Local equity indices trade firm in early deals; Metal index shine

Indian equity benchmarks made gap-up opening on Friday tracking strong gains in global counterparts. Domestic markets are trading firm in early deals with gains of around 0.70% each on the back of strong buying in all the sector indices led by Metal, Consumer Durables and Industrials. Sentiments got a boost with a report that the Income-tax department has collected around Rs 28 crore in taxes after about 1 lakh returns were filed by taxpayers under the newly introduced return filing form called ITR-U that was notified this year as part of the Budget 2022-23. Adding more optimism on the street, S&P Global Ratings said that India has built up buffers against cyclical difficulties and has ample foreign exchange reserves to withstand pressure on credit worthiness. Some support also came in as RBI data showed bank credit growth accelerated to 14.2 per cent in the quarter ended June 2022 from 6 per cent in the same period of the previous year.

Most of the Asian markets are trading higher following the broadly positive cues from Wall Street overnight, as traders remained cautious in making large moves as they brace for the US Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later today. Traders also digested a slew of earnings updates and economic data. Back home, sugar industry stocks were in focus with report that India's sugar exports are likely to decline by 28.57 at around 8 million tonne in the 2022-23 season on expected lower opening balance stock and higher diversion for ethanol. In stock specific development, Indian Oil Corporation rose after it announced plans to invest Rs 2 lakh crore to achieve net-zero operational carbon emissions by 2046.

The BSE Sensex is currently trading at 59184.83, up by 410.11 points or 0.70% after trading in a range of 59049.19 and 59321.65. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.84%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Metal up by 1.80%, Consumer Durables up by 1.22%, Industrials up by 1.20%, Capital Goods up by 1.19%, Basic Materials up by 1.15%, while there was no loser on BSE sectoral front.

The top gainers on the Sensex were Titan Company up by 2.15%, Tech Mahindra up by 1.82%, Tata Steel up by 1.69%, Kotak Mahindra Bank up by 1.56% and Mahindra & Mahindra up by 1.54%. On the flip side, Indusind Bank down by 1.02%, Bharti Airtel down by 0.68% and Asian Paints down by 0.01% were the few losers.

Meanwhile, expressing optimism over India’s credit worthiness, S&P Global Ratings said India has built up buffers against cyclical difficulties and has ample foreign exchange reserves to withstand pressure on credit worthiness. S&P Sovereign & International Public Finance Ratings Director Andrew Wood said the country has a strong external balance sheet and limited external debt, making debt servicing not so expensive. He said ‘the country has built up buffers against cyclical difficulties like those, which we are experiencing right now’. He said the rating agency did not expect near-term pressures to have a serious impact on India's credit worthiness.

He also said ‘we are expecting a strong level of GDP growth of 7.3% this fiscal’, and added that the rupee exchange rate movement against the U.S. dollar had been moderate. The rupee has depreciated about 7% against the U.S. currency this year but has performed better than its emerging market peers. He said India had ‘ample buffer’ in its foreign exchange reserves and the forex kitty is expected to recover to $600 billion by the end of this year. Forex reserve stood at $570.74 billion as of August 12. The U.S.-based agency has a 'BBB-' rating on India with a stable outlook.

S&P said it expected the Reserve Bank of India to raise interest rates further to 5.65% to tame inflation. Retail inflation remained above the RBI's comfort level for the seventh month in a row and was 6.71% in July. Wholesale price-based inflation remained in double-digits for the 16th month in July at 13.93%. To tame stubbornly high inflation, the RBI has raised the key interest rate three times this year to 5.4%. The central bank had projected retail inflation to average 6.7% in 2022-23.

The CNX Nifty is currently trading at 17636.55, up by 114.10 points or 0.65% after trading in a range of 17613.75 and 17685.85. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 2.20%, Hindalco up by 1.88%, Tech Mahindra up by 1.81%, HDFC Life Insurance up by 1.67% and Kotak Mahindra Bank up by 1.67%. On the flip side, Eicher Motors down by 2.44%, Bharti Airtel down by 1.21%, Indusind Bank down by 1.00%, Reliance Industries down by 0.08% and Shree Cement down by 0.06% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 209.66 points or 0.74% to 28,688.67, Straits Times rose 12.96 points or 0.40% to 3,260.76, Hang Seng jumped 134.44 points or 0.67% to 20,102.82, Taiwan Weighted advanced 125.65 points or 0.83% to 15,325.69, KOSPI added 12.25 points or 0.49% to 2,489.51 and Shanghai Composite was up by 2.79 points or 0.09% to 3,249.04, while Jakarta Composite was down by 4.83 points or 0.07% to 7,169.38.