Bulls continue to roar over Dalal Street

Bulls continued to roar over the Dalal Street in early afternoon deals, with both Sensex and Nifty holding strong gains, aided by rally at IT and Oil & Gas counters despite negative cues from other Asian markets. Sentiments remained positive, amid a private report stating that the market value of companies listed on the BSE crossed a record $4 trillion for the first time riding on the sustained rally in Indian equities. As of November 29, the total market cap (MCap) of all BSE-listed companies hit $4.01 trillion or over Rs 333 trillion, climbing over $600 billion since the beginning of the year.  

Traders took a note of credit rating agency, India Ratings and Research’s (IndRa) latest ‘the November 2023 edition of Credit Market Tracker’ stating that the Reserve Bank of India’s (RBI) recent move to increase the risk weight on consumer credit of commercial banks and nonbanking financial companies (NBFCs) would have a varying impact on their growth, capital buffers and margins. 

On the global front, Asian markets were trading mostly in red, even as Singapore's producer prices declined at the fastest pace in three months amid a decline in the oil and non-oil index. The data from the Department of Statistics showed that the manufacturing producer price index fell 4.6 percent year-on-year in October, faster than the 2.9 percent fall in the prior month. The oil index dropped 5.9 percent annually in October, and the non-oil index showed a decrease of 4.3 percent.

The BSE Sensex is currently trading at 66656.25, up by 482.05 points or 0.73% after trading in a range of 66374.52 and 66671.49. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.75%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were IT up by 1.19%, Oil & Gas up by 1.18%, Utilities up by 1.16%, Auto up by 1.04% and TECK up by 1.04%, while Realty down by 0.40% and Consumer Durables down by 0.03% were the only losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.56%, Wipro up by 2.23%, Axis Bank up by 1.82%, Tech Mahindra up by 1.60% and HCL Tech. up by 1.42%. On the flip side, Nestle down by 0.41%, Titan down by 0.36%, NTPC down by 0.25%, Bajaj Finserv down by 0.20% and Ultratech Cement down by 0.17% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that the credit metrics of India Inc. are likely to show slight sequential improvement in Q3 FY2024, with interest coverage increasing to 4.55.0 times in Q3 FY2024 from 4.5 times in Q2 FY2024. The credit metrics would result from improved earnings of Corporate India, on the back of continuing, albeit moderating tailwinds from commodity prices and seasonally strong demand during the recently concluded festive season.

ICRA’s analysis of the Q2 FY2024 performance of 601 listed companies (excluding financial sector entities) revealed expectedly improved operating profit margins (OPM), increasing by 398 bps and 64 bps on a YoY and sequential basis, respectively. This was primarily aided by softening in commodity prices. However, while the input costs softened in recent months, they remain elevated compared to the historic levels, and accordingly, India Inc.’s OPM is yet to revive to its historic highs.

According to the report, improvement in earnings coupled with a pause in rate hikes by the MPC in the recent past (thereby restricting the upward movement in finance cost), led to YoY improvement in interest coverage ratio to 4.5 times for Q2 FY2024 from 3.9 times in Q2 FY2023 for ICRA’s sample set companies. However, it remained flattish on a sequential basis. An expected revival in earnings coupled with pause on rate hike is likely to result in an improvement in India Inc’s interest coverage to 4.55.0 times in Q3 FY2024, although inflationary trends remain a monitorable in the long run.

The CNX Nifty is currently trading at 20034.30, up by 144.60 points or 0.73% after trading in a range of 19956.30 and 20041.75. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.76%, Mahindra & Mahindra up by 2.76%, Wipro up by 2.36%, Britannia up by 2.35% and Axis Bank up by 1.85%. On the flip side, ONGC down by 0.80%, Nestle down by 0.37%, Titan down by 0.34%, Coal India down by 0.16% and Eicher Motors down by 0.16% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 409.73 points or 2.36% to 16,944.41, Jakarta Composite plunged 3.51 points or 0.05% to 7,037.56, Shanghai Composite weakened 13.26 points or 0.44% to 3,025.29, KOSPI dropped 1.95 points or 0.08% to 2,519.81 and Nikkei 225 slipped 87.17 points or 0.26% to 33,321.22, while Taiwan Weighted added 29.31 points or 0.17% to 17,370.56 and Straits Times rose 17.2 points or 0.56% to 3,083.14.