Markets continue to trade near neutral lines in late morning deals

Indian equity markets continued to trade near neutral lines in late morning deals after the U.S. Federal Reserve reiterated its fight against inflation with a quarter-point rate hike and the treasury secretary ruled out insuring all banking deposits. Further, cautiousness also prevailed in the markets as Fitch Ratings said India has some room to cut capital expenditure in FY24 as there may be pressure on revenue as the buoyancy assumptions in the Union budget may be inflated. There were some buzz in IT industry related stocks as a private report stated that  IT firms, which earn a significant share of their revenue from the United States and Europe, could see a growth slowdown due to potential delays in discretionary tech spending in the West.

On the global front, Asian markets were trading mostly in green despite negative cues from Wall Street overnight.  Back home, in the stock specific development, GR Infraprojects jumped after the company emerged as the L-1 bidder for a six-lane project worth Rs 872.17 crore in Maharashtra.
The BSE Sensex is currently trading at 58233.94, up by 19.35 points or 0.03% after trading in a range of 57838.85 and 58277.81. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.35%, while Small cap index up by 0.10%.

The top gaining sectoral indices on the BSE were Power up by 0.96%, Utilities up by 0.93%, FMCG up by 0.36%, Metal up by 0.34% and Telecom up by 0.31%, while PSU down by 0.51%, IT down by 0.49%, TECK down by 0.27%, Realty down by 0.21% and Consumer Durables down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.25%, Nestle up by 1.20%, Maruti Suzuki up by 1.14%, Bharti Airtel up by 0.92% and Indusind Bank up by 0.92%. On the flip side, Asian Paints down by 1.78%, HCL down by 1.13%, Wipro down by 0.91%, Reliance Industries down by 0.89% and SBI down by 0.83% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that sizeable equity commitments in under-construction projects and rising working capital needs will increase the debt burden of road developers but revenue growth is set to remain high, driven by strong contract awards and execution in the next fiscal (FY24). Besides, a high budgetary allocation to the sector will also help road developers.

According to the report, with the prevailing low leverage levels, developers have the headroom to borrow more to fund new projects, which will keep their credit risk profiles stable, and noted that asset monetisation will be crucial to rein in debt. It further stated that total equity commitment towards the under-construction public-private partnership (PPP) projects is estimated at over Rs 21,000 crore by fiscal 2025. The working capital requirements are expected to increase with expected strong revenue growth of 10-15 per cent over the next two fiscals. Accruals will fund around 45 per cent of these incremental outflows, while the balance is expected to be funded through asset monetisation and debt.

The report further said consequently, debt is expected to inch up to Rs 30,000 crore by March 2025 from Rs 17,000 crore in March 2022. Projects awarded through the hybrid annuity model (HAM) route typically form a large share of the National Highways Authority's total awards and these projects require 12-15 per cent of the project cost to be funded through equity. Additionally, working capital needs are expected to rise with strong revenue growth expected over the medium term, as is reflected in the healthy order book-to-revenue ratio of 3x.

The CNX Nifty is currently trading at 17152.65, up by 0.75 points after trading in a range of 17045.30 and 17172.00. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 1.35%, Tata Motors up by 1.27%, Nestle up by 1.22%, Maruti Suzuki up by 1.13% and Indusind Bank up by 0.99%. On the flip side, Asian Paints down by 1.83%, Bajaj Auto down by 1.42%, HCL down by 1.17%, Wipro down by 0.96% and Reliance Industries down by 0.85% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted added 103.49 points or 0.65% to 15,863.95, Hang Seng advanced 273.57 points or 1.4% to 19,865.00, Shanghai Composite strengthened 10.2 points or 0.31% to 3,275.95 and KOSPI increased 0.48 points or 0.02% to 2,417.44. However, Straits Times fell 6.62 points or 0.21% to 3,214.36 and Nikkei 225 slipped 47 points or 0.17% to 27,419.61.