Benchmarks stage splendid performance on Tuesday

Indian equity benchmarks staged splendid performance on Tuesday with frontline gauges surpassing their crucial 58,000 (Sensex) and 17,250 (Nifty) levels on sustained buying by fund and retail investors. Key gauges made gap-up opening and showed strength throughout the day amid positive trends in global equity markets. Traders took encouragement with 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.  Some solace also came with Icra Ratings’ statement 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.

Domestic sentiments remained up-beat in late afternoon deals, 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. Market participants paid no heed towards 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. Traders also overlooked the commerce ministry in its preliminary data has showed that India's merchandise exports contracted by 3.52 per cent to $32.62 billion in September 2022 as against $33.81 billion in the same month last year, while the trade deficit widened to $26.72 billion.

On the global front, European markets were trading higher as weak U.S. manufacturing and construction data released overnight raised hopes for slower Federal Reserve tightening. Asian markets settled higher on Tuesday 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. Sentiment was also boosted after the British government made a dramatic U-turn on one of the tax cuts that contributed to extreme bond market turmoil last week.

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. Telecom industry’s stocks also were 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.

Finally, the BSE Sensex rose 1276.66 points or 2.25% to 58,065.47 and the CNX Nifty was up by 386.95 points or 2.29% to 17,274.30.

The BSE Sensex touched high and low of 58,099.94 and 57,506.65, respectively. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 2.42%, while Small cap index was up by 1.49%.

The top gaining sectoral indices on the BSE were Metal up by 3.43%, Financial Services up by 2.82%, Bankex up by 2.74%, IT up by 2.68% and TECK up by 2.47%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Indusind Bank up by 5.29%, Bajaj Finance up by 4.23%, TCS up by 3.58%, Bajaj Finserv up by 3.37% and HDFC up by 2.96%. On the flip side, Power Grid Corporation down by 1.07%, Sun Pharma down by 0.24% and Dr. Reddy's Lab down by 0.18% were the top losers.

Meanwhile, the 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.

It mentioned India experienced an expansion of 8.2 per cent in 2021, the strongest among G20 countries. As supply chain disruptions eased, rising domestic demand turned the current account surplus into a deficit, and growth decelerated. It noted that the Production-Linked Incentive Scheme introduced by the government is incentivising corporate investment, but rising import bills for fossil energy are deepening the trade deficit and eroding the import coverage capacity of foreign exchange reserves.

Besides, it stated the government has announced plans to increase capital expenditure, especially in the rail and road sector, but in a weakening global economy, policymakers will be under pressure to reduce fiscal imbalances, and this may lead to falling expenditures elsewhere. Under these conditions, the economy is expected to decelerate to 4.7 per cent growth in 2023.

Moreover, UNCTAD said it expects the South Asia region to expand at a pace of 4.9 per cent in 2022, as inflation increases on the back of high energy prices, exacerbating balance of payment constraints and forcing several governments (Bangladesh, Sri Lanka,) to restrict energy consumption.

The CNX Nifty traded in a range of 17,287.30 and 17,117.30. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 5.25%, Adani Ports &SEZ up by 5.21%, Bajaj Finance up by 4.30%, Coal India up by 4.07% and TCS up by 3.75%. On the flip side, Power Grid Corporation down by 0.95% and Dr. Reddy's Lab down by 0.13% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 145.72 points or 2.11% to 7,054.48, France’s CAC increased 205.46 points or 3.55% to 5,999.61 and Germany’s DAX increased 388.18 points or 3.18% to 12,597.66.

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.