Firm trade continues over Dalal Street

Firm trade continued over the Dalal Street in early morning deals, with both Sensex and Nifty trading notably higher, despite negative cues from other Asian markets. Heavy buying at Metal and Telecom counters helped indices to remain higher, while Tata Steel gained the most. Traders were positive, as a Labour Bureau statement has said that retail inflation for industrial workers eased to 5.41 per cent in November 2022 as compared to 6.08 per cent in October 2022 and 4.84 per cent in November 2021 mainly due lower prices of certain food items. Food inflation stood at 4.30 per cent in November 2022 against 6.52 per cent of the previous month and 3.40 per cent during the corresponding month a year ago.

Adding more comfort among market participants, a report stated that corporate tax collections exceeded 3 per cent of the Gross Domestic Product (GDP) after a gap of two years in 2021-22, reflecting overall improvement in profitability of India Inc propelled by increase in demand for goods and services. Besides, another report stated that the Department for Promotion of Industry and Internal Trade (DPIIT) is working on a new industrial policy that proposes to increase financing sources for industry and a scheme for promoting Made in India brand.

On the global front, Asian markets were trading in red, as South Korea's manufacturing activity registered a steeper downturn towards the end of 2022 as subdued demand drove output and new orders down. The survey results from S&P Global showed that the factory Purchasing Managers' Index slid to 48.2 in December from 49.0 in November. A score below 50.0 indicates contraction. Overall orders posted its sharpest fall in two-and-a-half years. Foreign orders decreased at the most pronounced pace since mid-2020.

The BSE Sensex is currently trading at 61094.57, up by 253.83 points or 0.42% after trading in a range of 60764.63 and 61170.79. There were 17 stocks advancing against 11 stocks declining, while 2 stocks were unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.51%, while Small cap index up by 0.82%.

The top gaining sectoral indices on the BSE were Metal up by 2.59%, Telecom up by 1.02%, PSU up by 0.86%, Industrials up by 0.79% and Utilities up by 0.66%, while Healthcare down by 0.23%, Consumer Durables down by 0.22% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.79%, Tata Motors up by 1.77%, ICICI Bank up by 1.51%, Mahindra & Mahindra up by 1.27% and Bharti Airtel up by 1.04%. On the flip side, Asian Paints down by 1.56%, Tech Mahindra down by 0.64%, Indusind Bank down by 0.51%, Titan Company down by 0.50% and Wipro down by 0.38% were the top losers.

Meanwhile, India's manufacturing sector finished 2022 on a solid note with PMI of 57.8 in December, as business conditions improved to the greatest extent in over two years. Hiring activity was stretched to December, while more inputs were acquired as firms sought to supplement production and add to their inventories. Input cost inflation was contained, but there was a solid and quicker increase in selling prices.

According to the report, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) increased to 57.8 in December from 55.7 in November. It further noted that demand resilience boosted sales growth in December, with the rate of increase picking up to the quickest since February 2021. International demand for Indian goods also improved, but did so to a lesser extent than in November. Overall, new orders from abroad rose at the slowest pace in five months as several companies reportedly struggled to secure new work from key export markets.

The report further said that with overall demand remaining conducive of growth, manufacturers scaled up production at the end of 2022. The upturn in output was sharp and the best seen since November 2021. It also pointed to a further increase in buying levels among goods producers. Moreover, the rate of expansion was historically sharp and the strongest since May 2022.

Besides, the report noted that suppliers to the Indian manufacturing sector were comfortably able to accommodate for the uptick in input demand, with average lead times unchanged from November. Manufacturers themselves faced mild pressures on their operating capacities as signalled by a further, albeit slower, increase in outstanding business. To address backlogged work, Indian goods producers hired additional staff at the end of the year. The latest increase in employment was the tenth in consecutive months but the slowest since September.

The CNX Nifty is currently trading at 18181.65, up by 76.35 points or 0.42% after trading in a range of 18086.50 and 18199.80. There were 29 stocks advancing against 20 stocks declining, while 1 stock was unchanged on the index.

The top gainers on Nifty were Tata Steel up by 4.84%, Hindalco Industries up by 2.43%, ONGC up by 1.98%, Tata Motors up by 1.78% and ICICI Bank up by 1.51%. On the flip side, Bajaj Auto down by 1.75%, Asian Paints down by 1.36%, Hero MotoCorp down by 0.68%, Divi's Lab down by 0.68% and Tech Mahindra down by 0.64% were the top losers.

Asian markets were trading mostly in red; KOSPI fell 10.73 points or 0.48% to 2,225.67 and Jakarta Composite lost 19.85 points or 0.29% to 6,830.77.