Benchmarks trade higher with marginal gains in early deals

Indian equity benchmarks made flat-to-positive start amid mixed global cues. Soon, markets slipped below neutral lines but, managed to come back in green and are trading higher with marginal gains in early deals. Buying in Capital Goods, Industrials and Auto stocks aided the domestic markets. Some support came in as India and the European Union (EU) signed an agreement on cooperation in areas such as climate modelling and quantum technologies, building on the Trade and Technology Council launched by the two sides earlier this year. Though, upside remained capped as rating agencies Crisil and Icra revised down their India growth projections for the current fiscal and the second quarter mainly due to the ripple effect of slowdown in global growth and mixed crop output. Crisil downgraded the India growth forecast by 30 bps to 7 per cent while Icra pegged the economic expansion at 6.5 per cent for the second quarter of FY2022-23. Meanwhile, foreign institutional investors (FIIs) net offloaded shares worth Rs 1,593.83 crore on 21 November, according to the provisional data available on the NSE.

On the global front, Asian markets are trading mixed amid broadly negative cues from global markets overnight, as imposition of stringent restrictions and lockdowns in several cities in China, including Shanghai and Beijing, amid a surge in new COVID cases raised concerns about the outlook for the global economy. Back home, metal stocks were in focus as Union minister Jyotiraditya Scindia said removal of export duty on steel products will lead to a new era of growth for the domestic steel industry which has gained footprint internationally. In stock specific development, JK Paper gained after the company plans to acquire Horizon Packs and Securipax Packaging in a phased-manner for about Rs 578 crore.

The BSE Sensex is currently trading at 61228.93, up by 84.09 points or 0.14% after trading in a range of 61073.68 and 61235.02. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.26%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.40%, Industrials up by 0.34%, Auto up by 0.26%, Metal up by 0.20%, FMCG up by 0.18%, while Oil & Gas down by 0.66%, Realty down by 0.56%, Energy down by 0.48%, Utilities down by 0.18%, Power down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 1.68%, Dr. Reddy's Lab up by 0.83%, Maruti Suzuki up by 0.75%, Larsen & Toubro up by 0.69% and Indusind Bank up by 0.57%. On the flip side, Nestle down by 0.68%, Power Grid down by 0.62%, Kotak Mahindra Bank down by 0.35%, HCL Technologies down by 0.25% and Wipro down by 0.24% were the top losers.

Meanwhile, with the ripple effect of slowdown in global growth and mixed crop output, rating agencies Crisil has revised down India growth projections for the current fiscal. The agency has downgraded the India growth forecast by 30 bps to 7 per cent for fiscal 2023 from 7.3 per cent primarily because of the slowdown in global growth that has started to impact our exports and industrial activity. It added that this will test the resilience of domestic demand.

Crisil chief economist Dharmakirti Joshi said he is paring growth forecast only by 30 bps as domestic demand still remains supportive, helped by a catch-up in contact-based services, government capex, relatively accommodative financial conditions, and overall normal monsoons for the fourth time in a row. But Joshi warned that the ripple effect of the global slowdown will be felt more next fiscal, which will put domestic demand under pressure as interest rate hikes get transmitted more to consumers, and the catch-up in contact-based services fades.

He further said ‘Consequently, we expect GDP growth to slow to 6 per cent in fiscal 2024, down from 6.5 per cent estimated previously, with more downside risks to the revised forecast’. Despite the markdown in near-term growth, the country is expected to remain a growth outperformer over the medium-run, he said, and expects GDP growth to average 6.6 per cent between fiscals 2024 and 2026, compared to the 3.1 per cent global growth forecast by the International Monetary Fund. He also sees the country outgrowing her emerging market peers such as China (4.5 per cent growth estimated for 2023-25), Indonesia (5.2 per cent), Turkey (3 per cent) and Brazil (1.6 per cent).

Joshi sees stronger domestic demand (private consumption constitutes as much as 57 per cent of GDP) driving growth premium over peers in the medium-term on the back of optimistic investment prospects given the government's capex push, the progress of production-linked incentive scheme, healthier corporate balance sheets, and a well-capitalised banks with low NPAs. The country is also likely to benefit from China-plus-one policy as global supply chains get reconfigured with shifting focus from efficiency towards resilience and friend shoring.

The CNX Nifty is currently trading at 18178.20, up by 18.25 points or 0.10% after trading in a range of 18137.70 and 18191.90. There were 29 stocks advancing against 20 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Ultratech Cement up by 1.62%, Grasim Industries up by 1.25%, Dr. Reddy's Lab up by 0.86%, Hindalco up by 0.79% and UPL up by 0.77%. On the flip side, ONGC down by 1.33%, BPCL down by 1.16%, Nestle down by 0.78%, Power Grid down by 0.71% and Coal India down by 0.48% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 189.80 points or 0.68% to 28,134.59, Straits Times added 17.96 points or 0.55% to 3,268.58, Taiwan Weighted advanced 85.14 points or 0.59% to 14,534.53 and Shanghai Composite was up by 23.26 points or 0.75% to 3,108.30. On the other hand, Hang Seng fell 27.28 points or 0.15% to 17,628.63, KOSPI lost 8.80 points or 0.36% to 2,410.70 and Jakarta Composite was down by 1.00 points or 0.01% to 7,062.25.