Firm trade continues over Dalal Street

Firm trade continued over the Dalal Street in early noon deals, with both Sensex and Nifty trading notably higher, aided by positive cues from other Asian markets along with buying at IT and TECK counters. Sentiments remained positive, amid a private report stating that the Centre's prospects of meeting its fiscal deficit target of 5.9 percent of GDP for the current financial year have brightened rather considerably over the last few days, with direct tax collections - both corporate and personal income tax - rising massively, and unexpectedly, in August. Beside, the Reserve Bank said India is poised to become the growth engine of the world as it retained the GDP projection for the current fiscal at 6.5 per cent. Unveiling the bi-monthly monetary policy review, Reserve Bank of India (RBI) Governor Shaktikanta Das said the domestic economy exhibits resilience on the back of strong demand.

On the global front, Asian markets were trading mostly in green, as Japan's leading index improved in August to the highest level in nine months. The preliminary data from the Cabinet Office showed that the leading index, which measures future economic activity, rose to 109.5 in August from 108.2 in July. Further, this was the highest reading since November last year, when it was 109.6. The coincident index that measures the current economic situation increased somewhat to a 114.3 in August from 114.2 in the previous month.

The BSE Sensex is currently trading at 65857.65, up by 226.08 points or 0.34% after trading in a range of 65762.33 and 66030.69. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.35%, while Small cap index was up by 0.34%.

The top gaining sectoral indices on the BSE were IT up by 0.84%, Realty up by 0.77%, TECK up by 0.63%, Consumer Durables up by 0.56% and Healthcare up by 0.44%, while Telecom down by 0.62%, Energy down by 0.12%, Capital Goods down by 0.12% and Oil & Gas down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 3.64%, Titan Company up by 1.53%, Bajaj Finance up by 1.47%, HCL Technologies up by 1.44% and ITC up by 1.42%. On the flip side, Hindustan Unilever down by 0.78%, Bharti Airtel down by 0.43%, Axis Bank down by 0.32%, Larsen & Toubro down by 0.22% and Asian Paints down by 0.19% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.  The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the inflation front, the MPC highlighted that CPI headline inflation surged by 2.6 percentage points to 7.4 per cent in July due to spike in vegetable prices, before moderating somewhat in August to 6.8 per cent. Fuel inflation edged up to 4.3 per cent in August. Core inflation (i.e., CPI excluding food and fuel) softened to 4.9 per cent during July-August 2023. Taking into account these factors, CPI inflation is projected at 5.4 per cent for 2023-24, with Q2 at 6.4 per cent, Q3 at 5.6 per cent and Q4 at 5.2 per cent, with risks evenly balanced. CPI inflation for Q1:2024-25 is projected at 5.2 per cent.

On the economic growth front, it noted that domestic demand conditions are expected to benefit from the sustained buoyancy in services, revival in rural demand, consumer and business optimism, the government’s thrust on capex, and healthy balance sheets of banks and corporates. Headwinds from global factors like geopolitical tensions, volatile financial markets and energy prices, and climate shocks pose risks to the growth outlook. Taking all these factors into consideration, real GDP growth for 2023-24 is projected at 6.5 per cent, with Q2 at 6.5 per cent, Q3 at 6.0 per cent, and Q4 at 5.7 per cent, with risks evenly balanced. Real GDP growth for Q1:2024-25 is projected at 6.6 per cent.

The CNX Nifty is currently trading at 19620.40, up by 74.65 points or 0.38% after trading in a range of 19589.40 and 19658.20. There were 36 stocks advancing against 13 stocks declining, while one stock remained unchanged on the index.

The top gainers on Nifty were Bajaj Finserv up by 3.76%, Bajaj Finance up by 1.52%, HCL Technologies up by 1.48%, Titan Company up by 1.43% and ITC up by 1.42%. On the flip side, ONGC down by 0.74%, Hindustan Unilever down by 0.70%, Bharti Airtel down by 0.40%, Larsen & Toubro down by 0.23% and Britannia down by 0.22% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 255.12 points or 1.46% to 17,468.99, Taiwan Weighted added 67.05 points or 0.41% to 16,520.57, Jakarta Composite gained 22.84 points or 0.33% to 6,897.67, Straits Times rose 17.97 points or 0.57% to 3,173.07 and KOSPI increased 5.13 points or 0.21% to 2,408.73, while Nikkei 225 slipped 80.69 points or 0.26% to 30,994.67.