Domestic indices trade tad higher in early deals

Indian equity benchmarks started Wednesday’s trade with marginal gains amid mixed global cues. Soon, markets gained some traction and are trading higher with decent gains in early deals on the back of healthy buying in metal stocks. Traders took encouragement as economists in the Finance Ministry said with the stable downward movement in core inflation and moderation in food prices, the outlook for a reasonably low headline inflation rate is good. They said the outlook for the Indian economy appears ‘bright’ with GDP likely to grow by 7% next financial year beginning April 1 from an estimated 7.3% in the current financial year. Some support also came in with report that retail inflation for farm workers and rural labourers eased marginally to 7.52 per cent and 7.37 per cent in January as compared to the previous month, mainly due to lower prices of certain food items. 

However, upside remained limited amid foreign fund outflows. Foreign institutional investors (FIIs) net sold shares worth Rs 1,335.51 crore on February 20, provisional data from the NSE showed. Also, oil prices regained some ground in early Asian trade on Wednesday, as investors weighed concerns over output cuts by key producers and attacks on shipping in the Red Sea against dimmed expectations of U.S. rate cuts. 

On the global front, most of the Asian markets are trading lower, following the broadly negative cues from Wall Street overnight, as traders remain cautious and seemed reluctant to make significant moves ahead of the release of the minutes of the US Fed's latest monetary policy meeting later in the day. The Fed may provide additional insight into the outlook for interest rates. Back home, in stock specific development, Hindalco Industries rallied after its subsidiary Novelis filed for an initial public offering.

The BSE Sensex is currently trading at 73217.07, up by 159.67 points or 0.22% after trading in a range of 73027.59 and 73267.80. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.32%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Realty up by 2.08%, Metal up by 1.56%, Basic Materials up by 1.02%, Consumer discretionary up by 0.50% and Telecom up by 0.49%, while TECK down by 0.26%, IT down by 0.22% and Utilities down by 0.21% were the few losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 2.78%, Tata Steel up by 2.76%, ICICI Bank up by 1.35%, Mahindra & Mahindra up by 1.24% and Indusind Bank up by 1.09%. On the flip side, Power Grid down by 1.35%, Infosys down by 1.07%, Axis Bank down by 0.41%, HCL Technologies down by 0.38% and NTPC down by 0.32% were the top losers.

Meanwhile, expressing optimism over India’s economic growth, the Finance Ministry in its latest the Monthly Economic Review report has said that the outlook for the country’s economy appears ‘bright’ with Gross Domestic Product (GDP) likely to clock 7 per cent growth rate next fiscal (FY25) although the nation needs to keep a watch on global headwinds emanating from geopolitical tensions and volatility in international financial markets. It said driven by a better-than-expected performance in Q2 and above 7 per cent growth projection for FY24 (by Ministry of Statistics and Programme Implementation in its first advance estimates), many global agencies have revised India’s growth projection in the upward direction.

It said this reflects the resilience of the Indian economy to sustain its growth path amidst ongoing geopolitical headwinds, and added that the measures announced in the Interim Union Budget FY25 are expected to play a pivotal role in supporting India’s growth journey ahead. Talking about tailwinds for the next financial year, the report said prospects of healthy Rabi harvesting, sustained manufacturing profitability and underlying service resilience are expected to support economic activity in FY25. On the demand side, it said household consumption is expected to improve, while prospects of fixed investment remain bright owing to an upturn in the private capex cycle, improved business sentiments, healthy balance sheets of banks and corporates, and the government’s continued thrust on capital expenditure.

It further said improvement in the outlook for global trade and rising integration in the global supply chain will support net external demand. However, headwinds from geopolitical tensions, volatility in international financial markets, and geoeconomic fragmentation need watching. It said Global slowdown, especially in India’s major trading partners, has led to a slowdown in demand for India’s merchandise exports. At the same time, it said, there has been a decline in the overall value of imports due to a fall in international commodity prices, which spiked after the outbreak of the Russia-Ukraine conflict. This has led to a narrowing of India’s merchandise trade deficit in the first ten months of FY24, and a narrowing merchandise trade deficit, coupled with rising net services receipts, is expected to result in an improvement in India’s current account deficit.

As far as capital account is concerned, India’s strong macroeconomic fundamentals, high growth and stable business environment have boosted Foreign Portfolio Inflows (FPIs). On the inflation, it said pressure has moderated in January 2024 due to a fall in food as well as core inflation. The recent measures announced by the government to control food prices are likely to reduce inflation further. The expectations of the fading away of El Nino and the forecast of a normal monsoon bodes well for a better-than-normal kharif sowing. On the employment front, it said, the urban unemployment rate in Q3 of FY24 declined to 6.5 per cent, the lowest since the start of the Periodic Labour Force Survey (PLFS). Formal sector employment also showed robust growth, as indicated by a steep rise in the subscription base of the Employees Provident Fund Organisation (EPFO).

The CNX Nifty is currently trading at 22233.50, up by 36.55 points or 0.16% after trading in a range of 22189.80 and 22248.85. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.94%, JSW Steel up by 2.77%, Hindalco up by 2.28%, ICICI Bank up by 1.25% and Eicher Motors up by 1.18%. On the flip side, Hero MotoCorp down by 1.58%, Power Grid down by 1.41%, Infosys down by 1.27%, BPCL down by 1.15% and Larsen & Toubro down by 0.53% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 161.26 points or 0.42% to 38,202.35, Taiwan Weighted lost 58.59 points or 0.31% to 18,694.57, Jakarta Composite declined 48.67 points or 0.66% to 7,303.93, Straits Times fell 9.68 points or 0.3% to 3,234.38 and KOSPI was down by 8.80 points or 0.33% to 2,648.99. On the other hand, Hang Seng jumped 488.41 points or 3.01% to 16,735.92 and Shanghai Composite was up by 50.14 points or 1.69% to 2,972.87.