Markets open at record highs; Nifty above 19,750 level

Indian equity benchmarks opened at record highs on Tuesday tracking overnight gains on Wall Street. The Nifty opened above the 19,750 level for the first time, while the Sensex held above the 66,700 mark. Markets trimmed some of their opening gains but continue to trade in green in early deals led by gains in banking stocks. Foreign fund inflows also supported domestic sentiments. Foreign institutional investors (FII) net purchased shares worth net Rs 73 crore on July 17. Some optimism came in as Federation of Indian Chambers of Commerce & Industry’s (FICCI) latest quarterly survey on manufacturing reveals that sentiment is positive during the first quarter (Q1). Though, upside remained limited amid cautiousness as RBI’s monthly bulletin noted that the Gross foreign direct investments (FDI) into India moderated to $12.2 billion in April-May 2023, from $16.5 billion in April-May 2022. Gross FDI had moderated from $84.8 billion in FY22 to $71.4 billion in FY23. Broader indices were also underperforming larger peers with marginal cut.

On the global front, all the Asian markets are trading lower as traders seem cautious and reluctant to make significant moves amid data showing a slower than expected pace of economic growth in China in the second quarter, raising concerns about the outlook for global growth. Back home, gold jewellery related stocks were in focus as the government clarified that import restrictions on certain gold jewellery and articles are not applicable for units in the special economic zones (SEZs). In stock specific development, Sheela Foam soared after the company announced that it will buy a 94.66 per cent stake in Kurlon Enterprises at an equity valuation of Rs 2,150 crore. The indicative time period for the completion of the acquisition is by or before November 30, 2023.

The BSE Sensex is currently trading at 66767.44, up by 177.51 points or 0.27% after trading in a range of 66696.07 and 66985.50. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.07%, while Small cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were Bankex up by 0.55%, Energy up by 0.42%, Oil & Gas up by 0.35%, Power up by 0.19% and Industrials up by 0.17%, while Consumer Durables down by 0.46%, Metal down by 0.25%, Telecom down by 0.20%, Healthcare down by 0.14% and Auto down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.30%, Indusind Bank up by 1.06%, Infosys up by 1.03%, ICICI Bank up by 0.87% and HDFC Bank up by 0.70%. On the flip side, Bharti Airtel down by 1.64%, Tata Motors down by 1.56%, Titan Company down by 1.56%, Tech Mahindra down by 0.83% and Ultratech Cement down by 0.76% were the top losers.

Meanwhile, notwithstanding global headwinds, the Federation of Indian Chambers of Commerce & Industry (FICCI) in its latest survey report has said that manufacturing sentiments in India remained positive during June quarter FY24. The latest quarterly survey on manufacturing outlook by the industry body observed that after a revival in the Indian economy in FY22, momentum of growth has continued in the subsequent quarters as well. The survey assessed the sentiments of manufacturers for April-June (2023-24) for nine major sectors namely automotive & auto components, capital goods & construction equipment, cement, chemicals fertilizers and pharmaceuticals, electronics & white goods, machine tools, metal & metal products, textiles, apparels & technical textiles, toys & handicraft.

Responses have been drawn from over 400 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 7.70 lakh crore. In March quarter FY23, 55 per cent of the respondents reported higher production levels. The survey said this assessment is also reflective in order books as 58 per cent of the respondents in Q1 FY24 have had higher number of orders and demand conditions especially domestic, continue to be optimistic in Q2 as well. The existing average capacity utilization in manufacturing is around 75 per cent, which reflects sustained economic activity in the sector and is same as in the previous quarter. The future investment outlook has also improved as compared to the previous quarter as over 56 per cent of respondents reported plans for investments and expansions in the coming six months. This is an improvement over the previous survey where 47 per cent reported plans for investments in next six months.

However, global economic slowdown caused by the recessionary climate in America, the EU and other developed nations and Russia-Ukraine war continue to add to volatilities in supply chain and demand. The survey said high raw material prices, increased cost of finance, cumbersome regulations and clearances, high logistics cost due to high fuel prices, low global demand, high volume of cheap imports into India, shortage of skilled labour, highly volatile prices of certain metals etc and other supply chain disruptions are some of the major constraints which are affecting expansion plans of the respondents. The hiring outlook looks positive as over 38 per cent of the respondents are looking at hiring additional workforce in the next three months. 

The average interest rate paid by manufacturers has more and less remained same at little over 9 per cent per annum during last quarter and the highest rate at which loan has been raised is 16 per cent per annum. Based on expectations, electronics & white goods sector is likely to enjoy strong growth. Sectors like auto & auto components and capital goods & construction machinery are expected to have strong growth forecasts. Cement and machine tools sectors are also to experience moderately strong growth. Rest all the sectors are expected to register moderate to moderately low growth in Q1FY24.

The CNX Nifty is currently trading at 19757.90, up by 46.45 points or 0.24% after trading in a range of 19738.85 and 19811.25. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.35%, Infosys up by 1.13%, BPCL up by 1.07%, Indusind Bank up by 1.07% and ICICI Bank up by 0.89%. On the flip side, LTIMindtree down by 2.28%, Bharti Airtel down by 1.63%, Titan Company down by 1.48%, Tata Motors down by 1.24% and Dr. Reddy's Lab down by 0.95% were the top losers.

All Asian markets are trading lower; Hang Seng declined 426.4 points or 2.25% to 18,987.38, Taiwan Weighted lost 46.89 points or 0.27% to 17,287.40, Jakarta Composite plunged 34.16 points or 0.5% to 6,832.98, Nikkei 225 slipped 20.01 points or 0.06% to 32,371.25, KOSPI dropped 14.06 points or 0.54% to 2,604.94, Shanghai Composite weakened 11.37 points or 0.36% to 3,198.26 and Straits Times was down by 5.12 points or 0.16% to 3,249.31.