Sensex, Nifty turn positive in early noon deals

A recovery witnessed over the Dalal street in early noon deals, with both Sensex and Nifty turning positive, aided by firm cues from other Asian markets along with buying at Healthcare and FMCG counters. Traders were getting relief, as the Asian Development Bank (ADB) in its latest forecast has maintained the growth outlook for developing economies in Asia and the Pacific at 4.8 per cent for 2023, and noted robust domestic demand continues to support the region’s recovery. According to the Asian Development Outlook (ADO) July 2023, ADB forecasted that inflation in the region is expected to fall continuously, approaching pre-pandemic levels as fuel and food prices decline. Further, highlighting the transformative potential of the Indian EV industry and its positive impact on both the economy and the environment, NITI Aayog Vice Chairman Suman Bery has emphasized the role of electric mobility in accelerating India’s economic growth along low-carbon pathways and facilitating the nation's net-zero vision for 2070.

On the global front, Asian markets were trading mostly in green, after the Malaysian trade surplus increased in June as imports fell faster than exports. The data from the statistical office showed that the trade surplus rose to MYR 25.8 billion in June from MYR 23.2 billion in the same month last year. The expected surplus was MYR 21.6 billion. In May, the trade surplus was MYR 15.7 billion. Exports fell 14.1 percent yearly in June after a 0.9 percent drop in the previous month.

The BSE Sensex is currently trading at 67143.87, up by 46.43 points or 0.07% after trading in a range of 66831.38 and 67183.50. There were 12 stocks advancing against 17 stocks declining, while one stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.10%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.90%, FMCG up by 0.89%, Energy up by 0.53%, Oil & Gas up by 0.52% and PSU up by 0.39%, while IT down by 1.05%, TECK down by 0.94%, Power down by 0.46%, Capital Goods down by 0.39% and Auto down by 0.18% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.64%, Sun Pharma up by 1.04%, Kotak Mahindra Bank up by 1.02%, SBI up by 0.67% and Indusind Bank up by 0.62%. On the flip side, Infosys down by 1.96%, HCL Technologies down by 1.37%, Ultratech Cement down by 1.28% and TCS down by 0.72% were the top losers.

Meanwhile, credit rating agency Crisil in its latest report has said that the Indian specialty chemicals sector will see revenue growth of 6-7% in fiscal 2024, with higher domestic demand (60% of total revenue) driving up volume growth even as macroeconomic headwinds in the US and Europe subdue exports. Besides, realisations are expected to remain flattish this fiscal, which will have a moderating effect on the overall revenue growth. It noted that last fiscal, revenue growth had plunged to 11% from 41% in fiscal 2022 owing to steep correction in realisations in the second half triggered by dumping from China, where consumption fell sharply owing to strict zero-Covid policy. 

According to the report, growth trends would be different across sub-segments, with the agrochemicals and fluorochemicals sub-segments (over 35% of total revenues) likely to see double digit growth in fiscal 2024. Agrochemicals help improve nutrient in crops besides control pests, and has been growing at a steady pace, while fluorochemicals cater to niche emerging verticals such cold storage, semi-conductors, EV batteries, and hydrogen fuel cells. On the other hand, sub-segments such as dyes & pigments, personal care & surfactants, and flavours & fragrances (together contributing over 40% of total revenues) shall see relatively lower growth as their demand is linked to discretionary spending. With realisations having bottomed out, higher sales volume and moderated crude-linked raw material prices will support operating margin, which is expected to stabilise at 14.0-14.5% this fiscal, almost similar to last fiscal.

The report further said operating margin had fallen 300-350 basis points last fiscal following dumping by China. Some companies, especially in the polymer segment, suffered material inventory losses. Capital expenditure (capex) is expected to remain high as manufacturers focus on augmenting capacity and expanding downstream to value-added products to seize opportunities emanating from Europe, where high labour cost makes local operations less competitive. This will be in addition to the continuing China+1 strategy adopted by global majors as part of their diversification strategy. Steady cash generation and healthy balance sheets will ensure debt metrics remain adequate, despite higher debt for capex and incremental working capital lending stability to credit profiles.

The CNX Nifty is currently trading at 19856.10, up by 22.95 points or 0.12% after trading in a range of 19758.40 and 19870.25. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Dr Reddy's Laboratories up by 2.04%, Grasim Industries up by 1.65%, ITC up by 1.60%, Kotak Mahindra Bank up by 1.24% and Sun Pharma up by 1.09%. On the flip side, Infosys down by 2.00%, HCL Technologies down by 1.44%, Ultratech Cement down by 1.36% and TCS down by 0.76% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted added 48.45 points or 0.28% to 17,164.89, Jakarta Composite gained 34.42 points or 0.5% to 6,864.62, Hang Seng advanced 11.94 points or 0.06% to 18,964.25 and Straits Times rose 1.04 points or 0.03% to 3,276.28, while KOSPI dropped 8.01 points or 0.31% to 2,600.23, Shanghai Composite weakened 21.8 points or 0.69% to 3,177.04 and Nikkei 225 slipped 405.51 points or 1.25% to 32,490.52.