis of industrial output and merchandise exports has stated that the Indian manufacturing sector, which received a fillip in FY22 due to export growth, is likely to be hit by a slump in foreign trade activity in FY23. The report suggested that the ‘exuberance’ witnessed in merchandise exports in FY22 helped the manufacturing segments. It added that ‘surge in merchandise exports helped the manufacturing sector in FY22, but was not broad-based and may not sustain in FY23’.

It further said the exports trend of FY22 may not sustain in FY23 due to the adverse impact of the Russian invasion of Ukraine, leading to recessionary concerns in the advanced economies, stringent COVID-19 control measures in China impacting production in various sub-sectors in India, and continued disruptions in global supply chain/trading sanctions imposed on Russia.

The report said India’s average annual merchandise exports during FY16-FY20 were $297.02 billion, having peaked at $330.08 billion in FY19. The same jumped to the highest-ever $421.89 billion in FY22. It said ‘since the pickup in merchandise exports has primarily been driven by the higher exports of manufactured goods, its spillover effect was expected to be visible in the higher capacity utilisation and an improvement in the industrial growth numbers in FY22’.

As per the agency, basic metals, textiles, pharmaceuticals and food products witnessed a robust rebound in export volumes in FY22 when compared to FY20 volume levels, suggesting that the production in these segments benefited from the buoyant export demand. On the other hand, the sectors which not only witnessed low growth in production levels but also low-to-moderate export volume growth in FY22 were railways locomotives, ships and aircraft, wearing apparel and leather products, among others.

The CNX Nifty is currently trading at 17961.60, up by 5.10 points or 0.03% after trading in a range of 17933.70 and 17992.20. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.24%, Adani Ports & SEZ up by 2.24%, Kotak Mahindra Bank up by 1.50%, Larsen & Toubro up by 1.26% and Wipro up by 1.14%. On the flip side, BPCL down by 1.79%, Indusind Bank down by 1.47%, Power Grid down by 1.40%, Apollo Hospital down by 1.03% and Coal India down by 0.88% were the top losers.

Asian markets are trading mixed; Nikkei 225 slipped 11.05 points or 0.04% to 28,931.09, Straits Times declined 23.21 points or 0.71% to 3,250.27, KOSPI fell 5.89 points or 0.23% to 2,502.16 and Shanghai Composite was down by 0.41 points or 0.01% to 3,277.13. On the other hand, Hang Seng rose 97.52 points or 0.49% to 19,861.43, Taiwan Weighted added 41.92 points or 0.27% to 15,438.68 and Jakarta Composite was up by 12.94 points or 0.18% to 7,199.50.