Benchmarks struggle for direction; trade flat in early deals

Indian equity benchmarks made flat opening with positive bias on Tuesday tracking overnight gains on Wall Street. But, soon markets turned volatile and are struggling for direction ahead of the monthly F&O expiry this week. Domestic indices are trading flat in early deals amid cautiousness as US Treasury yields scaled a fresh 16-year peak. Foreign fund outflows also dampened sentiments in the markets. According to the provisional data available on the NSE, foreign institutional investors (FII) offloaded shares worth net Rs 2,333.03 crore on September 25, 2023. Though, downside remained capped supported by buying in metal, auto, and pharma counters. Traders took note of the Global Trade Research Initiative’s (GTRI's) statement that steps like streamlining port and customs operations, and setting up of national trade network will help Indian firms integrate with global value chains and add $1.2 trillion in the country’s foreign trade by 2030. 

Weakness in Asian counterparts also hit Indian markets, with all Asian markets trading in red as traders remain cautious and await inflation data from across the region for directional cues. Inflation data from Singapore, Australia and Japan's Tokyo region are due later this week. Back home, the market regulator has extended the short-term additional surveillance measure (ASM) and trade-for-trade settlement framework to small and medium enterprises (SME) stocks. This revised framework will be made available by October 3. In stock specific development, Tata Steel rose after Moody's raised the company's long-term rating from Ba1 to Baa3. 

The BSE Sensex is currently trading at 65984.49, down by 39.20 points or 0.06% after trading in a range of 65909.41 and 66078.26. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.26%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Metal up by 1.04%, Telecom up by 1.00%, Utilities up by 0.83%, Basic Materials up by 0.67% and Power up by 0.59%, while IT down by 0.35%, Bankex down by 0.30%, TECK down by 0.20% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.96%, Ultratech Cement up by 1.16%, Larsen & Toubro up by 0.83%, JSW Steel up by 0.78% and NTPC up by 0.75%. On the flip side, Asian Paints down by 1.70%, Kotak Mahindra Bank down by 0.82%, Tech Mahindra down by 0.81%, Bajaj Finserv down by 0.74% and TCS down by 0.55% were the top losers.

Meanwhile, the Global Trade Research Initiative (GTRI) in its latest report has stated that steps like streamlining port and customs operations, and setting up of national trade network will help Indian firms integrate with global value chains and add $1.2 trillion in the country’s foreign trade by 2030. It said that currently, India’s limited participation in global value chains (GVCs) hampers its export potential, despite possessing substantial manufacturing capabilities across various GVC-relevant product categories. The integration of Indian companies in the GVCs is fundamental as about 70% of global trade operates within these chains, encompassing a wide range of products, from electronics and machinery to pharmaceuticals and apparel.

GTRi Co-Founder Ajay Srivastava said ‘India’s weak GVC integration can be attributed to poor trade infrastructure, causing delays at ports and customs, which are detrimental to the timely flow of goods in these intricate value chains’. Countries like China, Japan, South Korea, Thailand, and Malaysia have excelled in GVCs due to investments in quality trade infrastructure. The GTRI report has recommended six action points to the government which can help boost the participation of domestic firms in GVCs. The suggestions include automating port and customs procedures, and implementation of green channel clearances for 99 per cent of shipments; analysing the top 10,000 exporters responsible for 85 per cent of India’s exports; matching global best practices for ship turnaround times, reducing queues, speeding up transactions, and optimizing infrastructure use; and enhance communication between traders and shipping companies, port operators, and Container Freight Stations (CFS).

The report asked for creation of an online platform for all export-import compliance processes. Srivastava said ‘National Trade Network (NTN) would enable exporters to submit all required information and documents in one place, eliminating the need to interact separately with customs, DGFT (directorate general of foreign trade), shipping companies, ports, and banks’. The other steps include focus on high-value segments of GVCs, product conceptualization, design, prototype development, and after-sales services. Countries like the US, Germany, Japan, Taiwan, and South Korea excel in R&D expertise at the high end, while China specializes in final assembly at the lower end. Further, it suggested inviting top global firms to become anchor manufacturers in priority sectors.

The CNX Nifty is currently trading at 19680.35, up by 5.80 points or 0.03% after trading in a range of 19649.80 and 19698.55. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 3.74%, Tata Steel up by 1.92%, Dr. Reddy's Lab up by 1.42%, Ultratech Cement up by 1.20% and NTPC up by 1.06%. On the flip side, Asian Paints down by 1.79%, Apollo Hospital down by 1.00%, Tech Mahindra down by 0.80%, Kotak Mahindra Bank down by 0.75% and Bajaj Finserv down by 0.74% were the top losers.

All Asian markets are trading lower; Nikkei 225 slipped 317.09 points or 0.97% to 32,361.53, Hang Seng declined 149.26 points or 0.84% to 17,580.03, Taiwan Weighted lost 123.1 points or 0.75% to 16,329.13, KOSPI dropped 30.55 points or 1.22% to 2,465.21, Jakarta Composite fell 10.78 points or 0.15% to 6,987.60, Shanghai Composite weakened 10.3 points or 0.33% to 3,105.31 and Straits Times was down by 2.72 points or 0.08% to 3,212.68.