Lackluster trade continues over Dalal Street

Lackluster trade continued over the Dalal Street in early afternoon deals, on the back of negative cues from other Asian markets along with selling at Telecom and Utilities counters. Some anxiety came, amid private reports that Rakesh Mohan, a part-time member of the Prime Minister's Economic Advisory Council said that after the failure of the Silicon Valley Bank (SVB) it will not be surprising if more financial institutions fail globally, but no direct impact is expected on Indian banks, though a reversal of capital flows and the consequent impact on the exchange rate could affect the economy. Meanwhile, India will appeal against a ruling of the World Trade Organization's (WTO) trade dispute settlement panel which ruled that the country's import dues on certain information and technology products are inconsistent with the global trade norms.

On the global front, Asian markets are trading mostly in red, even after China's gross domestic product was up 4.5 percent on year in the first quarter of 2023. That beat expectations for an increase of 4.0 percent and was up from 2.9 percent in the three months prior. On a seasonally adjusted quarterly basis, GDP gained 2.2 percent - matching forecasts following the flat reading in the previous quarter.

The BSE Sensex is currently trading at 59841.12, down by 69.63 points or 0.12% after trading in a range of 59717.29 and 60113.47. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.59%, while Small cap index was up by 0.41%.

The top gaining sectoral indices on the BSE were Realty up by 1.55%, Healthcare up by 0.44%, Metal up by 0.42%, PSU up by 0.32% and Bankex up by 0.27%, while Telecom down by 0.64%, Consumer Durables down by 0.54%, Utilities down by 0.53%, Power down by 0.49% and FMCG down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies. up by 1.77%, Indusind Bank up by 1.70%, Nestle up by 0.94%, Tata Motors up by 0.85% and Maruti Suzuki up by 0.63%. On the flip side, Power Grid Corporation of India down by 2.20%, Titan Company down by 1.44%, Reliance Industries down by 1.13%, Tech Mahindra down by 0.96% and Ultratech Cement down by 0.46% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that continued government push to build infrastructure will drive cement demand further this fiscal (FY24) by 8-9 per cent over 9 per cent growth in FY23, which will help the sector see some recovery in profitability. According to the report, which has a neutral outlook for the sector for the year, recovery in profitability despite the inflationary pressure and healthy balance sheets will keep the sector in good stead despite the large capex pipeline.

The report further said softening fuel cost to drive recovery in operating margins even as the industry is likely to increase prices only in low single digit. It expects operating margins to recover to Rs 950-1,000/MT in FY24 on the back of softening power and fuel cost. Downside risks could arise from a rebound in coal and petcoke prices, though. After the strong profitability of over Rs 1,000/MT during FY20-22, operating margin has likely fallen to Rs 750-800/MT in FY23 as input costs soared.

Ind-Ra said the infrastructure push by the government will be key growth driver like in the past three pre-election years when the GDP multiplier averaged 1.5 times compared to the long-period average of 0.9 times. Another key driver will be the agricultural sector and the focus on completing affordable housing projects. But the report added that if the likely adverse impact of the El Nino impacted the monsoon, it could pose a downside risk.

However, it said the large expansion plans will keep capacity utilisation below 70 per cent, up from 65 per cent in FY23. It expects 75 per cent of the announced expansion of around 150 million tonnes is actually likely to come on stream during FY23-25. But since most of the capacity addition is coming in grinding units, clinker utilisation is likely to remain 800-1,000 basis points higher than cement utilisation, indicating a higher effective utilisation rate. The report also sees the industry undergoing more consolidation, especially in the south in the near-to-medium term, given the widening gap between leading and small players amid a tough environment and aggressive medium-term capacity targets of large players.

The CNX Nifty is currently trading at 17688.20, down by 18.65 points or 0.11% after trading in a range of 17650.50 and 17766.60. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were HCL Technologies up by 1.86%, Indusind Bank up by 1.72%, Coal India up by 1.05%, Dr Reddy's Laboratories up by 1.03% and Nestle up by 0.91%. On the flip side, Power Grid Corporation of India down by 2.26%, Titan Company down by 1.48%, Bajaj Auto down by 1.47%, Reliance Industries down by 1.17% and Apollo Hospitals Enterprise down by 1.09% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 192.82 points or 0.94% to 20,589.63, Taiwan Weighted lost 94.11 points or 0.59% to 15,869.44, Straits Times fell 15.57 points or 0.47% to 3,303.69 and KOSPI dropped 4.82 points or 0.19% to 2,571.09, while Shanghai Composite strengthened 5.24 points or 0.15% to 3,390.85, Jakarta Composite gained 42.95 points or 0.63% to 6,830.53 and Nikkei 225 surged 144.05 points or 0.5% to 28,658.