Key gauges trade marginally in red in morning deals

Indian equity benchmarks were trading marginally in red in morning deals, as traders remained on sidelines ahead of the Reserve Bank of India's monetary policy decision due Wednesday. Some concern also came with data available with the BSE showing that foreign portfolio investors were net sellers on Monday, offloading shares worth Rs 1,218.14 crore. Traders took a note of report that Minister of State for Finance -- (MoS) Pankaj Chaudhary’s statement that the government is aware of the downside risks to the Indian economy and will closely monitor the current account deficit (CAD) in view of the decline in export growth. Further, he said the government has implemented several measures to limit the impact of external factors on India’s inflation and growth.

On the global front, Asian markets were trading mostly in green despite the broadly negative cues from global markets overnight as traders remain cautious and continued to refrain from creating fresh long positions. Back home, stocks related to Coal sector remained in watch as coal minister Pralhad Joshi said the country's coal production target has been fixed at 1,017 million tonnes for the next fiscal. He said the steps were being taken by the Centre to augment the coal output in the country by engaging mine developers and operators.

The BSE Sensex is currently trading at 60407.53, down by 99.37 points or 0.16% after trading in a range of 60366.59 and 60655.14. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.11%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Power up by 0.56%, Utilities up by 0.41%, Realty up by 0.16%, Bankex up by 0.12% and Capital Goods up by 0.10%, while Metal down by 1.41%, FMCG down by 0.99%, Telecom down by 0.80%, Consumer Durables down by 0.74% and Auto down by 0.73% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.23%, Bajaj Finance up by 0.67%, Ultratech Cement up by 0.67%, Kotak Mahindra Bank up by 0.65% and Reliance Industries up by 0.47%. On the flip side, Tata Steel down by 3.44%, ITC down by 2.39%, Tata Motors down by 1.21%, Sun Pharma down by 1.06% and Maruti Suzuki down by 0.86% were the top losers.

Meanwhile, with evolving macroeconomic headwinds leading to lower discretionary IT spending, ICRA in its report stated that the Indian IT services industry’s growth momentum is likely to slow down in the near to mid-term. Despite expectation of slowdown in growth momentum, ICRA maintains its stable outlook on the Indian IT services industry supported by its cost competitiveness, growing demand for IT services (including digital and cloud services) and healthy credit profile of industry participants.

It sees lower hiring by the IT service companies in the near term given that excess capacities were added in FY2022 and expects moderation in demand compared to previous fiscals amid macroeconomic headwinds. Indian IT services companies have witnessed a moderation in growth in the last two quarters in constant currency terms owing to the base effect and evolving macroeconomic headwinds in key markets of the US and Europe. It noted that due to these headwinds, the decision-making towards discretionary IT spending has seen a slight deferment, while the cost optimisation deals continue to generate stable demand, it noted.

It estimated that operating profit margins will moderate owing to wage cost inflation and normalisation of operational overheads partially offset by currency gains. ICRA's sample set of leading IT services companies reported a year-on-year revenue growth of 18.4 per cent in Rupee terms and 9.9 per cent in dollar terms in nine months of FY2023, against about 17-18 per cent YoY growth in USD terms in FY2022. In terms of the segment-wise trend, growth in the BFSI (banking, financial services and insurance) segment, one of the key segments for IT companies, has tapered compared to the other segments in recent quarters. This is partially attributable to lower lending activity.

According to ICRA ‘Moreover, if the macroeconomic headwinds persist, the mortgage lending and the retail segments are expected to witness relatively higher moderation in growth, compared to the manufacturing and the healthcare segments’. The industry is also grappling with high employee attrition in recent times, led by the demand-supply gap, especially for digital tech talent. However, the attrition is on a declining trend from the last two quarters and ICRA expects attrition to further decline over the next two-three quarters before stabilising, supported by a strong hiring in FY2022, which has addressed the demand-supply mismatch to an extent.

The CNX Nifty is currently trading at 17754.35, down by 10.25 points or 0.06% after trading in a range of 17730.60 and 17811.15. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 13.65%, Adani Ports &SEZ up by 6.96%, Dr. Reddy's Lab up by 1.80%, Indusind Bank up by 1.19% and JSW Steel up by 0.89%. On the flip side, Tata Steel down by 3.32%, Hindalco down by 2.75%, ITC down by 2.45%, Hero MotoCorp down by 2.04% and Sun Pharma down by 1.20% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted added 37.36 points or 0.24% to 15,430.18, Hang Seng advanced 177.27 points or 0.83% to 21,399.43, Shanghai Composite strengthened 10.62 points or 0.33% to 3,249.32, KOSPI increased 14.05 points or 0.58% to 2,452.24 and Jakarta Composite gained 59.53 points or 0.86% to 6,933.32.

On the flip side, Straits Times fell 8.22 points or 0.24% to 3,377.71 and Nikkei 225 slipped 19.8 points or 0.07% to 27,673.85.