Benchmarks trade flat in morning deals

Indian equity benchmarks gyrated between gains and losses and were trading flat in morning deals, amidst subdued global trends and foreign fund outflows. According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 285.15 crore on Monday. Some cautiousness also came as India expressed serious concerns in a WTO meeting in Abu Dhabi over increase in the use of trade protectionist measures by certain countries in the name of environment protection. The remarks assume significance as the country has earlier flagged issues over the European Union's (EU) decision to impose carbon tax (a kind of import tax) on sectors such as steel and fertiliser; and adoption of deforestation regulation by the 27-nation bloc. On the global front, Asian markets are trading mostly in red ahead of key US economic data which could influence the interest rate trajectory in the world's largest economy.

The BSE Sensex is currently trading at 72788.72, down by 1.41 points after trading in a range of 72660.13 and 72889.95. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.30%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Telecom up by 0.95%, Consumer Durables up by 0.84%, Industrials up by 0.75%, Capital Goods up by 0.65% and TECK up by 0.58%, while Oil & Gas down by 0.63%, Energy down by 0.45%, Bankex down by 0.40% and Auto down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.97%, Power Grid Corp up by 1.48%, Titan Co up by 1.13%, ITC up by 0.77% and Bharti Airtel up by 0.73%. On the flip side, Bajaj Finance down by 0.84%, Axis Bank down by 0.56%, Reliance Industries down by 0.54%, ICICI Bank down by 0.50% and HDFC Bank down by 0.43% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that passenger vehicle (PV) volume is expected to ascend to a new peak for the third straight time next financial year, growing 5-7 per cent on a high base of 6-8 per cent estimated for the current year ending March 2024. This ascend is expected as sport utility vehicles (SUVs) race ahead even as demand for cars and exports remain muted. Healthy volume growth of the SUV segment, which enjoys higher margin, will steer an improvement in operating margin to 11.5-12.5 per cent next financial year. The rating agency said better cash generation, along with strong balance sheet and robust liquidity will support funding of sizeable capital expenditure to set up additional capacity, keeping credit profiles of passenger vehicle makers stable. 

It said a significant change in consumer preference has cranked up demand for SUVs leading to its market share doubling to 60 per cent of total domestic volume this fiscal from 28 per cent before the pandemic in fiscal 2019. This preference is expected to further grow backed by a healthy pipeline of new model launches across price points, including electric variants, and normalised availability of semiconductors after a prolonged period of short supply. In contrast, it said demand for cars is seen slowing this fiscal too due to the ongoing weakness in the rural market and lower affordability at the entry level. The cost of vehicles has risen in the past 3-4 years as manufacturers have been passing on higher commodity prices and have had to comply with more stringent regulations on safety and emissions. 

The situation is similar on the exports front. The share of passenger exports is estimated to have slowed to 14 per cent this fiscal compared with 17 per cent in fiscal 2019, mainly due to inflationary headwinds and limited availability of foreign exchange in key export markets -- Latin America, south-east Asia and Africa -- in the past two years. It added that this trend is expected to continue next fiscal. It said but increasing share of SUVs with higher realisations, along with stable commodity prices and full benefit of price hikes executed last fiscal have resulted in operating margin expansion of manufacturers by 200 basis points (100 basis points is equal to 1 percentage point) to 11.0 per cent this fiscal. A further improvement in sales mix in favour of SUVs can take that number to 11.5-12.5 next fiscal.

The CNX Nifty is currently trading at 22109.80, down by 12.25 points or 0.06% after trading in a range of 22085.65 and 22151.80. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were TCS up by 1.84%, HDFC Life Insurance up by 1.24%, Power Grid Corporation up by 1.23%, Titan Company up by 1.04% and Bharti Airtel up by 0.81%. On the flip side, UPL down by 1.05%, ONGC down by 0.91%, Bajaj Finance down by 0.88%, Hero MotoCorp down by 0.87% and Axis Bank down by 0.76% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 71.42 points or 0.18% to 39,162.29, Taiwan Weighted lost 81.25 points or 0.43% to 18,866.80, Hang Seng declined 60.53 points or 0.37% to 16,574.21, Straits Times fell 29.39 points or 0.93% to 3,141.73, KOSPI dropped 18.12 points or 0.68% to 2,628.96 and Jakarta Composite plunged 8.24 points or 0.11% to 7,275.58.

On the flip side, Shanghai Composite strengthened 15.28 points or 0.51% to 2,992.30.