Sensex, Nifty back in green in early noon deals

Erasing their losses, Indian equity benchmarks came back in green during early afternoon deals, with both Sensex and Nifty trading marginally higher, aided by rally in banking stocks along with positive cues from other Asian markets as softer-than-expected U.S. retail sales data reinforced bets of imminent Federal Reserve rate cuts. Domestic sentiments remained optimistic, as Prime Minister Narendra Modi released the 17th instalment of about Rs 20,000 crore under PM-KISAN and distributed certificates to over 30,000 self-help groups known as Krishi Sakhis. Besides, the Central Board of Direct Taxes (CBDT) has said that net direct tax collection grew 21 per cent to Rs 4.62 lakh crore during April 1 to June 17, 2024 period, on higher advance tax mop-up.

On the global front, Asian markets were trading mostly in green, after Indonesia's foreign trade surplus increased notably in May from a year ago as exports rose amid a significant fall in imports. The figures from Statistics Indonesia showed that the trade surplus rose to $2.93 billion in May from $0.43 billion in the same month last year. In April, the surplus was $2.72 billion. Exports climbed 2.86 percent year-over-year in May, versus an expected rise of 0.78 percent.

The BSE Sensex is currently trading at 77448.26, up by 147.12 points or 0.19% after trading in a range of 76954.87 and 77581.46. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell by 0.45%, while Small cap index was down by 0.21%.

The only gaining sectoral indices on the BSE were Bankex up by 1.36% and IT up by 0.37%, while Realty down by 3.06%, Consumer Durables down by 1.58%, Power down by 1.29%, Capital Goods down by 1.24% and Industrials down by 1.12% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.04%, ICICI Bank up by 1.79%, HDFC Bank up by 1.60%, Kotak Mahindra Bank up by 1.55% and Axis Bank up by 1.13%. On the flip side, Titan down by 2.67%, Larsen & Toubro down by 1.51%, Maruti Suzuki down by 1.27%, NTPC down by 1.10% and Bharti Airtel down by 1.05% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has said that the domestic jewellery consumption growth (in value terms) is likely to moderate to 6-8% in FY2025, amidst the sharp rise in gold prices in recent months and the consequent impact on consumer sentiments of postponing non-essential purchases, from the sharp around 18% expansion in FY2024. After a muted volume growth of around 2% and around 4% in FY2023 and FY2024 respectively, ICRA expects the volume to contract in FY2025. Consumers are expected to remain watchful of the price movements and adjust to the new price levels over two or three quarters. Given the elevated gold prices, ICRA expects the share of recycled gold in the overall supply to continue to increase and rise by 400-600 bps in FY2025. 

According to the report, after the volatility witnessed in FY2023, gold prices stabilised, post Akshaya Tritiya in April 2023, before witnessing an upsurge since November 2023 amid the wedding and festive season. Gold prices rose around 14% in FY2024 on a YoY basis, which supported revenue growth for most jewellers, despite muted volume growth. The current gold prices are higher by around 19% over the FY2024 average and remain exposed to the confluence of factors like the global macroeconomic environment, geo-political tensions, inflation, currency movements etc.

ICRA estimates the industry operating margin at around 7% in FY2024 and at a range-bound of 7-8% in FY2025 amidst rising competition. Debt protection metrics are likely to improve, going forward, supported by steady accruals from operations and with an increasing trend in expansion through the asset-light franchise route by large retailers. The interest coverage is estimated to remain comfortable at over 7.0 times while the total outside liabilities to tangible net worth ratio is expected to improve to around 1.7 times in FY2025, against around 1.9 times in FY2024.

The CNX Nifty is currently trading at 23563.10, up by 5.20 points or 0.02% after trading in a range of 23412.90 and 23630.85. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 1.97%, ICICI Bank up by 1.93%, HDFC Bank up by 1.69%, Kotak Mahindra Bank up by 1.57% and Axis Bank up by 1.14%. On the flip side, Titan down by 2.76%, Bajaj Auto down by 1.76%, Hero MotoCorp down by 1.58%, Hindalco down by 1.47% and Larsen & Toubro down by 1.47% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 454.42 points or 2.54% to 18,369.97, Jakarta Composite gained 14.03 points or 0.21% to 6,748.86, Straits Times rose 13.09 points or 0.4% to 3,314.87, KOSPI increased 33.41 points or 1.19% to 2,797.33, Nikkei 225 surged 88.65 points or 0.23% to 38,570.76 and Taiwan Weighted added 452.11 points or 1.95% to 23,209.54, while Shanghai Composite weakened 9.7 points or 0.32% to 3,020.55.