Sensex, Nifty near day’s highs

Extending their gains, Indian equity benchmarks were trading near their intraday high points in early noon deals, aided by positive cues from other Asian markets as traders took note of US Fed Vice Chair Philip Jefferson’s statement that the central bank needs to proceed carefully to balance the risk of tightening too much. Besides, heavy buying at Realty and Telecom counters helped indices to maintain gaining rally. The street took a note of reports that India and Saudi Arabia have decided to promote investments in each other’s country in the new and renewable energy sector. A Memorandum of Understanding  (MoU) between India and Saudi Arabia in the fields of Electrical Interconnections, Green / Clean Hydrogen and Supply Chains was signed.

On the global front, Asian markets are trading mostly in green, after Japan posted a current account surplus of 2.279 trillion yen in August. That was shy of expectations for a surplus of 3.091 trillion yen following the 2.771 trillion yen surplus in July. Exports were down 2.6 percent on year at 7.893 trillion yen, while imports slumped an annual 18.2 percent to 8.643 trillion yen for a trade deficit of 749.5 billion yen.

The BSE Sensex is currently trading at 66054.38, up by 541.99 points or 0.83% after trading in a range of 65662.27 and 66059.12. There were 25 stocks advancing against 4 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 1.00%, while Small cap index was up by 1.21%.

The top gaining sectoral indices on the BSE were Realty up by 4.29%, Telecom up by 2.04%, PSU up by 1.41%, Bankex up by 1.31% and Auto up by 1.19%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.37%, Kotak Mahindra Bank up by 2.27%, Tata Motors up by 1.97%, ICICI Bank up by 1.79% and Maruti Suzuki up by 1.54%. On the flip side, Indusind Bank down by 0.45%, TCS down by 0.33%, Asian Paints down by 0.10% and Nestle down by 0.03% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has estimated steady revenue growth of 8-10% for its sample set of domestic alcohol beverages (alcobev) companies in FY2024. After two consecutive pandemic-hit years of FY2021 and FY2022, the Indian alcobev industry witnessed a strong revival in FY2023, led by healthy demand across both the segments, i.e., spirits and beer. ICRA’s sample set companies witnessed a YoY growth of 20% in revenues in FY2023 to Rs 26 billion, exceeding the pre-COVID levels. 

ICRA further said during Q1 FY2024, the spirits industry reported a 13% YoY increase in revenues despite being the lean season for the segment, while the beer industry, despite being the peak season, witnessed a marginal decline of 1%, due to the unseasonal rainfall. However, despite a steady demand, the OPM of ICRA’s sample set companies is poised to contract further by around 90-140 basis points in FY2024, following a sharp 300 basis points decline in FY2023. The primary reason for the expected margin contraction is the elevated prices of key inputs in the current fiscal, like non-basmati rice and other grains such as maize, used to produce extra neutral alcohol (ENA), the base to manufacture spirits. The impact of a sub-par monsoon, the El Nino conditions, and the Government measures on grain prices thus remain crucial to ascertain the industry cost structure.

According to the report, packing material costs also remain high, particularly glass, led by an increase in soda ash prices. However, prices of barley, the key raw material for producing beer, have witnessed correction in recent quarters and are likely to remain stable in the near to medium term. Moreover, the availability and consequent pricing pressures from the diversion of grains towards production of ethanol, which is seeing increased demand due to the Government blending norms, is also a key influencing factor to monitor for the industry.

The CNX Nifty is currently trading at 19671.35, up by 159.00 points or 0.81% after trading in a range of 19565.45 and 19674.55. There were 41 stocks advancing against 8 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Coal India up by 3.82%, Adani Ports & SEZ up by 2.65%, Bharti Airtel up by 2.46%, Kotak Mahindra Bank up by 2.22% and SBI Life Insurance up by 2.08%. On the flip side, Indusind Bank down by 0.53%, Cipla down by 0.51%, Hindalco down by 0.50%, Dr. Reddy's Lab down by 0.43% and TCS down by 0.36% were the top losers.

Asian markets are trading mostly in green; Hang Seng advanced 142.64 points or 0.81% to 17,660.04, Jakarta Composite gained 48.9 points or 0.7% to 6,940.36, Straits Times rose 25.4 points or 0.8% to 3,191.91 and Nikkei 225 surged 751.86 points or 2.37% to 31,746.53, while Shanghai Composite weakened 20.49 points or 0.67% to 3,076.43 and  KOSPI dropped 6.15 points or 0.26% to 2,402.58.