Firm trade continues over Dalal Street

Firm trade continued over the Dalal Street, with both Sensex and Nifty holding notable gains, on the back of positive cues from other Asian markets. Sentiments remained optimistic, as RBI Monetary Policy Committee (MPC) Member Ashima Goyal has said that eight years of systemic economic reforms under the Modi government have increased India's macroeconomic stability and its capacity to withstand any external shocks. Traders overlooked reports that India’s business and consumption activity showed conflicting signs of recovery in July as elevated inflation, rising borrowing costs and fears of a global slowdown weighed on Asia’s third-largest economy.

Asian markets were trading mostly in green, even after producer prices in South Korea were up 0.3 percent on month in July. That was down from the upwardly revised 0.6 percent increase in June (originally 0.5 percent). Individually, prices for agricultural, forestry & marine products rose 4.1 percent on month; manufacturing products fell 0.6 percent; utilities advanced 3.9 percent; and services rose 0.6 percent.

The BSE Sensex is currently trading at 59360.82, up by 275.39 points or 0.47% after trading in a range of 59197.82 and 59469.24. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.83%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Realty up by 1.71%, PSU up by 1.24%, Consumer Durables up by 1.20%, Metal up by 1.03% and Power up by 0.87%, while IT down by 0.08% and TECK down by 0.06% were the only losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.13%, Maruti Suzuki up by 1.06%, Hindustan Unilever up by 1.05%, Kotak Mahindra Bank up by 1.05% and HDFC up by 0.89%. On the flip side, TCS down by 0.33%, HCL Tech. down by 0.26%, Infosys down by 0.15%, Sun Pharma down by 0.15% and NTPC down by 0.09% were the top losers.

Meanwhile, RBI Monetary Policy Committee (MPC) member Jayanth R Varma has said that the biggest risk to India's growth outlook is an escalation of geopolitical tensions, especially if these tensions spread to the Asian region. He also said that inflation and inflationary expectations appear to be moderating and high inflation will certainly not become the 'norm' in the country.

Varma is cautiously optimistic about the Indian economy as after the pandemic abated, consumption demand has begun to recover though the recovery is uneven across sectors and industries. He also said capacity utilization has been inching up, and is now approaching levels at which business will have to seriously consider capital expenditure for expansion. He further noted that the MPC is determined to bring inflation down close to the target rate of 4 per cent as quickly as possible without imposing intolerable costs in terms of economic growth.

Noting that inflation has already peaked, he said Inflation would be above the target for several quarters, but there is reason to believe that the worst is over, unless the world is confronted by another unforeseen global shock. On the other hand, he said any adverse shocks to economic growth (domestic or global) could cause a steeper decline in inflation than is currently expected. He said in the last three years, India's inflation targeting regime was confronted with two shocks in rapid succession -- the pandemic (which was an unprecedented growth shock) and the Ukraine war (which has caused a global inflation shock). He added that by helping maintain credibility of monetary policy, the inflation targeting regime proved its worth in confronting both these shocks.

The CNX Nifty is currently trading at 17691.75, up by 86.80 points or 0.49% after trading in a range of 17637.70 and 17716.35. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 1.98%, UPL up by 1.68%, Hindalco up by 1.64%, ONGC up by 1.32% and Divi's Lab up by 1.32%. On the flip side, Cipla down by 0.64%, Adani Ports & SEZ down by 0.39%, TCS down by 0.37%, NTPC down by 0.34% and HCL Tech. down by 0.33% were the top losers.

Asian markets were trading mostly in green; Hang Seng gained 299.94 points or 1.56% to 19,568.68, Nikkei 225 surged 165.54 points or 0.58% to 28,479.01, Taiwan Weighted strengthened 130.85 points or 0.87% to 15,200.04, KOSPI rose 24.62 points or 1.01% to 2,472.07, Shanghai Composite gained 13.06 points or 0.41% to 3,228.26 and Straits Times advanced 12.39 points or 0.38% to 3,245.87. On the flip side, Jakarta Composite lost 37.36 points or 0.52% to 7,157.35.