Benchmarks erase losses to end in green on Wednesday

Indian equity benchmarks erased all of their initial losses to end in green on Wednesday propped up by robust fag-end buying in Utilities, Power and Capital Goods stocks. Markets made a negative start and stayed in red for most part of the day as traders got anxious amid a private report stating that like all emerging markets that rely upon the rest of the world for commodities and capital, India has spent the last two years battling the twin challenges posed by more expensive raw materials and a stronger dollar. A weak rupee against major rivals overseas weighed on market sentiment and restricted gains. Selling further crept in during afternoon deals, even as exchange data showing that Foreign Institutional Investors (FIIs) were net buyers in capital markets as they bought shares worth Rs 721.37 crore on Monday.

However, recovery took place in last leg of trade and markets cut all of their initial losses. Traders took some support with Moody's Analytics’ statement that India's domestic economy, rather than trade, is its primary engine of growth and the slowdown in economic activity late last year will only be temporary. Some support also came as Finance Ministry data showed that there has been a rise of 133 per cent in collection of major cess and surcharges levied by the Central government on various products during the five-year period between 2017-18 and 2022-23, as it went up from Rs 2,18,553 crore in 2017-18 to Rs 5,10,549 crore in 2022-23.

On the global front, Asian markets settled mostly lower on Wednesday, while European markets were trading mostly in red, amid fears of further rate hikes and a prolonged higher rate regime as indicated by the US Federal chief spooked investors. Fed Chair Jerome Powell said in his testimony to Congress the US central bank will likely need to hike interest rates more than previously expected. Worsening sentiment towards China also weighed markets, as warning on a potential escalation in Sino-U.S. tensions from China's foreign minister soured risk appetite.

Back home, power industry stocks were in limelight as rating agency ICRA said India’s thermal plant load factor (PLF) improved to 64 percent in FY2023 from 58.9 percent in FY2022, driven by a strong recovery in electricity demand growth in the country. Sugar stocks were in focus with a report that India has a cushion to export additional 1 million tonnes of sugar this year if the domestic output reaches the estimated 33.6 million tonnes.

Finally, the BSE Sensex rose 123.63 points or 0.21% to 60,348.09 and the CNX Nifty was up by 42.95 points or 0.24% to 17,754.40.

The BSE Sensex touched high and low of 60,402.85 and 59,844.82, respectively. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.61%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Utilities up by 1.91%, Power up by 1.79%, Capital Goods up by 1.23%, Industrials up by 1.09% and Auto up by 0.95%, while Realty down by 0.50%, Consumer Durables down by 0.44%, Metal down by 0.43%, IT down by 0.41% and Healthcare down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.75%, Mahindra & Mahindra up by 1.61%, Larsen & Toubro up by 1.37%, NTPC up by 1.10% and ITC up by 1.06%. On the flip side, Bajaj Finance down by 2.30%, Tech Mahindra down by 1.14%, Infosys down by 1.00%, Sun Pharma down by 0.86% and Kotak Mahindra Bank down by 0.65% were the top losers.

Meanwhile, rating agency ICRA has said that it revised the thermal power sector outlook to ‘stable’ from ‘negative’ owing to strong demand growth and realisation of dues from discoms under LPS (late payment surcharge) scheme. The agency mentioned ‘The outlook for the thermal power segment has been revised to stable from negative, supported by the healthy improvement in the thermal PLF (plant load factor or capacity utilisation) level in FY2023, which is likely to sustain in FY2024, coupled with the reduction in dues from state distribution utilities (discoms).

It stated the PLF improvement is driven by the strong recovery in electricity demand growth in the country. A sustained growth in electricity demand is expected to improve the visibility on the signing of new power purchase agreements (PPAs) for the thermal IPPs (independent power producers). Vikram V, VP & Sector Head - corporate ratings, ICRA, said, the all-India thermal PLF level is expected to improve from 58.9% in FY2022 to 64.0% in FY2023 and further to 65.5% in FY2024, led by healthy demand growth and limited thermal capacity addition.

The full-year demand growth for FY2023 is estimated at 9.5-10%, which is likely to moderate in FY2024, though remaining healthy at 5.5-6%. Further, he stated that the power-generating companies are benefiting from the realisation of overdue from discoms under the late payment surcharge scheme notified by the power ministry in June 2022.

The CNX Nifty traded in a range of 17,766.50 and 17,602.25. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.81%, Adani Ports & SEZ up by 3.06%, Adani Enterprises up by 2.83%, Bajaj Auto up by 2.20% and Larsen & Toubro up by 1.44%. On the flip side, Bajaj Finance down by 2.20%, Hindalco down by 1.39%, Tech Mahindra down by 1.02%, Infosys down by 0.96% and Apollo Hospital down by 0.84% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 19.55 points or 0.25% to 7,899.93 and France’s CAC fell 26.51 points or 0.36% to 7,312.76, while Germany’s DAX gained 0.64 points or 0% to 15,560.17.

Asian markets settled mostly lower on Wednesday, tracking Wall Street sell off overnight after US Chair Powell warned that US interest rate might need to go up faster and higher than expected to get inflation under control. Meanwhile, investors are awaiting the release of US nonfarm payrolls report later in the week and next week's inflation figures. Chinese shares declined after trade data showed Chinese imports and exports both shrank in the first two months of the year that has clouded the outlook for the Chinese economy. However, Japanese shares gained as a weakening yen buoyed exporters.