Sensex, Nifty add gains in early noon deals

Indian equity benchmarks added gains in early afternoon deals, with both Sensex and Nifty trading with notable gains, on account of heavy buying at Realty and Metal counters. Traders were positive as S&P Global Ratings raised its assessment of India's banking sector, citing a strong recovery underway in the Indian financial sector. The rating agency said that India's 'Banking Industry Country Risk Assessment', an indicator of an economy's financial sector, has been raised one notch to 5 from 6 earlier. Besides, in an effort towards enhancing ethanol production capacities further with the vision to boost the agricultural economy and to reduce dependence on imported fossil fuel, the central government has extended timeline for disbursement of loan/completion of ethanol projects up to September 30, 2023.

On the global front, Asian markets were trading mixed, after Taiwan's industrial production continued to decrease sharply in May, mostly driven by a plunge in manufacturing output. The preliminary data from the Ministry of Economic Affairs showed that industrial production fell 15.73 percent year-on-year in May, slower than the 20.62 percent slump in the previous month. Production has been falling since June last year.

The BSE Sensex is currently trading at 63156.30, up by 186.30 points or 0.30% after trading in a range of 63054.84 and 63205.52. 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 by 0.30%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Realty up by 1.35%, Metal up by 0.86%, Healthcare up by 0.64%, Industrials up by 0.47% and TECK up by 0.44%, while Consumer Durables down by 0.18%, Telecom down by 0.14% and FMCG down by 0.08% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.26%, Tata Steel up by 1.14%, Bharti Airtel up by 1.03%, Axis Bank up by 0.84% and NTPC up by 0.84%. On the flip side, Titan Company down by 0.69%, Indusind Bank down by 0.65%, Maruti Suzuki down by 0.41%, Bajaj Finance down by 0.40% and Hindustan Unilever down by 0.34% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that Indian handicraft exports may witness a 6-8 per cent decline to $3.3 billion in FY24, mainly due to slowdown in discretionary spending in key global markets. It noted that amid the slowdown in key export markets, Indian handicraft exporters will face increased competition from their Chinese counterparts post easing of Covid-19 curbs in China. It said handicraft exporters will rely on lower pricing and extended credit to counter subdued demand, which may pull down operating profitability by 200-250 basis points to 12 per cent.

According to the report, the industry derives almost 60 per cent of its sales from the US and EU, which are battling high inflation and recession fears. Together, these two regions make up a market of more than $500 billion, which is largely tapped by China and Indian exporters have a limited share. Last fiscal, a favourable rupee-dollar exchange rate cushioned the impact of export sales by as much as 8 per cent. There will be no such respite this financial year as the exchange rate is expected to remain largely stable. 

The report noted that the longer credit periods may, in turn, stretch working capital cycles - from 90 days to more than 120 days, on average. This could imply higher working capital borrowings. It further noted that despite the likely increase in working capital borrowings, healthy balance sheets should keep debt metrics comfortable. Also, with demand expected to remain sluggish, the capex outlay will be negligible and will be funded through cash accrual. Hence, it said credit profiles of handicraft exporters will remain stable.

The CNX Nifty is currently trading at 18746.10, up by 54.90 points or 0.29% after trading in a range of 18714.25 and 18763.60. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were HDFC Life Insurance up by 3.17%, Divi's Laboratories up by 1.53%, Apollo Hospital up by 1.36%, Tata Motors up by 1.29% and Tata Steel up by 1.14%. On the flip side, Cipla down by 0.97%, Tata Consumer Products down by 0.68%, Titan Company down by 0.67%, Adani Ports and Special Economic Zone down by 0.66% and Indusind Bank down by 0.62% were the top losers.

Asian markets were trading mixed; Hang Seng advanced 387.53 points or 2.02% to 19,181.66, Shanghai Composite strengthened 39.13 points or 1.23% to 3,189.75, Straits Times rose 16.55 points or 0.52% to 3,206.23 and Jakarta Composite gained 0.39 points or 0.01% to 6,665.06, while KOSPI dropped 0.81 points or 0.03% to 2,581.39, Nikkei 225 slipped 160.48 points or 0.49% to 32,538.33 and Taiwan Weighted lost 171.34 points or 1.01% to 16,887.90.