Domestic indices trade higher with marginal gains in early deals

Indian equity benchmarks extended previous session’s gains with positive start on Friday tracking overnight gains on Wall Street on the back of rally technology stocks. Nvidia reported better than expected fourth quarter results and provided upbeat revenue guidance. Sensex and Nifty soon trimmed some of their opening gains but managed to keep their head above water. Domestic indices are trading higher with marginal gains in early deals. Sentiments got a boost as World Economic Forum President Borge Brende said that India is on track to become a $10 trillion economy in coming years and grab the third-largest slot soon. He described the country as a place with optimism not seen elsewhere in a very fragmented and polarised world. Traders took encouragement as Finance Minister Nirmala Sitharaman said robust tax collections had given the Centre confidence to go ahead with increased capital expenditure and continue investment in infrastructure projects. 

However, upside remained capped amid foreign fund outflows. Foreign institutional investors (FIIs) net sold shares worth Rs 1,410.05 crore on February 22, provisional data from the NSE showed. Some cautiousness also came in as India Ratings and Research said India's GDP is expected to grow by 6.5 percent in 2024-25. While this would represent a decline from the statistics ministry's first advance estimate of 7.3 percent for the current financial year, the prospect of the private investment cycle bodes well for the economy. 

On the global front, Asian markets are trading mixed as traders are cautious after data showed new home prices in 70 of China's major cities fell at a faster pace year-on-year in January. Strong gains were seen in technology stocks amid robust demand outlook for chips used in AI products offered by chipmaker Nvidia. The Japanese stock market is closed on observance of Emperor's Birthday. Back home, sugar industry stocks are in focus as food secretary Sanjeev Chopra said the government will consider the demand for higher minimum sale prices of sugar from mills in sync with the FRP of sugarcane paid to farmers. In stock specific development, Tata Elxsi traded higher on pact with Accuknox.

The BSE Sensex is currently trading at 73304.06, up by 145.82 points or 0.20% after trading in a range of 73155.98 and 73413.93. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.49%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were Realty up by 1.52%, Telecom up by 1.14%, Consumer Durables up by 0.97%, Industrials up by 0.63% and IT up by 0.57%, while Oil & Gas down by 0.28% and Energy down by 0.11% were the only losing indices on BSE.

The top gainers on the Sensex were Titan Company up by 1.61%, Bajaj Finserv up by 1.01%, Tech Mahindra up by 0.96%, Wipro up by 0.95% and Indusind Bank up by 0.73%. On the flip side, Bharti Airtel down by 1.40%, Asian Paints down by 1.13%, Power Grid down by 0.57%, NTPC down by 0.52% and Maruti Suzuki down by 0.33% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) has anticipated that the India’s economy to grow at 6.5 per cent in the financial year 2024-25, 50 basis points lower than what was projected by the central government and the Reserve Bank of India (RBI) at its recent policy review. The ratings agency has said the sequential GDP growth indicated that the economic recovery was on track due to sustained government capex, healthy corporate performance, continued softness in global commodity prices, and the prospect of a new private corporate capex cycle.

However, it noted that there are risks as aggregate demand in the economy is largely driven by government capital expenditure. It said ‘Prevailing consumption demand is still skewed in favour of the goods and services consumed by households belonging to the upper 50 per cent of the income bracket’. Hit by the growth slowdown in advanced economies and rising trade distortions/geopolitical fragmentation, the rating agency said India's exports are likely to face global headwinds even in 2024-25. India's goods and services exports during the first 10 months of 2023-24 recorded a negative growth rate of 0.14 per cent.

Another issue that will have implications for gross value added (GVA) and corporate profitability in 2024-25 is the rise in Wholesale Price Index (WPI) inflation, which is akin to the producers' price index. The WPI after remaining in deflation from April to October 2023, has turned into inflation since November 2023. In January 2024, it was at 0.27 per cent. It said ‘A rise in input cost, if not adequately passed into output prices, will reduce value addition/corporate margin. Given that consumption is not broad-based, producers will find it difficult to pass on the higher input cost to output prices’. Since consumption demand is skewed in favour of the goods and services consumed largely by households belonging to the upper-income bracket.

Flows in the capital account are estimated to improve to $119.6 billion in 2024-25 from $99.8 billion in the current financial year 2023-24, leading to a net addition of $68.4 billion in foreign exchange reserves. The rating agency expects this to help the Indian rupee average 85.59 per dollar in 2024-25 and has opined that the RBI's intervention in the forex market will be more to keep the volatility in the Indian rupee under check. Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the sale of dollars, to prevent a steep depreciation in the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.

The CNX Nifty is currently trading at 22256.65, up by 39.20 points or 0.18% after trading in a range of 22216.35 and 22297.50. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 1.51%, HDFC Life Insurance up by 1.29%, Cipla up by 1.21%, Bajaj Finserv up by 1.13% and Dr. Reddy's Lab up by 0.96%. On the flip side, Bharti Airtel down by 1.45%, Asian Paints down by 1.11%, Power Grid down by 0.76%, NTPC down by 0.66% and BPCL down by 0.57% were the top losers.

Asian markets are trading mixed; Taiwan Weighted surged 120.38 points or 0.63% to 18,973.16, KOSPI rose 10.34 points or 0.39% to 2,674.61 and Shanghai Composite was up by 0.51 points or 0.02% to 2,988.87. On the other hand, Jakarta Composite slipped 55.74 points or 0.77% to 7,283.90, Straits Times fell 41.48 points or 1.3% to 3,181.46 and Hang Seng was down by 44.95 points or 0.27% to 16,698.00.