Sensex, Nifty trade volatile

Indian equity benchmarks were trading volatile in late morning session, with both Sensex and Nifty trading in red terrain, on the back of negative cues from other Asian markets. Domestic sentiments remained pessimistic, as the government introduced new set of rules for domestic entities, including companies and large family offices and start-ups, opting for overseas direct investment route (ODI), which could impact their acquisition decisions in a big way.

However, losses were limited in the markets, amid a private report stating that The Reserve Bank's rate setting panel is likely to opt for slowing down the pace of hikes and increase the repo rate by 0.25 per cent in September. The central bank has already hiked the repo rate by 1.40 per cent in three consecutive actions since May this year, in response to the uncomfortably high inflation which has been consistently breaching upper end of the tolerance band set by the government to the RBI.

On the global front, Asian markets were trading mostly in red, after the manufacturing sector in Japan continued to expand in August, albeit at a slower rate, the latest survey from Jibun Bank showed on Tuesday with a manufacturing PMI score of 51.0. That's down from 52.1 in July, although it remains above the boom-or-bust line of 50. Manufacturers reported a second successive contraction in output levels, and one that was the steepest for 11 months, while new order growth fell at the sharpest pace since September 2020.

The BSE Sensex is currently trading at 58684.02, down by 89.85 points or 0.15% after trading in a range of 58172.48 and 59068.25. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.30%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Metal up by 1.54%, Auto up by 0.93%, Telecom up by 0.83%, PSU up by 0.81% and Capital Goods up by 0.65%, while IT down by 1.98%, Power down by 1.64%, TECK down by 1.61%, Utilities down by 1.48%, Oil & Gas down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.60%, Bajaj Finserv up by 2.55%, Tata Steel up by 1.62%, Sun Pharma up by 1.58% and SBI up by 1.08%. On the flip side, Tech Mahindra down by 2.32%, Infosys down by 2.29%, TCS down by 1.77%, HCL Tech. down by 1.59% and Wipro down by 1.52% were the top losers.

Meanwhile, CRISIL Ratings in its latest report has said that the plant load factor (PLF) of Indian coal-based power plants will improve over 300 basis points (bps) to 62% this fiscal (FY23) - the highest in the past five fiscals - fuelled by strong demand growth and limited capacity addition in the sector. It said this will help improve the credit risk profiles of one-third (25 GW) capacities of private generating companies (gencos) the most, with their operating profit expected to touch a five-year peak.

According to the report, annual power demand recovered sharply last fiscal, rising 8.2% on-year, tracking the 8.7% growth in gross domestic product (GDP) as the pandemic impact eased. This fiscal, with GDP growth expected at 7.3%, power demand is likely to rise over 6%2 on-year given the high correlation3 between GDP growth and power demand growth. However, capacity addition remains low compared with demand growth. Coal gencos added just 2% capacity4 annually in the past five years vis-a-vis annualised demand growth of 3.4% and may add 3.5% (7 GW) this fiscal against demand growth of over 6%.

The report further said one-third of total private coal gencos7 are likely to benefit the most, given that more than 40% of available untied capacity is ready to cater to the rising demand either through sale on exchanges or through power purchase agreements (PPAs) on a bilateral basis. Their proximity to coal belts will ensure steady fuel availability, an issue that plagues most private coal gencos. Also, their variable cost of power generation, at less than Rs 3 per unit, is significantly lower compared with other private coal-based gencos, which will cushion their operating margins.

The CNX Nifty is currently trading at 17477.05, down by 13.65 points or 0.08% after trading in a range of 17345.20 and 17588.55. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.67%, Bajaj Finserv up by 2.57%, Cipla up by 1.76%, Eicher Motors up by 1.72% and Hindalco up by 1.68%. On the flip side, Tech Mahindra down by 2.36%, Infosys down by 2.29%, TCS down by 1.81%, HCL Tech. down by 1.65% and Adani Ports & SEZ down by 1.60% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 341.75 points or 1.19% to 28,452.75, Taiwan Weighted dropped 149.25 points or 0.98% to 15,095.89, Hang Seng decreased 96.43 points or 0.49% to 19,560.55, KOSPI fell 21.87 points or 0.89% to 2,440.63 and Straits Times trembled 27.03 points or 0.83% to 3,235.54. On the flip side, Shanghai Composite gained 5.86 points or 0.18% to 3,283.65 and Jakarta Composite soared 52.69 points or 0.74% to 7,160.67.