Domestic indices trade lower in early deals; Nifty below 17,600 mark

Indian equity benchmarks made gap-down opening on Wednesday tracking bearish global cues. But, markets managed to trim some of their losses and are trading lower with around half a percent cut in early deals. Traders were concerned as domestic ratings agency Icra said India's current account deficit (CAD) will widen to 5 per cent of the GDP in the September quarter due to higher merchandise trade deficit. The trade deficit has doubled to $28.7 billion for August due to a 36.8 per cent expansion in imports and a 1.2 per cent decline in export earnings. Though, some losses got trimmed taking support with Moody's Investors Service’s statement that India's economic recovery is unlikely to be derailed by rising challenges to the global economy, higher inflation and tightening financial conditions,  and affirmed a stable outlook for the country's rating Baa3. Meanwhile, foreign institutional investors (FIIs) have net bought shares worth Rs 1,144.53 crore on September 6, as per provisional data available on the NSE.

On the global front, all the Asian markets are trading lower following the broadly negative cues from Wall Street overnight, amid lingering concerns about the outlook for interest rates and the impact further rate hikes will have on the global economy. Traders now await comments from several US Fed officials, including Fed Chair Jerome Powell, as well as the central bank's Beige Book for more cues. Back home, fertiliser sector stocks were in focus with a private report that government may look to privatise PSUs in the sector. According to the PSE policy, 2021, the government will look at leaving non-strategic sectors, such as fertiliser, steel and tourism, by privatising or closing PSUs. In stock specific development, Suzlon Energy soared on winning a 180.6 MW wind energy project.

The BSE Sensex is currently trading at 58885.14, down by 311.85 points or 0.53% after trading in a range of 58722.89 and 58956.04. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.12%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were FMCG up by 0.46%, Basic Materials up by 0.26%, PSU up by 0.08%, Consumer Discretionary up by 0.06%, Energy up by 0.02%, while Realty down by 0.82%, Bankex down by 0.79%, TECK down by 0.76%, IT down by 0.67%, Metal down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.05%, Ultratech Cement up by 0.96%, Hindustan Unilever up by 0.83%, Nestle up by 0.82% and Power Grid up by 0.49%. On the flip side, Indusind Bank down by 1.56%, Bharti Airtel down by 1.48%, Tech Mahindra down by 1.25%, HCL Technologies down by 1.20% and Axis Bank down by 1.13% were the top losers.

Meanwhile, retaining its sovereign rating on India, Moody's Investor Service has said that the impact of higher inflation, the Russia-Ukraine conflict and tightening global financial conditions are unlikely to disrupt India's economic recovery from the pandemic. The agency has retained Baa3 sovereign rating on India with a stable outlook. Also, Moody's saw the Indian economy expanding by 7.6 per cent in the current fiscal compared to 8.7 per cent growth in the last financial year that ended on March 31. For 2023-24, it estimates a 6.3 per cent GDP growth. It’s Baa3 rating on India is the lowest investment grade rating. In October last year, it revised upwards the rating outlook to stable from negative.

The agency said ‘the credit profile of India reflects key strengths, including its large and diversified economy with high growth potential, a relatively strong external position, and a stable domestic financing base for government debt’. Principal credit challenges include low per capita income, high general government debt, low debt affordability and limited government effectiveness. It noted that ‘we do not expect rising challenges to the global economy, including the impact of the Russia-Ukraine military conflict, higher inflation, and the tightening financial conditions on the back of policy tightening, to derail India's ongoing recovery from the pandemic in 2022 (FY2022-23) and 2023 (FY2023-24)’.

It further said the stable outlook reflects its view that the risks from negative feedback between the economy and financial system are receding. It said ‘with higher capital buffers and greater liquidity, banks and non-bank financial institutions (NBFIs) pose much less risk to the sovereign than we previously anticipated, facilitating the ongoing recovery from the pandemic’. It also said ‘while risks stemming from a high debt burden and weak debt affordability remain, we expect that the economic environment will allow for a gradual narrowing in the general government fiscal deficit over the next few years, avoiding further deterioration in the sovereign credit profile’.

Moody's said it could upgrade the rating if India's economic growth potential increased materially beyond expectations, supported by effective implementation of economic and financial sector reforms that led to a significant and sustained pickup in private sector investment. Effective implementation of fiscal policy measures that resulted in a sustained decline in the government's debt burden and improvements in debt affordability would also support the credit profile. However, the rating can be downgraded if weaker economic conditions and/or a resurgence of financial sector risks.

The CNX Nifty is currently trading at 17574.80, down by 80.80 points or 0.46% after trading in a range of 17484.30 and 17593.80. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Shree Cement up by 2.98%, Ultratech Cement up by 1.40%, Nestle up by 1.01%, Coal India up by 0.95% and Asian Paints up by 0.88%. On the flip side, Indusind Bank down by 1.68%, Bharti Airtel down by 1.54%, HCL Technologies down by 1.31%, Hindalco down by 1.23% and Tech Mahindra down by 1.17% were the top losers.

All the Asian markets are trading in red; Nikkei 225 declined 305.06 points or 1.10% to 27,321.45, Straits Times weakened 19.48 points or 0.60% to 3,204.70, Hang Seng slipped 354.37 points or 1.85% to 18,848.36, Taiwan Weighted plunged 246.70 points or 1.68% to 14,430.50, KOSPI fell 38.92 points or 1.61% to 2,371.10, Jakarta Composite lost 30.87 points or 0.43% to 7,202.29 and Shanghai Composite was down by 0.48 points or 0.01% to 3,242.97.