Markets make gap-up opening; trade in fine-fettle in early deals

Indian equity benchmarks made gap-up opening on Tuesday tracking firm global cues. Markets are trading in fine-fettle in early deals, gaining around 1.80% each, with healthy buying in Bankex, Metal and Capital Goods stocks. Sentiments got a boost as Crisil Ratings said that India Inc's credit quality showed further improvement in April-September period with the ratio of upgrades to downgrades inching higher. Crisil Ratings, which rates 6,800 companies, added that the credit ratio's improvement to 5.52 times in H1FY23 as compared to 5.04 times in H2FY22 was driven by leaner balance sheets led by healthy cash flows and muted investments.  Also, Icra Ratings said credit quality of corporates has strengthened further in the first half of the current fiscal with rating upgrades being more than three times that of downgrades, carrying on with the momentum since early FY22. Market participants largely overlooked the United Nations Conference on Trade and Development’s (UNCTAD) statement that India's economic growth is expected to decline to 5.7 per cent this year from 8.2 per cent in 2021, citing higher financing cost and weaker public expenditures.

On the global front, Asian markets are trading higher, following the broadly positive cues from global markets overnight, with major gains across most sectors as the market rebounded after the recent sharp sell-off amid a spike in commodity prices and a fall in bond yields. Traders also indulged in some bargain hunting. Besides, the Ministry of Communications and Internal Affairs said overall consumer prices in the Tokyo region of Japan were up 2.8 percent on year in September. Meanwhile, Hong Kong is closed for Double Ninth Festival and China is closed for the Golden Week holiday until October 10.

Back home, fertilizer stocks were in focus as fertiliser companies are looking to import phosphoric acid at not more than $1,000-1,050 per tonne -- around 40 per cent cheaper than the price quoted by global suppliers in the September quarter, with fall in global prices. In stock specific developments, Tata Steel surged on reports that it has commenced operations at its Neelachal Ispat Nigam plant in Orissa. TCS gained on reports it has created two new business units dedicated to telecom and 5G solutions led by industry veterans.

The BSE Sensex is currently trading at 57847.90, up by 1059.09 points or 1.86% after trading in a range of 57506.65 and 57973.67. There were 28 stocks advancing against 2 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.18%, while Small cap index was up by 1.06%.

The top gaining sectoral indices on the BSE were Bankex up by 2.51%, Metal up by 2.01%, Capital Goods up by 1.97%, IT up by 1.91%, TECK up by 1.87%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Indusind Bank up by 5.20%, Bajaj Finance up by 2.97%, Larsen & Toubro up by 2.82%, Axis Bank up by 2.70% and ICICI Bank up by 2.59%. On the flip side, Dr. Reddy's Lab down by 0.43% and Power Grid down by 0.38% were the only losers.

Meanwhile, with leaner balance sheets led by healthy cash flows and muted investments, Crisil Ratings, which rates 6,800 companies, in its latest report stated that credit quality of India Inc improved to 5.52 times in April-September period of current fiscal year (H1FY23) as compared to 5.04 times in the second half of last fiscal (H2FY22) with the ratio of upgrades to downgrades inching higher. However, the agency clarified that the data may not be fully representative as many small businesses with outstanding ratings have turned non-cooperative in sharing data on a continued basis which can be driven by adverse financial health.

Its managing director Gurpreet Chhatwal said India Inc has emerged stronger post-pandemic exuding confidence that the corporate India can weather the current storm caused by global events like higher inflation and monetary tightening which will hurt India's exports. Crisil's senior director Somasekhar Vemuri said there can, however, be a moderation in the credit ratio going ahead due to some of the challenges faced by companies.

The agency said during the first half of the fiscal year, the credit ratio moved ahead majorly driven by the infrastructure sector, which contributed a third of the upgrades, attributing the same to higher project work being undertaken and improvement in project clearances and payments. It added that the six months saw 569 upgrades and 103 downgrades, while ratings on 80 per cent of the companies being reaffirmed. For the financial sector, it gave a 'stable' outlook and added that while the gross non-performing assets ratio may moderate on an overall basis, exposures to small businesses face a risk of higher NPAs.

The CNX Nifty is currently trading at 17188.05, up by 300.70 points or 1.78% after trading in a range of 17117.30 and 17235.95. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.83%, Hindalco up by 3.06%, Bajaj Finance up by 3.00%, Larsen & Toubro up by 2.84% and TCS up by 2.68%. On the flip side, Dr. Reddy's Lab down by 0.58% and Power Grid down by 0.40% were the only losers.

All the Asian markets are trading in green; Nikkei 225 surged 730.16 points or 2.79% to 26,945.95, Straits Times rose 26.95 points or 0.87% to 3,134.04, Taiwan Weighted jumped 271.47 points or 2.04% to 13,571.95, KOSPI advanced 50.83 points or 2.36% to 2,206.32 and Jakarta Composite was up by 49.96 points or 0.71% to 7,059.68.