Post Session: Quick Review

Indian equity benchmarks showed an enthusiastic performance on Tuesday with Nifty and Sensex ending higher by above two percent, amid strong sentiments overseas. Markets made a gap-up opening, as traders took encouragement with Crisil Ratings’ statement 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. Key indices continued their gaining momentum even after United Nations Conference on Trade and Development (UNCTAD) in its latest report has said 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. It further said India's GDP will further decelerate to 4.7 per cent growth in 2023.

Markets continued their rally mood till the end and closed the session with splendid gains ahead of the corporate earnings season. Domestic sentiments remained upbeat with Icra Ratings stating that 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. Some additional support came as foreign investors turned net buyers after a gap of eight days of being net sellers. The foreign portfolio investors bought equities worth 590.58, according to National Stock Exchange data.

On the global front, European markets were trading higher on Tuesday to extend gains from the previous session as weak U.S. manufacturing and construction data released overnight raised hopes for slower Federal Reserve tightening. Asian markets ended in green amid hopes for a dovish pivot from the U.S. Federal Reserve. The Bank of England is the first to pivot back to quantitative easing, claiming to restore market functioning and reduce risks of contagion. Back home, sector wise, telecom industry stocks remained in limelight, as government has approved a sum of Rs 26,000 crore to set up 25,000 telecommunication towers in the country over the next 500 days, as connectivity is vital for Digital India. The move comes within days of India launching 5G services, which the government says would connect the remotest parts of the country to the internet and fast-track the digital revolution.

The BSE Sensex ended at 58,065.47, up by 1276.66 points or 2.25% after trading in a range of 57,506.65 and 58,099.94. There were 27 stocks advancing against 3 stocks declining on the index (provisional).

The broader indices ended in green; the BSE Mid cap index gained 2.42%, while Small cap index was up by1.49% (provisional).

The top gaining sectoral indices on the BSE were Metal up by 3.43%, Bankex up by 2.74%, IT up by 2.68%, TECK up by 2.47% and Utilities was up by 2.35%, while there were no losing sectoral indices on the BSE (provisional).

The top gainers on the Sensex were Indusind Bank up by 5.40%, Bajaj Finance up by 4.47%, TCS up by 3.71%, Bajaj Finserv up by 3.50% and Tata Steel up by 3.00%. On the flip side, Power Grid down by 1.02%, Dr. Reddy's Lab down by 0.27% and Sun Pharma down by 0.08% were the few losers (provisional).

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 ended at 17274.30, up by 386.95 points or 2.29% after trading in a range of 17117.30 and 17287.30. There were 48 stocks advancing against 2 stocks declining on the index (provisional).

The top gainers on Nifty were Indusind Bank up by 5.45%, Adani Ports up by 4.93%, Bajaj Finance up by 4.42%, Coal India up by 3.86% and Hero MotoCorp up by 3.81%. On the flip side, Power Grid down by 1.11% and Dr. Reddy's Lab down by 0.13% were the only losers (provisional).

European markets were trading higher, UK’s FTSE 100 increased 116.77 points or 1.69% to 7,025.53, France’s CAC increased 175.02 points or 3.02% to 5,969.17 and Germany’s DAX was up by 327.13 points or 2.68% to 12,536.61.

Asian markets settled higher on Tuesday tracking Wall Street gains overnight and retreating US Treasury yields, while investors awaited clues on how much further the US central bank would go with interest rate hikes to cool off surging prices. Market sentiments were improved further after the British government made a dramatic U-turn on one of the tax cuts that contributed to extreme bond market turmoil last week. Japanese shares gained on bargain hunting in beaten-down heavyweights and growth stocks, despite news that North Korea fired a ballistic missile over Japan for the first time in five years. But data showed that inflation in Japan's capital stood above the central bank's 2% target for a fourth consecutive month. Moreover, Seoul shares rebounded as traders returned to their desks after a holiday on Monday for the National Foundation Day holiday.