Domestic indices trade higher with decent gains in early deals

Indian equity benchmarks made optimism start on Wednesday tracking overnight gains on Wall Street as well as positive cues from Asian counterparts, as data showing a slowdown in U.S. manufacturing activity in the month of April raised hopes the US Fed will start thinking of cutting interest rates soon. Traders now await more economic data later in the week, including the release of first-quarter U.S. GDP data as well as the core personal-consumption expenditures (PCE) price index, which is the Fed's preferred measure of inflation. Domestic indices are trading higher with decent gains in early deals on account of healthy buying in Metal, Basic Materials and Healthcare counters. Traders took encouragement with a private report that India's GDP growth is likely to average 7% from 2024-25 to 2029-30. Also, traders took note of an article in the Reserve Bank of India's (RBI) monthly bulletin released that to achieve its developmental goals over the next three decades, the Indian economy must grow at a rate of 8-10 per annum over the next decade to reap the demographic dividend that started accruing from 2018 and, as calculations show, will last till 2055. Besides, broader indices -- BSE mid & small cap – are outperforming larger peers with gains of over half a per cent each.

However, upside remained capped amid foreign fund outflows. Foreign institutional investors (FIIs) net sold shares worth Rs 3,044.54 crore on April 23, provisional data from the NSE showed. Some pessimism also came in as the net foreign direct investment (FDI) in India, inflows minus the outflows, dropped sharply by 45.5 per cent in the 11 months of Financial Year 2024 (April 2023 to February 2024), when compared with the same period a year ago due to a rise in repatriation of capital.  On the sectoral front, telecom industry stocks were in focus as data released by the Telecom Regulatory Authority of India (TRAI) showed that the telecom sector witnessed a 1.88 per cent sequential growth in adjusted gross revenue (AGR), reaching Rs 67,835 crore in the third quarter (October-December) of FY24. In stock specific development, Puravankara gained on appointment as developer for Mumbai's Pali Hill redevelopment project.

The BSE Sensex is currently trading at 73910.64, up by 172.19 points or 0.23% after trading in a range of 73861.91 and 73980.94. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.58%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Metal up by 1.09%, Basic Materials up by 1.02%, Healthcare up by 0.83%, Realty up by 0.78% and Industrials up by 0.60%, while Telecom down by 0.12% was the sole losing index on BSE.

The top gainers on the Sensex were JSW Steel up by 1.19%, Tata Steel up by 1.09%, Nestle up by 1.06%, Ultratech Cement up by 0.85% and Tata Motors up by 0.71%. On the flip side, Hindustan Unilever down by 0.49%, Titan Company down by 0.38%, Infosys down by 0.27%, Indusind Bank down by 0.26% and Asian Paints down by 0.22% were the top losers.

Meanwhile, in order to achieve developmental goals over the next three decades, an article released in the Reserve Bank of India's (RBI) monthly bulletin showed that the Indian economy must grow at a rate of 8-10% per annum over the next decade to reap the demographic dividend that started accruing from 2018 and, as calculations show, will last till 2055. In the article themed, 'State of the economy', RBI said conditions in India are shaping up for an extension of the trend upshift that took the average real GDP growth above 8 per cent during 2021-24. So far, the deepening of capital is powering the step-up in the country's growth trajectory, led by sustained public investment, and supported by productivity improvements. It said ‘More recently, a resurgence of private investment has become visible, according to the Asian Development Bank (ADB), which is shifting its investment strategy to expand space for private capital’.

The credit quality of Indian corporates has strengthened on the back of deleveraged balance sheets, sustained domestic demand and public capital expenditure - rating upgrades have continued to surpass downgrades. For India to harness its favourable demographics and achieve the escape velocity required to breach the low-middle-income barrier, the article argued that the developmental strategy over the next few decades must centre around extracting the maximum possible contribution of its young and rising labour force to the growth of Growth Value Added. It emphasised raising the employability of its youth. It said ‘Raising employability--the set of skills that makes a person more likely to gain employment in a chosen occupation to benefit the person, the workforce, the community and the economy--with a focus on the formalisation of employment opportunities for the youth and women should continue to be the hallmark of the strategy’.

With the working age population set to expand at the rate of about 9.7 million per annum during 2021-31 and 4.2 million per annum during 2031-41, India's growth will largely hinge on the quality of the workforce it produces. While labour quality has grown slowly in past years, i.e., at the rate of 0.7 per cent per annum between 1980 and 2021, there is growing evidence that the growth rate of aggregate labour quality has improved since 2017-18. The growth in aggregate labour quality can be attributed to its services sector. Also, an important development that favours India's growth ambitions is the evolution of inflation dynamics in recent figures. Starting in January this year, the softening of headline inflation is providing a tailwind to growth impulses, the article argued. In India, consumer price index (CPI) inflation was 4.9 per cent in March after averaging 5.1 per cent in the preceding two months, following the recent peak of 5.7 per cent in December 2023. It said ‘With 4 per cent inflation finally being sighted, there is greater confidence now that the descent of inflation to the target is imminent’.

The CNX Nifty is currently trading at 22416.05, up by 48.05 points or 0.21% after trading in a range of 22399.85 and 22431.00. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Cipla up by 2.46%, JSW Steel up by 1.23%, Tata Steel up by 1.18%, Hero MotoCorp up by 0.95% and Nestle up by 0.84%. On the flip side, Tata Consumer Products down by 4.12%, HDFC Life Insurance down by 0.57%, Titan Company down by 0.48%, Indusind Bank down by 0.35% and Infosys down by 0.31% were the top losers.

All Asian markets are trading higher; Nikkei 225 surged 815.41 points or 2.17% to 38,367.57, Taiwan Weighted jumped 503.85 points or 2.57% to 20,103.13, Hang Seng rose 268.71 points or 1.6% to 17,097.64, Jakarta Composite gained 72.07 points or 1.01% to 7,182.88, KOSPI increased 50.83 points or 1.94% to 2,673.85, Straits Times added 22.18 points or 0.68% to 3,294.90 and Shanghai Composite was up by 9.98 points or 0.33% to 3,031.96.