Benchmarks enters into green terrain in morning deals

Indian equity benchmarks entered into green terrain in morning deals, led by gains in Teleco, Utilities and Oil & Gas stocks. Traders took some support with report that NITI Aayog has proposed a series of measures to boost exports from micro, small and medium enterprises, including boosting e-commerce exports, creating a comprehensive trade portal, promoting ease of merchandise exports, improving access to export finance and creation of one stop information channel for exporters. Traders overlooked Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that he is “worried” over retail investors’ play in risky Futures and Options (F&O) segment in search of instant profits. He said the biggest threat to sustainable capital formation and also sustainable economic growth is the “short-termism” in attitudes that the country is afflicted with. On the global front, Asian markets are trading mostly in green as investors digest mixed U.S. jobs data and look ahead to the release of upcoming U.S. inflation data this week for cues on the timing and pace of interest-rate cuts.

The BSE Sensex is currently trading at 72942.04, up by 180.15 points or 0.25% after trading in a range of 72497.19 and 72985.30. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.52%, while Small cap index was up by 2.18%.

The top gaining sectoral indices on the BSE were Telecom up by 2.83%, Utilities up by 2.27%, Oil & Gas up by 2.16%, Industrials up by 1.83% and Power up by 1.79%, while Realty down by 0.01% was the lone losing index on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.72%, Mahindra & Mahindra up by 1.70%, Infosys up by 1.32%, Bharti Airtel up by 1.27% and HCL Technologies up by 1.07%. On the flip side, JSW Steel down by 2.67%, Tata Steel down by 1.88%, TCS down by 0.78%, HDFC Bank down by 0.75% and Tata Motors down by 0.75% were the top losers.

Meanwhile, SBI Research in its Ecowrap report has said India’s retail inflation gauged by the Consumer Price Index (CPI) is expected to remain slightly above 5 per cent till May before declining towards 3 per cent in July. The retail inflation print is expected to stay below 5 per cent beginning November till the end of the financial year 2024-25. Retail inflation in India eased a tad in February to 5.09 per cent from 5.10 per cent the prior month, due to the deceleration of prices in all categories except food. Within food inflation, protein items (meat, egg) inflation increased exorbitantly (in the range of 400-500 basis points) in February month as compared to January. Vegetable prices also increased month-on-month by 300 basis points to 30.2 per cent. Core CPI declined to 3.37% - a 52-month low and reached the level of Oct-19. The retail inflation was at a four-month high of 5.69 per cent in December.

The retail inflation in India though is in RBI’s 2-6 per cent comfort level but is above the ideal 4 per cent scenario. Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. At the latest monetary policy meeting, the RBI pegged India’s retail inflation projections for 2024-25 at 4.5 per cent, with Q1 at 5.0 per cent, Q2 at 4.0 per cent, Q3 at 4.6 per cent, and Q4 at 4.7 per cent, with risks evenly balanced.

SBI Research said spatial heatmap shows that the largest weighted contribution to the current reading of retail inflation came from Maharashtra and Uttar Pradesh. Report mentioned ‘With moderate fuel prices, inflation is currently being driven by food price dynamics. Looking ahead evolving food prices will determine domestic inflation.’ The report suggested Department of Consumer Affairs publish a detailed list of vegetable prices other than only TOP (tomato, onion, potato). This will make it easier to fathom the direction of vegetable price impact on CPI (retail inflation. In recent months, vegetable prices in CPI have been driven mostly by prices of other vegetables in the basket apart from TOP. It added ‘Based on all the scenarios, the current repo rate at 6.5 per cent, looks ideal. We can expect the first rate cut only in Q2FY25.’

The CNX Nifty is currently trading at 22071.05, up by 73.35 points or 0.33% after trading in a range of 21917.50 and 22089.15. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 3.46%, Adani Ports &SEZ up by 3.22%, Hero MotoCorp up by 2.51%, Hindalco up by 2.23% and Larsen & Toubro up by 1.84%. On the flip side, JSW Steel down by 2.67%, Tata Steel down by 1.84%, TCS down by 0.87%, HDFC Bank down by 0.78% and Tata Motors down by 0.70% were the top losers.

Asian markets are trading mostly in green; KOSPI increased 22.69 points or 0.84% to 2,716.26, Jakarta Composite gained 5.46 points or 0.07% to 7,426.67, Shanghai Composite strengthened 2.32 points or 0.08% to 3,046.15 and Nikkei 225 surged 58.39 points or 0.15% to 38,754.36.

On the flip side, Taiwan Weighted lost 51.45 points or 0.26% to 19,877.06, Hang Seng declined 90.09 points or 0.53% to 16,992.02 and Straits Times fell 24.5 points or 0.78% to 3,185.22.