Benchmarks remain in red in morning deals

Indian equity benchmarks trimmed some losses but continued to trade in red in morning deals, amid weak trends from global markets and fresh foreign fund outflows. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,790.19 crore on Friday, according to exchange data. Some concern also came as data released by the Ministry of Labour & Employment showed that the retail inflation for agricultural labourers (CPI-AL) and rural workers (CPI-RL) remained almost unchanged at 7 per cent and 7.02 per cent respectively in May 2024. However, losses remain capped as traders took some support as the GST Council at its 53rd meeting introduced sweeping reforms with an aim to simplify tax compliance and ease the burden on taxpayers. Key among these is the introduction of biometric-based Aadhaar authentication for registration applicants nationwide. This is intended to curb fraudulent registrations and tax evasion. On the global front, Asian markets are trading mostly in red as investors looked ahead to the release of key U.S. inflation data and comments from Federal Reserve officials this week for clarity on the Fed's rate path.

The BSE Sensex is currently trading at 77103.30, down by 106.60 points or 0.14% after trading in a range of 76745.94 and 77109.89. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.14%, while Small cap index was up by 0.45%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.91%, Industrials up by 0.83%, Power up by 0.62%, FMCG up by 0.34% and Consumer Discretionary up by 0.27%, while Metal down by 0.97%, Realty down by 0.81%, Basic Materials down by 0.53%, Energy down by 0.39% and Bankex down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.22%, Power Grid Corporation up by 1.46%, Mahindra & Mahindra up by 1.45%, Nestle up by 1.04% and TCS up by 0.93%. On the flip side, Indusind Bank down by 2.57%, Tata Steel down by 1.61%, Adani Ports &SEZ down by 1.56%, Bajaj Finance down by 1.10% and Reliance Industries down by 0.80% were the top losers.

Meanwhile, the Confederation of Indian Industry (CII) in its latest report has said that demand for electronic components and sub-assemblies is estimated to grow over five-fold to $240 billion by 2030, including includes some of the key parts like motherboard, lithium ion batteries, camera module etc that are largely imported. The report recommends the government to come up with revised electronic components production-linked incentive schemes with higher incentives in the range of 35-40 per cent to reduce dependence on imports.

It stated the demand for components and sub-assemblies stood at $45.5 billion to support $102 billion worth of electronics production in 2023. This demand is expected to scale to $240 billion to support the $500 billion worth electronics production by 2030. Priority components and sub-assemblies, including PCBAs, are projected to grow at a robust CAGR of 30 per cent, reaching $139 billion by 2030.

The report identifies components and sub-assemblies of batteries (lithium-ion), camera modules, mechanicals (enclosures etc), displays and PCBs as high priority for India that cumulatively account for 43 per cent of the components demand in 2022 and is expected to grow to $51.6 billion by 2030. These components have either a nominal production in India or are heavily import dependent. India can hardly afford to sustain this trend of importing the priority components. Similarly, PCBA is a high potential category for India since most of the demand is met by imports.

This segment is expected to grow 30 per cent, leading to a demand creation of around $87.46 billion by 2030.
According to the report, manufacturing-related cost disabilities compared to other competing economies like China, Vietnam, Mexico (10-20 per cent), lack of big domestic manufacturing corporations, lack of domestic design ecosystem for Indian companies and lack of raw materials ecosystem are big challenges for manufacturing of components and sub-assemblies in India. It has recommended that the government craft a scheme aimed at providing fiscal support for select components and sub-assemblies in the range of 6-8 per cent for 6-8 years.

The CNX Nifty is currently trading at 23455.05, down by 46.05 points or 0.20% after trading in a range of 23350.00 and 23464.70. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.12%, Power Grid Corporation up by 1.26%, Mahindra & Mahindra up by 1.22%, Nestle up by 0.95% and TCS up by 0.80%. On the flip side, Indusind Bank down by 2.62%, Cipla down by 1.98%, Tata Steel down by 1.78%, Adani Ports &SEZ down by 1.73% and Coal India down by 1.21% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 183.63 points or 1.03% to 17,844.89, Shanghai Composite weakened 20.9 points or 0.7% to 2,977.24, Straits Times fell 1.17 points or 0.04% to 3,304.85, KOSPI dropped 22.32 points or 0.8% to 2,761.94 and Taiwan Weighted lost 417.27 points or 1.79% to 22,836.12.

On the flip side, Nikkei 225 surged 288.12 points or 0.75% to 38,884.59 and Jakarta Composite gained 17.34 points or 0.25% to 6,897.32.