Domestic indices trade firm in early deals; JIO Fin leads gainers

Indian equity benchmarks made optimistic start on Wednesday tracking overnight rally on Wall Street as well as broadly positive cues from Asian counterparts, as softer-than-expected consumer sentiment and job openings data, helped ease concerns about interest rates, lifting investor sentiment. Chinese stimulus measures are also aiding market sentiment. Domestic markets are trading firm in early deals with gains of over 0.40% each as buying in Telecom, Realty and Auto counters. Foreign fund inflows aided the sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) bought shares worth Rs 61.51 crore on August 29. Some support came in with report that the Centre is likely to infuse capital in certain regional rural banks (RRBs) during 2023-24, depending on their performance and adoption of digitisation. 

On the sectoral front, auto stocks are in focus as Union Heavy Industries Minister Mahendra Nath Pandey said the government has decided to extend the Rs 25,938-crore production-linked incentive scheme for the automotive sector by one year. In stock specific development, Lupin gained after launching Propranolol LA (long-acting) capsules in Canada.

The BSE Sensex is currently trading at 65390.95, up by 315.13 points or 0.48% after trading in a range of 65288.25 and 65431.54. There were 28 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.67%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Telecom up by 0.88%, Realty up by 0.87%, Auto up by 0.83%, Metal up by 0.83% and Industrials up by 0.68%, while Oil & Gas down by 0.10% was the only losing indices on BSE.

The top gainers on the Sensex were JIO Financial Services up by 4.99%, Tata Steel up by 1.67%, Axis Bank up by 1.62%, Mahindra & Mahindra up by 1.40% and Tech Mahindra up by 1.33%. On the flip side, Power Grid down by 0.78%, NTPC down by 0.18% and Asian Paints down by 0.01% were the few losers.

Meanwhile, expressing some concern over India’s monsoon and inflation, CARE Ratings in a report titled 'Erratic Monsoon, Food Prices, and Rural Demand' has said that the erratic monsoon, which is affecting sowing, and global developments will keep the food inflation at elevated levels and would also hit the demand in rural India owing to lower income and inflation. It added the government's budgeted cuts on subsidies introduced during the pandemic can further weaken rural demand.

According to the report, an uneven monsoon increases the risk to domestic food prices, while global developments don't support domestic inflationary conditions either. It said the food inflation will maintain an elevated trajectory in the coming months, gradually receding by October in conjunction with the influx of fresh harvest into the market. The report said ‘our analysis indicates that food and beverage inflation is projected to peak, reaching an average of 9.4% in the second quarter of FY24. Subsequently, we expect a gradual cooling, with an estimated 6.9% in the third quarter of FY24, followed by a further decline to 5.9% in the fourth quarter of FY24’.

The risk to global food prices remains elevated with recent weather-related disruptions in South Asian countries and geopolitical developments. CARE Ratings said ‘higher global food prices can pass through to domestic consumption baskets as import dependency remains high on some items like edible oil and pulses. India's import dependency of pulses and edible oil for domestic consumption currently stands at around 55 per cent and 9 per cent, respectively’. The erratic progress of the southwest monsoon has resulted in a spike in the prices of the domestic food basket, which has a weight of about 40 per cent in the CPI inflation basket.

A deficit monsoon has adversely affected kharif sowing with a decline in the sowing of pulses (-8.3 per cent yoy), oilseeds (-0.9 per cent yoy), and cotton (-1.8 per cent yoy). Lower rainfall and the resultant lower reservoir levels will have implications for the rabi crops that have a higher dependency on irrigation. The cumulative water levels in 146 key reservoirs across India have dipped below the 10-year average as a result of slow monsoon progress over the past week. Pulses, coarse grains, and oil seeds remain India's most rain-dependent food crops, with a higher proportion of unirrigated areas. A deficit in the sowing of these crops can further add to the inflationary pressures.

The CNX Nifty is currently trading at 19435.20, up by 92.55 points or 0.48% after trading in a range of 19407.85 and 19440.15. There were 43 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were JIO Financial Services up by 4.99%, Tata Steel up by 1.63%, Hindalco up by 1.55%, Axis Bank up by 1.50% and Mahindra & Mahindra up by 1.40%. On the flip side, BPCL down by 1.33%, Power Grid down by 0.78%, Apollo Hospital down by 0.33%, Divi's Lab down by 0.20% and Britannia Industries down by 0.16% were the top losers.

All Asian markets are trading higher; Nikkei 225 surged 228.10 points or 0.7% to 32,455.07, Taiwan Weighted added 107.6 points or 0.64% to 16,731.25, Hang Seng advanced 81.64 points or 0.44% to 18,565.67, Jakarta Composite gained 29.06 points or 0.42% to 6,986.90, KOSPI increased 16.89 points or 0.66% to 2,569.05, Straits Times rose 5.30 points or 0.16% to 3,228.39 and Shanghai Composite was up by 1.83 points or 0.06% to 3,137.72.