Domestic indices pare opening gains to trade flat with positive bias in early deals

Indian equity benchmarks made positive start on Tuesday tracking gains in Asian peers. But, soon markets pared most of the gains and are trading flat with positive bias in early deals as selling in IT, Telecom and TECK counters dragged the indices down. Initially, traders took encouragement as Finance Minister Nirmala Sitharaman said that while the necessary stimulus for growth would continue, her ministry and the Reserve Bank of India (RBI) would work on a pathway to maintain the growth momentum for the next 25 years in order to make India an advanced economy. Adding more optimism, Reserve Bank Governor Shaktikanta Das said despite the latest headwinds arising from the Jackson Hole summit leading to extreme volatility, the country’s banking system and financial markets are strong enough to withstand such pressures. Though, markets trimmed most of their gains as some cautiousness prevailed as India's external debt rose by 8.2 per cent year-on-year to $620.7 billion as of March 2022.

Most of the Asian markets are trading higher despite the mostly negative cues from European markets overnight, as traders remain concerned over the outlook for interest rates and rising inflation. Traders look ahead to speeches from Federal Reserve officials and policy decisions from other major central banks during the week. Back home, coal industry stocks were in focus as the government's monthly statistics (provisional) showed that India produced 58.33 million tonnes of coal in August, missing its target of 67.94 MT for the month, though it increased by 8.27 per cent from 53.88 MT in the corresponding month of previous fiscal. Besides, India’s largest airport service aggregator platform, DreamFolks Services is likely to make its debut today on stock exchanges. The IPO was subscribed 56.68 times, and the issue price is fixed at Rs 326.

The BSE Sensex is currently trading at 59278.66, up by 32.68 points or 0.06% after trading in a range of 59248.98 and 59566.67. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.50%, while Small cap index up by 0.19%.

The top gaining sectoral indices on the BSE were Power up by 1.36%, Utilities up by 1.30%, Healthcare up by 0.55%, Oil & Gas up by 0.35%, Energy up by 0.34%, while IT down by 0.29%, Telecom down by 0.24%, TECK down by 0.20%, Metal down by 0.18%, Basic Materials down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.16%, Bharti Airtel up by 0.91%, NTPC up by 0.82%, Reliance Industries up by 0.55% and Maruti Suzuki up by 0.55%. On the flip side, Wipro down by 0.54%, Nestle down by 0.54%, Kotak Mahindra Bank down by 0.53%, Tech Mahindra down by 0.44% and Asian Paints down by 0.40% were the top losers.

Meanwhile, the Reserve Bank Governor Shaktikanta Das has said despite the latest headwinds arising from the Jackson Hole summit leading to extreme volatility, the country’s banking system and financial markets are strong enough to withstand such pressures. Taking the markets by surprise, US Fed chair Jerome Powell had told the annual Jackson Hole summit of central bankers last week that he would have to keep raising federal fund rates to tame inflation, which remains the biggest challenge to the world’s largest economy. He also warned of the pains that such monetary policy actions would create on growth and jobs. In the previous policy meeting, Powell had sort of sounded dovish on interest rates.

Das said the recent commentary from the US Fed at Jackson Hole on the future trajectory of US monetary policy has created substantial volatility in global financial markets, with large spillovers and knock-on effects on emerging markets. And the difficulty gets further compounded in an environment of high uncertainty as such forward guidance may even have destabilising effects on financial markets, especially if the subsequent policy actions are at variance with earlier pronouncements.

He said ‘the health of our banking system is sound. It’s well capitalised and well provisioned, with improved asset quality. This constitutes a key pillar of our financial stability and is expected to provide positive spillovers for the financial markets’. Noting that markets often tend to overreact to new information from central banks and other regulators, amplifying volatility, he said in times like now, when geopolitical tension and synchronised monetary policy tightening come together, overshooting often precedes subsequent realignment with underlying fundamentals.

Listing out the strengths of the economy and financial markets, Das said the India’s economy still is one of the fastest growing major economies, while other major economies are staring at recession or considerable growth moderation. It can be noted that while the US and Britain contracted in Q1, the Eurozone is still not out of the Pandemic woods, and China has just stalled in its track in Q1, weighed down by successive lockdowns of its large cities. He said such growth differential provides confidence to investors, which is amply reflected in surging portfolio inflows since July. Inflows in August alone at $7.5 billion are more than 16 times the net inflows in July. But such large inflows came in after foreign funds remained in the exit mode for the first seven months of the year, pulling out as much as over $29 billion.

The CNX Nifty is currently trading at 17676.40, up by 10.60 points or 0.06% after trading in a range of 17668.90 and 17764.65. There were 26 stocks advancing against 23 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Apollo Hospital up by 2.63%, Power Grid up by 1.10%, HDFC Life Insurance up by 0.92%, Bharti Airtel up by 0.92% and Cipla up by 0.90%. On the flip side, BPCL down by 0.60%, Wipro down by 0.58%, ONGC down by 0.56%, Nestle down by 0.56% and Tech Mahindra down by 0.52% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 rose 13.44 points or 0.05% to 27,633.05, Straits Times gained 7.00 points or 0.22% to 3,222.48, KOSPI added 1.05 points or 0.04% to 2,404.73, Jakarta Composite advanced 7.18 points or 0.10% to 7,239.06 and Shanghai Composite was up by 32.33 points or 1.01% to 3,232.24. On the other hand, Hang Seng slipped 106.95 points or 0.56% to 19,118.75 and Taiwan Weighted was down by 19.82 points or 0.14% to 14,641.28.