Domestic indices trade higher in early deals

Indian equity benchmarks made positive start on Friday, as investor went for value buying after previous session’s sell-off and following overnight gains on Wall Street coupled with sharp fall in crude oil prices. Domestic indices are trading higher with gains of around 0.30% each in early deals. Some support came in as the figures released by the Reserve Bank of India showed that India’s foreign exchange reserves in nominal terms (which includes valuation effects) rose by $16.6 billion during April-June 2023, mainly driven by strong Foreign Institutional Investment (FII) flows. However, selling pressure in IT stocks kept upside in check. 

On the global front, Asian markets are trading mostly higher in thin trades amid China's Golden week holiday. Traders are indulging in bargain hunting as they picked up stocks at reduced levels following recent weakness even as concerns remain about interest rates and the outlook for global economic growth. South Korea remains closed for the Chuseok Festival. Taiwan and China are closed for the Mid-Autum Festival.

Back home, sugar industry stocks are in focus with a private report that India is likely to ban sugar exports during the upcoming season, starting October 1. In stock specific development, Emami rose after the company announced the acquisition of a 26 per cent stake in Axiom Ayurveda.

The BSE Sensex is currently trading at 65703.50, up by 195.18 points or 0.30% after trading in a range of 65570.38 and 65743.93. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.80%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Metal up by 1.21%, PSU up by 1.17%, Telecom up by 1.14%, Realty up by 1.04% and Capital Goods up by 0.93%, while IT down by 0.70% and TECK down by 0.48% were the only losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.80%, Tata Motors up by 1.62%, Larsen & Toubro up by 1.24%, JSW Steel up by 1.11% and SBI up by 1.08%. On the flip side, Infosys down by 1.11%, Wipro down by 0.79%, HCL Technologies down by 0.66%, TCS down by 0.59% and Tech Mahindra down by 0.53% were the top losers.

Meanwhile, Crisil Ratings in its report said has said that the credit growth is likely to moderate to 13-13.5 per cent this fiscal but will improve slightly to 13.5-14 per cent next financial year as the economic pace picks up. As per the report, the biggest factor driving the moderation is low demand in wholesale credit, which constitutes as much as 60 per cent of the overall credit. Wholesale credit is seen slowing to 11-11.5 per cent this fiscal from a decadal high of 15 per cent in 2022-23. A key monitorable, which will determine credit growth going forward, is the extent to which deposit growth picks up for banks. The retail credit demand will continue to go up in this fiscal but corporate credit demand is lagging, which is likely to pick up in the next fiscal on capex revival.

In absolute terms, overall bank credit stood at Rs 148 lakh crore in FY23, clipping at 15.9 per cent year-on-year, and this is likely to grow to Rs 168 lakh crore or 13-13.5 per cent this fiscal and further grow to Rs 191 lakh crore or 13.5-14 per cent in the next. According to the agency, the credit demand moderation this fiscal will be because of the following four key reasons -- gross domestic product growth is expected to fall to 6 per cent this fiscal from 7.2 per cent last fiscal, which will impact the overall credit growth. Secondly, the easing of inflation with some softening in commodity prices. A significant part of the growth in wholesale credit (comprising corporates and micro, small and medium enterprises) last fiscal was driven by higher working capital demand in a high-inflation environment. 

Going forward, inflation levels are expected to be lower than the last fiscal. Thirdly, robust bond issuances in the first half of this fiscal with the changes in interest rates have seen a substitution of bank credit with debt capital, which also supported wholesale credit growth last year, especially in the first half. But this is not seen to the same extent this year. Finally, given the strong growth in fiscal 2023, especially in the second half, the high-base effect will also be a factor. The retail credit, which is 28 per cent of overall credit, is expected to continue to grow at a healthy rate of 19-20 per cent, similar to last fiscal.

The CNX Nifty is currently trading at 19591.35, up by 67.80 points or 0.35% after trading in a range of 19551.05 and 19600.25. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.74%, Hindalco up by 2.21%, UPL up by 2.10%, Dr. Reddy's Lab up by 1.75% and Tata Motors up by 1.72%. On the flip side, Infosys down by 1.08%, LTIMindtree down by 1.04%, Wipro down by 0.70%, Adani Enterprises down by 0.61% and HCL Technologies down by 0.60% were the top losers.

Asian markets are trading mostly in green; Hang Seng jumped 470.1 points or 2.71% to 17,843.13, Jakarta Composite rose 23.29 points or 0.34% to 6,961.12 and Straits Times added 16.38 points or 0.51% to 3,223.37, while Nikkei 225 was down by 51.54 points or 0.16% to 31,820.98.