Markets trade higher in early deals after cautious start

Indian equity benchmarks made cautious start on Tuesday ahead of India’s Q3 gross domestic product (GDP) numbers for the fiscal year 2022-23 to be out later in the day. In the previous quarter, the GDP growth rate moderated to 6.3% after a double-digit growth in Q1. Some cautiousness also came in as ICRA Ratings said India Inc's operating profit margin narrowed by a sharp 2.37% in the December quarter to 16.3% on an annual basis due to high inflation and rising energy costs. Soon, markets gained traction and are trading higher with notable gains in early deals as traders going for bargain hunting for beaten down but fundamentally strong stocks after recent losses in the markets. Also, the Indian rupee strengthened against the U.S. dollar in early deals on the back of a possible RBI intervention in the foreign exchange market and a pause in the greenback's rally.

Global cues remained supportive with Asian counterparts trading higher following the broadly positive cues from global markets overnight, as traders continued to pick up stocks at reduced levels following heavy selling last week. Taiwan is closed for Peace Memorial Day holiday. Back home, fertilizer industry stocks remained in focus as the Fertiliser Ministry data showed that the country's fertiliser imports rose by 3.9 per cent to 19.04 lakh tonnes in January this year compared to the year-ago period.

The BSE Sensex is currently trading at 59446.35, up by 158.00 points or 0.27% after trading in a range of 59227.65 and 59483.72. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Auto up by 1.04%, IT up by 0.97%, TECK up by 0.81%, Consumer Durables up by 0.54%, Realty up by 0.49%, while Metal down by 1.14%, Oil & Gas down by 0.82%, Energy down by 0.81%, Utilities down by 0.51%, Power down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.36%, Tech Mahindra up by 1.57%, TCS up by 1.43%, Tata Motors up by 1.03% and Sun Pharma up by 0.87%. On the flip side, SBI down by 0.61%, Reliance Industries down by 0.51%, Tata Steel down by 0.47%, Bharti Airtel down by 0.44% and Indusind Bank down by 0.37% were the top losers.

Meanwhile, with high inflation and rising energy costs, domestic ratings agency ICRA Ratings said India Inc's operating profit margin narrowed by a sharp 2.37% in the December quarter to 16.3% on an annual basis. When viewed sequentially, it said the operating profit margin for the December quarter expanded by 1.8% over the preceding September quarter, and attributed the same to the easing in input costs and also price hikes by many companies.

The agency said going forward, while price increases and sequential input cost reductions can boost margins in the near term, geopolitical tensions, recessionary concerns, and forex volatility continue to pose risks. The revenue of companies, excluding those in the financial sector, grew 17.2%, which was as per expectations, and that hotels, oil and gas, auto, airlines, and power sectors led the way. However, the revenue growth was a muted 1.4% from a sequential perspective due to inflationary headwinds weighing on consumer sentiment.

The interest coverage ratio for the agency's sample adjusted for sectors with relatively low debt levels like IT, FMCG and pharma witnessed a moderation in the third quarter to 4.3 times from 5.1 times on a sequential basis. This was mainly on account of lower earnings in select sectors compared with historical trends amid higher interest rates.

The CNX Nifty is currently trading at 17434.05, up by 41.35 points or 0.24% after trading in a range of 17367.40 and 17440.45. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 2.32%, Bajaj Auto up by 1.87%, Tech Mahindra up by 1.58%, TCS up by 1.43% and Eicher Motors up by 1.09%. On the flip side, Adani Enterprises down by 1.86%, Hindalco down by 1.58%, Coal India down by 1.20%, Cipla down by 1.06% and JSW Steel down by 0.88% were the top losers.

Asian markets are trading mostly in green; Hang Seng surged 82.05 points or 0.41% to 20,025.56, Nikkei 225 advanced 54.12 points or 0.2% to 27,478.08, KOSPI increased 22.86 points or 0.95% to 2,425.50, Straits Times rose 15.63 points or 0.48% to 3,278.87, Shanghai Composite strengthened 2.37 points or 0.07% to 3,260.40 and Jakarta Composite was up by 1.39 points or 0.02% to 6,856.17.