Markets snap 2-day losing streak

Indian equity benchmarks snapped their 2-day losing streak and ended higher with gains of around half percent on Monday, aided by buying across Utilities, Power and Metal stocks. Benchmarks made a cautious start amid foreign fund outflows. Foreign institutional investors (FII) sold shares worth net Rs 266.98 crore on August 18. Some cautiousness also came in as retail inflation for farm and rural workers inched up to 7.43 per cent and 7.26 per cent in July compared to 6.31 per cent and 6.16 per cent, respectively, in June this year, mainly due to higher prices of certain food items. However, markets soon gained traction as traders got support after Moody’s Investors Service affirmed India’s sovereign rating at ‘Baa3’ with stable outlook and said high growth will support a gradual increase in income levels, which will further contribute to economic strength. It expects India’s economic growth to outpace all other G20 economies through at least the next two years, driven by domestic demand. 

Markets extended gains in second half of trading session, as sentiments remained up-beat with latest data by the Reserve Bank of India showing that India’s foreign exchange reserves snapped a three-week losing streak and increased by $708 million to $602 billion in the week ended August 11. The rise in the reserves was mainly on account of an increase in the foreign currency assets, which grew by $999 million to $534 billion in the previous week. Some optimism also came with Minister of State for Road Transport, Highways and Civil Aviation Gen V K Singh stating that with the Centre’s focus on development and infrastructure, India has gained the trust of many countries, which have come forward to invest in the country. Additional support also came with report stating that a healthy growth in India's services segments has helped the country's total exports and imports of goods and services to cross the $800 billion mark during the first half of 2023, despite a slowdown in global demand.

On the global front, Asian markets settled mostly higher on Monday, while European markets were trading higher as traders looked ahead to the Federal Reserve's summer conference for signs of whether the US central bank thinks inflation is under control or more interest rate hikes are needed to cool inflation. Back home, stocks related to plastic industry were in watch as the All India Plastics Manufacturers' Association’s President Mayur D Shah stated that India has the potential to emerge as a global plastic supplier and the domestic plastic market is expected to more than triple to reach Rs 10 lakh crore by 2027-28. 

Finally, the BSE Sensex rose 267.43 points or 0.41% to 65,216.09 and the CNX Nifty was up by 83.45 points or 0.43% to 19,393.60.        

The BSE Sensex touched high and low of 65,335.82 and 64,852.70, respectively. There were 24 stocks advancing against 7 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.87%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Utilities up by 2.56%, Power up by 2.31%, Metal up by 1.19%, Capital Goods up by 1.09% and Realty up by 1.03%, while there were no losing sectoral indices on the BSE. 

The top gainers on the Sensex were Bajaj Finance up by 2.70%, Indusind Bank up by 2.06%, Bharti Airtel up by 1.85% and NTPC up by 1.63% and ITC up by 1.31%. On the flip side, Jio Financial Services down by 5.00%, Reliance Industries down by 1.50%, Mahindra & Mahindra down by 0.87%, Maruti Suzuki down by 0.30%, SBI down by 0.28% were the top losers.

Meanwhile, Finance Secretary T V Somanathan has said that the government will stick to the fiscal deficit target of 5.9 per cent of the Gross domestic product (GDP) in FY24 as robust tax, non-tax collections will help meet the spending requirement and make up for any shortfall in disinvestment proceeds. He said although there would be a shortfall with respect to disinvestment, this shortfall would be met by non-tax revenue mobilisation.

It stated ‘Disinvestment target is unlikely to be met. However, I would say in aggregate the collective amount between disinvestment and non-tax revenue is likely to be very close to the budget. The total of disinvestment receipts, plus non-tax receipts are likely to be very close to the Budget Estimates.  He said ‘We expect to adhere to our fiscal deficit target this year...none of the events so far have caused anything for us to deviate from it.’

The government has already got a higher dividend from the Reserve Bank of India and expects higher dividends from public sector banks and other PSUs than estimated in the Budget. The Reserve Bank of India in May approved a Rs 87,416 crore-dividend payout to the central government for 2022-23, nearly triple of what it paid in the previous year. The government was expecting Rs 48,000 crore from the RBI, public sector banks and financial institutions in the current fiscal.

The CNX Nifty traded in a range of 19,425.95 and 19,296.30. There were 38 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 2.75%, Power Grid Corporation up by 2.66%, Adani Ports & SEZ up by 2.59%, Adani Enterprises up by 2.31% and Hindalco up by 2.09%. On the flip side, Jio Financial Services down by 5.00%, Reliance Industries down by 1.11%, Mahindra & Mahindra down by 0.91%, Britannia Industries down by 0.75%, Bajaj Auto down by 0.36% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 43.3 points or 0.59% to 7,305.73, France’s CAC rose 82.32 points or 1.14% to 7,246.43 and Germany’s DAX gained 105.66 points or 0.67% to 15,679.92.

Asian markets settled mostly higher on Monday, despite mixed cues from Wall Street last Friday ahead to the US Federal Reserve's summer conference for signs of whether the US Federal Reserve thinks inflation is under control or more interest rate hikes are needed to cool inflation. Although, Chinese shares declined as yuan tumbled after a smaller-than-expected rate cut from the People’s Bank of China disappointed markets.