Benchmarks trade higher in volatile session

Indian equity benchmarks made optimistic start on Thursday tracking firm global cues. But, soon lost momentum and turned volatile as investors watched the evolving COVID-19 situation in the country after a sudden rise in positive cases in countries such as the U.S., Japan, Korea, Brazil and China caused concern among Indian authorities. Now, markets are trading higher in early deals as sentiments remain optimistic as former Niti Aayog vice chairman Arvind Panagariya said the Indian economy is likely to grow at over 7 per cent in the current fiscal year, and observed that the growth rate should sustain next year too provided the forthcoming Budget does not have any negative surprises. Traders took note of report that India, which has already been in talks with Russia for a rupee-rouble payment system, is now looking at expanding the rupee trade with other nations as well, including several countries in Africa, UAE and Saudi Arabia among others. Though, tepid foreign flows capped the upside. As per provisional data available on the NSE, foreign institutional investors (FIIs) sold shares worth Rs 1,119.11 crore on December 21.

Most of the Asian markets are trading higher after Wall Street's three main stock indexes logged strong gains overnight on the back of upbeat consumer confidence data and solid earnings from corporate giants Nike and FedEx. Back home, auto components industry stocks were in focus as the Automotive Component Manufacturers Association of India said India's auto components industry witnessed a 34.8 per cent growth to Rs 2.65 lakh crore in first-half of 2022-23, riding on domestic demand, particularly from the passenger vehicles segment. In stock specific development, Reliance Industries was higher after its retail arm Reliance retail acquired Metro AG's wholesale operations in India for Rs. 2,850 crore.

The BSE Sensex is currently trading at 61226.71, up by 159.47 points or 0.26% after trading in a range of 60983.18 and 61464.38. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.18%, while Small cap index was down by 0.97%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.70%, TECK up by 0.62%, IT up by 0.50%, Bankex up by 0.16%, while Industrials down by 0.75%, Oil & Gas down by 0.62%, Capital Goods down by 0.58%, Utilities down by 0.49%, Energy down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.16%, Infosys up by 1.12%, Bharti Airtel up by 0.86%, Kotak Mahindra Bank up by 0.84% and HCL Technologies up by 0.72%. On the flip side, Tata Motors down by 1.01%, Axis Bank down by 0.95%, Bajaj Finserv down by 0.83%, Mahindra & Mahindra down by 0.51% and Tata Steel down by 0.46% were the top losers.

Meanwhile, expressing optimism over India’s economic situation, former Niti Aayog vice chairman Arvind Panagariya has said that the Indian economy is likely to grow at over 7 per cent in the current fiscal year, and he added that the growth rate should sustain next year too provided the forthcoming Budget does not have any negative surprises. He further said recessionary fears have been around for a while but so far neither the US nor the EU has gone into recession. He said ‘From the viewpoint of India, in terms of headwinds originating abroad, the worst is probably behind us’.

Panagariya said capital outflows induced by the hikes in policy rates by the US Fed Reserve had placed the rupee under considerable pressure. He said ‘Those flows have reversed with positive net portfolio inflows in November’, and added that inflation in the US is also coming down, suggesting the worst may be over in that country as well. But in the meantime, according to him, the rupee has appreciated against currencies such as the Euro and Yen which may contribute to weakness in exports in the coming year. He noted even prior to this episode, the rupee had been overvalued. He said ‘So, I would lean in favour of further depreciation of the rupee against the dollar’.

On unemployment, he said going by the Periodic Labour Force Survey (PLFS), which is the most reliable household survey available, he does not see that the unemployment rate is high. He said ‘Higher unemployment among the youth is not a new phenomenon. This rate has always been higher than the overall rate because youth do not take the first job they are offered. Instead, they wait in the hope of getting a better offer’. He also pointed out that in recent years, due to rising urban incomes, parents are able to support their children for longer. He said ‘As a result, the waiting period has become longer, which has resulted in an upward shift in this rate’, but pointed out that as per PLFS, the unemployment rate among those aged 15 to 29 years has fallen from 20.6 per cent in 2017-18 to 18.5 per cent in 2020-21.

The CNX Nifty is currently trading at 18246.25, up by 47.15 points or 0.26% after trading in a range of 18171.45 and 18318.75. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.18%, Infosys up by 1.13%, Apollo Hospital up by 1.12%, Adani Ports & SEZ up by 1.07% and Cipla up by 0.89%. On the flip side, BPCL down by 1.12%, Divi's Lab down by 1.09%, Axis Bank down by 0.93%, Bajaj Finserv down by 0.75% and UPL down by 0.74% were the top losers.

Asian markets are trading mostly in green; Nikkei 225 gained 139.26 points or 0.53% to 26,526.98, Straits Times advanced 20.77 points or 0.64% to 3,276.96, Hang Seng surged 491.13 points or 2.56% to 19,651.62, Taiwan Weighted rose 178.39 points or 1.25% to 14,412.79, KOSPI added 15.80 points or 0.68% to 2,344.75 and Shanghai Composite was up by 7.40 points or 0.24% to 3,075.81, while Jakarta Composite was down by 3.13 points or 0.05% to 6,817.53.