Domestic indices trade firm in early deals; Services PMI eyed

Indian equity benchmarks made positive start on Thursday, a day after holiday, tracking gains in Asian counterparts. Markets are trading firm in early deals with gains of around half a percent each with strong foreign flows. As per provisional data available on the NSE, foreign institutional investors (FIIs) remained net buyers to the tune of Rs 1,344.63 crore on October 4. Some support came in as the IMF said recent tightening actions by many central banks around the world will help to prevent high inflation from becoming entrenched. Though, rising oil prices capped gains in domestic markets. Some cautiousness also came in as the World Trade Organization (WTO) slashed its global trade growth forecast for 2023, stating that elevated commodity prices and rising interest rates would curb import demand, and warned of a likely contraction if the conflict in Ukraine escalates. Investors are looking ahead to the services PMI data for September to be out later in the day.

Most of the Asian markets are trading higher, despite the broadly negative cues from global markets overnight, with the gains led by energy and technology stocks, even as central banks around the world appear poised to continue raising interest in the months ahead, potentially tipping the global economy into a recession as they combat elevated inflation. Meanwhile, China remains closed for the Golden Week holiday until Monday.

Back home, sugar industry stocks were in focus as the government said India's sugar exports rose 57 per cent to 109.8 lakh tonnes during 2021-22 marketing year ended September, resulting in foreign currency inflow worth about Rs 40,000 crore into the country. In stock specific developments, SpiceJet advanced after the Centre allowed the airline to avail loan up to Rs 1,500 crore under ECLGS scheme. Zee Entertainment Enterprises jumped as CCI gives nod to Sony merger.

The BSE Sensex is currently trading at 58352.79, up by 287.32 points or 0.49% after trading in a range of 58314.05 and 58578.76. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.89%, while Small cap index was up by 1.08%.

The top gaining sectoral indices on the BSE were Metal up by 2.48%, Capital Goods up by 1.83%, Realty up by 1.80%, Industrials up by 1.69%, Power up by 1.23% while, FMCG down by 0.25% was the sole losing index on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.02%, Tata Steel up by 1.83%, Infosys up by 1.71%, HCL Technologies up by 1.70% and Sun Pharma up by 1.55%. On the flip side, Bajaj Finance down by 1.33%, Hindustan Unilever down by 0.65%, Indusind Bank down by 0.56%, HDFC down by 0.38% and Kotak Mahindra Bank down by 0.37% were the top losers.

Meanwhile, the International Monetary Fund (IMF) has said that recent tightening actions by many central banks around the world will help to prevent high inflation from becoming entrenched. It said the current coincidence of rising inflation and nominal wage growth has led to concerns that a wage-price spiral-in which both wages and prices accelerate for a prolonged period-could emerge.

It further said many economies have seen sharp rises in price inflation since 2021 as adverse supply shocks buffet the global economy and labour markets appear tight in the wake of the acute COVID-19 shock. These inflation rises have raised concerns among some observers that prices and wages could start feeding off each other and accelerate, leading to a wage-price spiral dynamic.

John Bluedorn, Deputy Division Chief on the World Economic Outlook in the IMF's Research Department, said if inflationary shocks start to come from the labour market itself- such as an unexpected, sharp uptick in wage indexation-that could moderate the effects of falling real wages, pushing up both wage growth and inflation for longer.

The CNX Nifty is currently trading at 17358.80, up by 84.50 points or 0.49% after trading in a range of 17354.45 and 17428.80. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.75%, JSW Steel up by 2.68%, Coal India up by 2.64%, Larsen & Toubro up by 2.00% and Infosys up by 1.78%. On the flip side, Bajaj Finance down by 1.39%, Cipla down by 0.92%, Hindustan Unilever down by 0.81%, Indusind Bank down by 0.64% and Britannia Industries down by 0.50% were the top losers.

Asian markets are trading mostly in green, Nikkei 225 surged 253.94 points or 0.94% to 27,374.47, Straits Times rose 12.86 points or 0.41% to 3,166.09, Taiwan Weighted added 51.11 points or 0.37% to 13,852.54, KOSPI advanced 29.57 points or 1.33% to 2,244.79 and Jakarta Composite was up by 23.52 points or 0.33% to 7,098.91, while Hang Seng was down by 97.52 points or 0.54% to 17,990.45.