Domestic indices trade flat with positive bias in early deals

Indian equity benchmarks extended their previous session’s gaining momentum with positive start on Tuesday in line with Asian peers. On Monday, the equity benchmarks rose nearly a percent each in the special one-hour-long Muhurat trading session on the occasion of Diwali. Soon markets turned volatile and now are trading flat with positive bias in early deals as traders remained on sidelines ahead of a holiday on Wednesday for Diwali Balipratipada and the expiry of monthly derivative contracts due on Thursday. Some support came in as the finance ministry in its monthly economic review stated that India’s growth and stability concerns are less than that of the world at large, and estimated the country’s medium-term growth rate above 6 percent. Though, upside remained capped as the RBI said India’s forex reserves dropped by $4.50 billion to $528.37 billion for the week ended October 14. Some cautiousness also came in as foreign investors have pulled out close to Rs 6,000 crore from the Indian equity markets so far this month in the wake of strength in the US dollar against the rupee.

Most of the Asian markets are trading higher following the broadly positive cues from global markets overnight. A recent report about the US Fed signaling a slowdown in the pace of rate hikes is aiding market sentiment. Though, uncertainty about the outlook for interest rates in the U.S. ahead of next week's Federal Reserve meeting kept the up side in check. Back home, sugar industry stocks were in focus with a private report that the government will soon announce the sugar export quota for the marketing year that started on October 1, which would be substantially lower than the 2021-22 level. In stock specific development, ICICI Bank gained as it reported a 37 per cent YoY jump in net profit to Rs 7,558 crore in Q2FY23, aided by lower provisions and higher net interest income.

The BSE Sensex is currently trading at 59864.65, up by 32.99 points or 0.06% after trading in a range of 59752.34 and 60081.24. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.02%, while Small cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were Auto up by 1.06%, Metal up by 0.76%, Capital Goods up by 0.50%, Healthcare up by 0.40%, Industrials up by 0.34%, while Telecom down by 0.71%, Utilities down by 0.63%, Power down by 0.54%, FMCG down by 0.40%, Realty down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.87%, Dr. Reddy's Lab up by 1.46%, Tech Mahindra up by 1.43%, ICICI Bank up by 1.20% and Sun Pharma up by 1.00%. On the flip side, Nestle down by 1.44%, Power Grid down by 1.33%, Axis Bank down by 1.27%, Indusind Bank down by 1.17% and Kotak Mahindra Bank down by 1.14% were the top losers.

Meanwhile, expressing cautiousness, the Finance Ministry’s Economic Review stated that inflation might witness another resurgence in case of deterioration of geo-political situation leading to higher global energy prices and supply chain pressures. Observing that India has managed inflation better than most other countries in the world, the Review said that barring further weather extremities, retail food inflation is expected to decline in the coming months, leading to lower headline retail inflation. However, it said global energy prices and supplies remain sources of concern.

It said retail inflation for India during these six months stood at 7.2 per cent, lower than the world inflation of 8 per cent, as represented by the median inflation of major economies. During the same period, it said the INR depreciated by 5.4 per cent against the USD, less than the depreciation of 8.9 per cent of six major currencies in the DXY Index. It said a series of measures taken by the RBI during July 2022 is expected to stabilise the capital flows further and support the INR.

The report said India’s growth narrative in the first six months of the current financial year featured the uninterrupted thrust government provided to its capital expenditure that, until August of FY 2022-23, stood 46.8 per cent higher than the corresponding period of the previous year. It said the increase marked a decisive shift towards improved quality of spending as the ratio of revenue expenditure to capital outlay fell to 4.5 from 6.4 in the last year, and added that rising capital expenditure levels were also supported by stronger revenue generation following an improvement in tax compliance, higher corporate profitability, and growing economic activity.

It further said that increasing revenue generation has further kept the fiscal deficit until August aligned with its budgeted level, which otherwise could have gone awry with high capital expenditure, higher fertilizer and food subsidies and excise tax cuts to rein in inflation. It added that quietly rebuilding the economy’s ability to grow and letting it grow, after at least half a decade of financial stress followed by the pandemic, the global inflation shock and the global tightening of financial conditions will yield results that will be harder for the world to miss.

The CNX Nifty is currently trading at 17752.15, up by 21.40 points or 0.12% after trading in a range of 17708.75 and 17811.50. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.76%, Maruti Suzuki up by 1.98%, Tata Motors up by 1.59%, Eicher Motors up by 1.47% and Dr. Reddy's Lab up by 1.47%. On the flip side, UPL down by 1.80%, Nestle down by 1.53%, Power Grid down by 1.35%, Kotak Mahindra Bank down by 1.27% and Axis Bank down by 1.17% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 surged 334.27 points or 1.24% to 27,309.17, Straits Times rose 19.98 points or 0.67% to 2,989.93, Hang Seng advanced 98.26 points or 0.65% to 15,278.95, KOSPI added 6.65 points or 0.30% to 2,242.81 and Shanghai Composite was up by 21.99 points or 0.74% to 2,999.55. On the other hand, Taiwan Weighted fell 128.19 points or 1.00% to 12,728.79 and Jakarta Composite was down by 17.43 points or 0.25% to 7,035.61.