Domestic indices trade firm in early deals

Indian markets started the new week on optimistic note, after previous session’s pull back, broadly supported by positive trade in Asian counterparts. Domestic indices are trading firm in early deals on Monday with gains of around 0.40% each on account of value buying. Investors are now focusing on the start of the earnings season during the week with most of IT companies likely to report their numbers. As per a private report, Nifty50 companies to have cumulatively witnessed strong double-digit growth in their earnings for the quarter. Traders took encouragement as the Confederation of Indian Industry-Business Confidence Index (CII-BCI) survey showed that business confidence improved in the first quarter of this fiscal on the back of strong fundamentals, driven by healthy domestic demand and moderating oil and commodity prices. Some support also came in as the Reserve Bank of India said India’s foreign exchange reserves rose by $1.853 billion to $595.051 billion in the week ended on June 30. 

Most of the Asian markets are trading higher despite the broadly negative cues from Wall Street on Friday, as traders react to softer-than-expected US jobs data in the month of June that eased concerns about the interest rate outlook. Bucking the trend, Nikkei traded lower led by losses in technology and heavyweight stocks. Back home, banking stocks were in focus with report that the non-performing advances (NPAs) of banks are at multi-year lows, supported by substantial write-offs, especially for state-owned banks. In stock specific development, Reliance Industries leading the gainers after it sets June 20 record date for demerger with Reliance Strategic Investments.

The BSE Sensex is currently trading at 65543.73, up by 263.28 points or 0.40% after trading in a range of 65342.55 and 65563.57. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.05%, while Small cap index was up by 0.03%.

The gaining sectoral indices on the BSE were Energy up by 1.01%, Auto up by 0.68%, Metal up by 0.67%, Bankex up by 0.45% and Oil & Gas up by 0.35%, while IT down by 1.05%, Consumer Durables down by 0.91%, TECK down by 0.91%, Utilities down by 0.75% and Power down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 3.51%, Tata Motors up by 2.21%, Tata Steel up by 0.90%, HDFC up by 0.75% and SBI up by 0.74%. On the flip side, HCL Technologies down by 2.46%, Titan Company down by 2.00%, Bajaj Finance down by 1.64%, Power Grid down by 1.56% and Tech Mahindra down by 1.49% were the top losers.

Meanwhile, with the positive momentum in most of high frequency indicators like GST collection and air & rail passenger traffic, the Confederation of Indian Industry (CII) in its latest survey report has showed that its Business Confidence Index rose to 66.1 in April-June quarter from 64 in the previous quarter. Though, majority of the over 180 firms surveyed in the Business Outlook Survey (63 per cent) expect India's GDP growth to be 6-7 per cent in the current fiscal, decelerating from 7.2 per cent in the previous year, attributing it to global headwinds and uncertainties.

CII stated ‘It is important for the RBI to stick with a pause on the interest rate to preserve the growth impulses. This was emphasised in the survey results, as 53 per cent of the respondents expected the RBI to maintain status quo on the key interest rates in the first half of the current fiscal’. Notably, 65 per cent respondents are of the view that the fresh sightings in private investment will be sustained in the current fiscal. There are several factors which are driving private capex such as deleveraged corporate balance sheets, which has in turn increased the capacity of the corporates to invest once there is clear visibility on demand.

The survey results also show that 62 per cent of respondents expect muted global growth and geopolitical turbulence as the key business concerns in the current fiscal. The survey showed the interest rate pause by the RBI is expected to bring down the cost of capital for India Inc, thus fuelling fresh investments and giving private capex a further leg-up. It observed there are already signs of increase in capacity utilisation of the respondent companies, with more than half (52 per cent) expecting it to stand in a range of 75-100 per cent in April-June, up from 45 per cent in the previous quarter. It said nearly half of the respondents (47 per cent) expect an increase in employment in the first quarter of the current fiscal (Q1FY24) as compared to 43 per cent in the previous quarter. 

Mirroring the improvement in business sentiments, expectations for the June quarter FY24 have turned sanguine as well, with a majority of the respondents anticipating an increase in sales (55 per cent) and count of new orders (57 per cent). Consequently, the profit outlook for the quarter has strengthened as over one-third of the respondents (38 per cent) foresee an increase in profits, despite the majority of them indicating high input costs. The 123rd round of the Business Outlook Survey was conducted during May-June 2023 and saw the participation of more than 180 firms of varying sizes and across all industry sectors and regions of the country. 64 per cent of firms belonged to the MSME sector.

The CNX Nifty is currently trading at 19409.55, up by 77.75 points or 0.40% after trading in a range of 19346.80 and 19414.65. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 3.47%, HDFC Life Insurance up by 2.32%, Tata Motors up by 1.89%, Bajaj Auto up by 1.84% and JSW Steel up by 1.32%. On the flip side, HCL Technologies down by 2.52%, Titan Company down by 1.69%, Bajaj Finance down by 1.60%, Tech Mahindra down by 1.41% and Power Grid down by 1.31% were the top losers.

Asian markets are trading mostly in green; Hang Seng surged 143.36 points or 0.78% to 18,509.06, Jakarta Composite gained 35.2 points or 0.52% to 6,751.66, Taiwan Weighted added 10.07 points or 0.06% to 16,674.28, Straits Times rose 8.52 points or 0.27% to 3,147.99, Shanghai Composite advanced 5.45 points or 0.17% to 3,202.06 and KOSPI was up by 0.41 points or 0.02% to 2,527.12, while Nikkei 225 slipped 264.84 points or 0.82% to 32,123.58.