Sensex, Nifty trade above neutral lines

Indian equity benchmarks were trading above their neural lines in early afternoon deals, supported by buying at Metal and PSU counters, despite negative cues from other Asian markets. The street took note of reports that India’s inflation based on wholesale price index (WPI) remained in the deflationary zone for the sixth straight month at (-) 0.26% for the month of September 2023 as against (-) 0.52% recorded in August 2023. Deflation in the reported month is primarily due to fall in prices of coal, minerals, textiles, basic metals and food products as compared to the corresponding month of previous year. However, upper side were capped, amid reports that days after the Reserve Bank took an unprecedented step of warning banks of their ballooning retail book, a foreign brokerage has cautioned against increasing default risks in retail unsecured loans of banks. 

On the global front, Asian markets were trading lower, after Singapore central bank kept its monetary policy unchanged on Friday as the current setting is assessed to be 'sufficiently tight' to dampen imported inflation and curb domestic cost pressures. The Monetary Authority of Singapore, or MAS, decided to maintain the prevailing rate of appreciation of the S$NEER policy band. There will be no change to its width and the level at which it is centered.

The BSE Sensex is currently trading at 66297.72, up by 14.98 points or 0.02% after trading in a range of 66039.38 and 66342.75. 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 by 0.44%, while Small cap index was up by 0.62%.

The top gaining sectoral indices on the BSE were Metal up by 1.30%, PSU up by 0.74%, Basic Materials up by 0.67%, Consumer Durables up by 0.62% and Energy up by 0.61%, while Telecom down by 0.18%, Realty down by 0.15%, Healthcare down by 0.07% and TECK down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 1.92%, Tata Steel up by 1.52%, Axis Bank up by 1.21%, HCL Tech. up by 1.06% and Power Grid up by 1.04%. On the flip side, Nestle down by 1.87%, Indusind Bank down by 1.23%, Asian Paints down by 1.01%, TCS down by 0.92% and Tech Mahindra down by 0.65% were the top losers.

Meanwhile, the Global Trade Research Initiative (GTRI) has said that India's high-quality labour-intensive goods such as apparel, footwear, carpets and cars will benefit from the removal of import duties by the UK, under the proposed free trade agreement (FTA) between the two countries. However, it said the overall gains for India will be limited because most of the goods from here are already entering the UK at low or zero tariffs (import or customs duties).

According to GTRI, in 2022-23, India's merchandise exports to the UK were valued at $11.41 billion and out of this, $6 billion worth of goods such as petroleum products, medicines, diamonds, machine parts, airplanes, and wooden furniture entered Britain at zero levy. The FTA is expected to have a limited impact on increasing these exports because over half of Indian products already enter the UK with low or no tariffs. The average duty on goods imported from India into the UK is 4.2 per cent.

However, the think tank said there will be gains from reducing duties for Indian exports worth $5 billion and those items include textiles, apparel (shirts, trousers, women's dresses, bed linen), footwear, carpets, cars, marine products, grapes, and mangoes. These products face relatively low to moderate tariffs in the UK. Citing examples, it said that duties on yarn and fabric are 4 per cent, while tariffs on shirts, trousers, women's dresses, and bed linen range from 10 per cent to 12 per cent. Similarly, handbags and trunk cases attract 8 per cent tariffs, levies on footwear vary from 4 per cent to 16 per cent. These products will benefit from the FTA's tariff reductions by the UK.

It further stated that chief negotiators of both the countries are negotiating the pact in the national capital and talks are at a crucial stage, as the negotiations are expected to close by end of this month.  It added that while the duty elimination in the UK can help Indian exports, significant growth requires improvements in product quality and signing an FTA alone may not lead to a substantial increase in India's labour-intensive goods exports. 

The CNX Nifty is currently trading at 19769.75, up by 18.70 points or 0.09% after trading in a range of 19691.85 and 19780.80. There were 29 stocks advancing against 20 stocks declining, while 1 stock remained unchaged on the index.

The top gainers on Nifty were JSW Steel up by 1.88%, Tata Steel up by 1.48%, LTIMindtree up by 1.47%, Hero MotoCorp up by 1.44% and Coal India up by 1.28%. On the flip side, Nestle down by 1.91%, Divi's Lab down by 1.66%, Indusind Bank down by 1.19%, Asian Paints down by 1.05% and TCS down by 0.97% were the top losers.

All Asian markets were trading lower; Hang Seng declined 170.64 points or 0.97% to 17,642.81, Taiwan Weighted lost 130.33 points or 0.78% to 16,652.24, Jakarta Composite plunged 37.57 points or 0.55% to 6,889.21, Straits Times fell 21.84 points or 0.69% to 3,163.95, Shanghai Composite weakened 14.29 points or 0.46% to 3,073.81, KOSPI dropped 19.91 points or 0.82% to 2,436.24 and Nikkei 225 slipped 656.96 points or 2.08% to 31,659.03.