Firm trade continues over Dalal Street

Firm trade continued over the Dalal Street in late morning session, with both Sensex and Nifty trading higher, aided by positive cues from other Asian markets. Sentiments were positive, after Prime Minister Narendra Modi highlighted the efforts of the Central government for the welfare of the citizens, including the ones toward agriculture and rural households and said that it is the government's priority to support crores of farmers all across the nation at every step. Besides, the joint study conducted by both countries for the proposed Comprehensive Economic Partnership Agreement (CEPA) said that India’s exports to Bangladesh may increase by additional $10 billion in a time span of five years if both countries sign a free trade agreement (FTA).

On the global front, Asian markets were trading in green, after consumer prices in China were up 2.5 percent on year in August. That was shy of forecasts for 2.8 percent and down from 2.7 percent in July. On a monthly basis, inflation fell 0.1 percent versus expectations for an increase of 0.2 percent and slowing from a 0.5 percent gain in the previous month.

The BSE Sensex is currently trading at 59922.19, up by 233.97 points or 0.39% after trading in a range of 59878.18 and 60119.80. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index was up by 0.51%.

The top gaining sectoral indices on the BSE were Bankex up by 0.90%, FMCG up by 0.85%, PSU up by 0.78%, Basic Materials up by 0.78% and Healthcare up by 0.76%, while Telecom down by 0.28% and Utilities down by 0.07% were the only losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.18%, Hindustan Unilever up by 2.00%, SBI up by 1.93%, NTPC up by 0.96% and Dr. Reddy's Lab up by 0.93%. On the flip side, Bajaj Finserv down by 0.62%, Larsen & Toubro down by 0.61%, Mahindra & Mahindra down by 0.51%, Bharti Airtel down by 0.29% and Maruti Suzuki down by 0.24% were the top losers.

Meanwhile, Crisil in its latest report has said that steel-makers are in for better times from the second half of the current fiscal (H2FY23) as lower input cost and robust domestic demand will ease their margin pressure and lift operating margins to over 25 per cent. It stated the industry was hit by high input costs in the first quarter and is still under pressure in the ongoing second quarter.

It stated as a result, their operating margins of primary steelmakers are likely to fall to 14-16 per cent in the first half of this fiscal (H1FY23)-- massively down from 30 per cent last fiscal, which was a decadal best -- due to high input costs, lower realisations and imposition of export duty on finished steel products, among other reasons. However, it said from the second half onwards the margin pressure is expected to ease due to lower production costs because of declining raw material prices and steady realisations backed by robust domestic demand, lifting it above 25 per cent.

It added this will have the full-year operating margin at a robust 22-24 per cent, which will still be 700-800 bps lower from the last year, but higher than the pre-pandemic average of 20 per cent logged between fiscals 2017 and 2020. The first quarter saw a significant decline in steel prices with high input costs. Though input prices have corrected, their impact will be felt only towards the end of the second quarter, leading to a subdued first half.

Besides, It can be noted that global coking coal -- a key raw material that comprises 40 per cent of the production cost and is usually imported by domestic steel manufacturers -- has seen the price plummet from a historical high of USD 600 a tonne in March 2022 to USD 250 in August due to improved supply from Australian mines and weakening demand from global steel producers. It said the coking coal price is expected to remain benign as supply improves and the global demand outlook remains weak.

The CNX Nifty is currently trading at 17880.60, up by 81.85 points or 0.46% after trading in a range of 17863.85 and 17925.95. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 4.27%, Shree Cement up by 3.75%, Indusind Bank up by 3.20%, SBI up by 2.16% and Hindustan Unilever up by 1.99%. On the flip side, Larsen & Toubro down by 0.48%, Bajaj Finserv down by 0.48%, Coal India down by 0.47%, BPCL down by 0.46% and Mahindra & Mahindra down by 0.45% were the top losers.

Asian markets were trading in green; Nikkei 225 surged 180.11 points or 0.64% to 28,245.39, Straits Times rose 26.30 points or 0.81% to 3,259.91, Hang Seng jumped 457.46 points or 2.43% to 19,312.08, Jakarta Composite added 0.36 points to 7,232.38 and Shanghai Composite was up by 22.34 points or 0.69% to 3,257.93.