Markets trim opening gains; trade marginally higher in early deals

Indian equity benchmarks made optimistic start on Wednesday tracking overnight gains on Wall Street. But, soon markets trimmed some of their gains and are trading marginally higher in early deals. Buying in Realty, Healthcare and IT stocks supported markets, whereas selling in Oil & Gas, Power and Utilities dragged them down. Initially, indices took some support as the Reserve Bank of India (RBI) said waning input cost pressures, buoyant corporate sales, and a turn-up in investments in fixed assets suggest the beginning of an upturn in India’s capital expenditure cycle, which could help improve earnings in the coming quarters and speed up the ‘momentum of growth’ in the Indian economy. Also, foreign institutional investors (FIIs) net bought shares worth Rs 455.94 crore on December 20, as per provisional data available on the NSE. Meanwhile, traders took note of report that the Fitch Ratings affirmed India’s sovereign rating at the lowest investment grade (BBB minus) with stable outlook holding that the country’s robust medium-term growth outlook is a key supporting factor.

On the global front, Asian markets are trading mixed, following the broadly positive cues from Wall Street overnight, as traders are indulging in bargain hunting after the recent heavy sell-off on recession fears. Some traders are reluctant to get back into the markets amid lingering concerns of aggressive interest rate hikes continuing in to the next year. Back home, Power stocks were under pressure as Fitch Ratings in a report said growth in the country’s power demand is likely to slow down in the second half of the financial year ending March 2023 (H2FY23), after a robust 11.3 per cent year-on-year (YoY) growth in the first half of the year (H1FY23). In stock specific development, Shyam Metalics surged amid reports that the company forayed into the stainless steel business with the acquisition of Mittal Corp.

The BSE Sensex is currently trading at 61784.03, up by 81.74 points or 0.13% after trading in a range of 61752.99 and 62006.46. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.37%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Realty up by 0.75%, Healthcare up by 0.54%, IT up by 0.54%, Metal up by 0.36%, TECK up by 0.32%, while Oil & Gas down by 0.18%, Power down by 0.15%, Utilities down by 0.13%, Energy down by 0.11%, Capital Goods down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.69%, Axis Bank up by 0.78%, Ultratech Cement up by 0.62%, Wipro up by 0.62% and Tech Mahindra up by 0.60%. On the flip side, Bharti Airtel down by 0.40%, HDFC down by 0.32%, Larsen & Toubro down by 0.31%, Indusind Bank down by 0.25% and Reliance Industries down by 0.23% were the top losers.

Meanwhile, Fitch Ratings has affirmed India's sovereign credit rating at 'BBB-' with a stable outlook, and said that the rating derives strengths from a robust growth outlook and still-resilient external finances. India enjoyed 'BBB-' rating since an upgrade in August 2006 but the outlook has oscillated between stable and negative. 'BBB-' is the lowest investment grade rating. In June this year, Fitch had upped India's rating outlook to 'stable' from 'negative'.

Though, it expects a modest fiscal slippage in current financial year with central government fiscal deficit at 6.6 percent of GDP against 6.4 percent pegged in Budget, due to higher food and fertiliser subsidies. It also projected the central government setting a six percent of GDP deficit target in its upcoming Budget and retaining its 4.5 percent FY26 target, but added that it may be difficult to achieve.

It noted that ‘Fiscal pressures could arise from upcoming national elections in May 2024, but the incumbent government's dominant political position likely limits these risks’. It said India's robust medium-term growth outlook is a key supporting factor for the rating. A clear improvement in corporate and bank balance sheets, which were under strain prior to the pandemic, is likely to facilitate a steady acceleration in investment in the coming years. Nevertheless, it said risks remain given dynamics in labour force participation, the lagging rural sector recovery, and uneven reform implementation record. 

It has forecast GDP growth of seven percent in the fiscal year ending March 2023 (FY23) on the back of sustained consumption and investment recoveries. It said ‘India is somewhat insulated from the gloomy global outlook in 2023, given its modest reliance on external demand. Nevertheless, we expect declining exports, heightened uncertainty and higher interest rates to slow growth to 6.2 percent in FY24’. It forecast the current account deficit (CAD) to rise to 3.3 percent of GDP this fiscal, from 1.2 percent in the previous year, due to a rising import bill from high commodity prices and robust domestic demand, and declining exports.

The CNX Nifty is currently trading at 18409.60, up by 24.30 points or 0.13% after trading in a range of 18396.50 and 18473.35. There were 34 stocks advancing against 15 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were HCL Technologies up by 1.58%, UPL up by 1.22%, SBI Life Insurance up by 0.87%, Tech Mahindra up by 0.85% and Axis Bank up by 0.79%. On the flip side, Britannia Industries down by 0.97%, Adani Enterprises down by 0.57%, Bharti Airtel down by 0.56%, ONGC down by 0.41% and Tata Consumer Products down by 0.33% were the top losers.

Asian markets are trading mixed; Nikkei 225 lost 190.17 points or 0.72% to 26,377.86, Straits Times fell 5.24 points or 0.16% to 3,248.73, KOSPI declined 2.73 points or 0.12% to 2,330.56 and Shanghai Composite was down by 3.16 points or 0.10% to 3,070.61. On the other hand, Hang Seng added 17.68 points or 0.09% to 19,112.48, Taiwan Weighted rose 100.00 points or 0.71% to 14,270.03 and Jakarta Composite was up by 20.53 points or 0.30% to 6,788.85.