Markets trade with traction after cautious start; HUL leads gainers

Indian equity benchmarks made cautious start on Tuesday tracking mixed cues from other Asian counterparts. But, soon markets gained traction and are trading higher with gains of around half a percent each in early deals on account of buying in the select heavyweights, led by Hindustan Unilever (HUL), HCL Technologies. Initially, traders were concerned as India’s exports contracted 12.2 per cent to $34.48 billion in December 2022, mainly due to global headwinds, and the trade deficit widened to $23.76 billion during the same period. Imports in December 2022 also declined 3.5 per cent to $58.24 billion as against $60.33 billion in the year-ago period. However, some support came in as the Reserve Bank of India said the fiscal health of the subcontinent's states is on the mend, with the consolidated gross fiscal deficit to gross domestic product ratio seen falling to 3.4% from 4.1% for the previous year.

On the global front, Asian markets are trading mixed as traders reacted to weak fourth-quarter economic data emerging from China, which reported its second-lowest annual economic growth in almost 50 years. Traders are also assessing stubborn inflation, possible recession and the growth outlook for the markets. Traders are also cautious as the Bank of Japan kicks off a two-day monetary policy meeting. Back home, India has cut its windfall tax on crude oil and exports of aviation turbine fuel (ATF) and diesel. In stock specific development, India Pesticides rallied after successfully commissioning Herbicide Technical at its Sandila plant.

The BSE Sensex is currently trading at 60347.17, up by 254.20 points or 0.42% after trading in a range of 60072.34 and 60405.42. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.14%, while Small cap index was down by 0.15%.

The top gaining sectoral indices on the BSE were Utilities up by 1.32%, Power up by 1.25%, FMCG up by 0.80%, TECK up by 0.34%, IT up by 0.31%, while Realty down by 0.49%, Healthcare down by 0.32%, Consumer Durables down by 0.21%, Telecom down by 0.20% were the few losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.11%, HCL Technologies up by 1.10%, NTPC up by 0.99%, Tata Motors up by 0.92% and Ultratech Cement up by 0.86%. On the flip side, Bajaj Finance down by 0.73%, Sun Pharma down by 0.49%, Indusind Bank down by 0.42%, Tata Steel down by 0.29% and Mahindra & Mahindra down by 0.28% were the top losers.

Meanwhile, the World Economic Forum (WEF) in its Chief Economists Outlook survey has said that a global recession is likely in 2023, but pressures on food, energy and inflation may be peaking. At the same time, it said some economies in the South Asia region, including Bangladesh and India, may benefit from global trends such as a diversification of manufacturing supply chains away from China. The WEF said globally businesses are expected to cut costs significantly in response to economic headwinds.

A majority of the World Economic Forum's Community of Chief Economists expect to see geopolitical tensions continuing to shape the global economy, and anticipate further monetary tightening in the United States and Europe. Almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18 per cent consider it extremely likely - more than twice as many as in the previous survey conducted in September 2022. A third of respondents consider a global recession to be unlikely this year. There is, however, a strong consensus that the prospects for growth in 2023 are bleak, especially in Europe and the US.

As per the survey, there are expectations of weak or very weak growth in 2023 in Europe, while 91 per cent expect weak or very weak growth in the US. In China, expectations of growth are polarised, with respondents almost evenly split between those who expect weak or strong growth. On inflation, it sees significant variation across regions, with the proportion expecting high inflation in 2023, ranging from just 5 per cent for China to 57 per cent for Europe.

More broadly, it expects the global landscape to remain challenging for businesses - 100 per cent of respondents expect global geopolitical trends to continue redrawing the map of global economic activity along new geopolitical fissures and fault lines. This wider economic shift will likely reverberate through trade, investment, labour and technology flows, creating myriad challenges and opportunities for business. One positive signal is that supply chain disruptions are not expected to cause a significant drag on business activity in 2023.

The CNX Nifty is currently trading at 17984.10, up by 89.25 points or 0.50% after trading in a range of 17886.95 and 17984.40. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 1.92%, HCL Technologies up by 1.15%, Larsen & Toubro up by 1.03%, Ultratech Cement up by 1.02% and Tata Motors up by 0.97%. On the flip side, Adani Enterprises down by 1.06%, Bajaj Finance down by 0.64%, Indusind Bank down by 0.59%, Hero MotoCorp down by 0.43% and Sun Pharma down by 0.39% were the top losers.

Asian markets are trading mixed; Hang Seng declined 231.63 points or 1.07% to 21,515.09, KOSPI dropped 13.9 points or 0.58% to 2,385.96, Shanghai Composite weakened 7.91 points or 0.25% to 3,219.68 and Straits Times was down by 4.51 points or 0.14% to 3,279.09. On the other hand, Nikkei 225 surged 337.38 points or 1.31% to 26,159.70, Jakarta Composite gained 73.02 points or 1.09% to 6,761.08 and Taiwan Weighted was up by 4.83 points or 0.03% to 14,931.84.