Domestic indices continue to trade in green in late morning deals

Domestic equity indices continued to trade in green in late morning deals amid firm cues from other Asian markets. Hectic buying in HDFC Bank, SBI, Axis Bank and Ultratech Cement companies’ stocks helped the markets to trade higher. Sentiments were upbeat as India’s current account balance posted a surplus of $5.7 billion or 0.6 per cent of gross domestic product (GDP) during the fourth quarter ended March 2024 (Q4FY24). However, gains were limited as rating agency Moody's Ratings in its report said that India's worsening water shortage crisis can adversely impact the nation's credit health while sparking social unrest and exacerbating the volatility in its economic growth. In the stock specific development, Happiest Minds Technologies plunged on private reports of stake sale by promoter Ashok Soota.

On the global front, Asian markets were trading mostly in green as investors assessed South Korea’s consumer sentiment index for June, as well as Japan’s service sector producer prices. South Korea’s consumer confidence index climbed in June to 100.9 from 98.4 in May. This comes amid growing optimism about living standards and future household income, as well as domestic economic conditions. Meanwhile, the services producer price index for Japan climbed 2.5% year on year in May, compared with the 2.7% rise in April. Back home, on the BSE sectoral front, traders were seen pilling up positions in Bankex, Industrials, Capital Goods, IT and Healthcare, while selling was witnessed in Realty, Utilities, Oil & Gas, Power and Metal. 

The BSE Sensex is currently trading at 77520.03, up by 178.95 points or 0.23% after trading in a range of 77459.60 and 77636.19. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.29%, while Small cap index up by 0.38%.

The top gaining sectoral indices on the BSE were Bankex up by 0.73%, Industrials up by 0.44%, Capital Goods up by 0.38%, IT up by 0.14% and Healthcare up by 0.12%, while Realty down by 1.78%, Utilities down by 0.60%, Oil & Gas down by 0.57%, Power down by 0.49% and Metal down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.53%, Ultratech Cement up by 1.49%, HDFC Bank up by 1.35%, SBI up by 1.01% and Larsen & Toubro up by 0.59%. On the flip side, Adani Ports down by 1.01%, Bajaj Finance down by 0.99%, NTPC down by 0.90%, Bajaj Finserv down by 0.77% and ITC down by 0.70% were the top losers.

Meanwhile, CRISIL Ratings in its latest report has said that capital goods makers are likely to see revenue rise of 9-11% in fiscal 2025, led by continued significant outlays towards railways (including metros), defence, conventional and renewable sectors. This compares with an expected around 13% growth in fiscal 2024. It said operating margin could moderate 80-100 basis points to 12-13% in fiscal 2025 as the market scenario continues to be highly competitive and exports, which offer higher margins, remain sluggish, even as prices of raw material (mainly steel, copper, and aluminium) are stable. That said, modest capital expenditure (capex) and continuing lower reliance on debt will support credit profiles. 

According to the report, in fiscal 2024, spending by the government on railways grew a strong 28% on-year, and on defence by 10%. Conventional sectors increased capex spend by 6-8% and investments in renewable capacity increased by a healthy 18%. This continued momentum in capex is also evident from the order books of capital goods makers that has seen a strong growth of over 15% in fiscal 2024, translating into 2.5-3.0 times the revenue. 

The report further said revenue growth momentum for capital good players will also be supported by investments in PLI driven schemes as well as in emerging sectors like electric vehicles and data centres wherein growth opportunities could arise in terms of providing automation, digitalisation services, and setting up of charging networks. These sectors (PLI driven schemes and emerging sectors) which accounted for around 10% of investments in fiscal 2024 is expected to rise to around 25% by fiscal 2028. That said, any deferment in expected capex by end-user industries in a year could alter the growth trajectory of the industry. Also, ability of companies to cater to technological needs of the emerging sectors would be critical to sustain the growth expectations and would be monitorable.

The CNX Nifty is currently trading at 23585.05, up by 47.20 points or 0.20% after trading in a range of 23562.05 and 23618.10. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.58%, Ultratech Cement up by 1.54%, HDFC Bank up by 1.44%, Divi's Lab up by 1.18% and Hindalco up by 1.06%. On the flip side, SBI Life Insuran down by 1.40%, BPCL down by 1.39%, ONGC down by 1.22%, Eicher Motors down by 1.07% and Adani Ports down by 1.03% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 113.8 points or 0.63% to 18,141.51, Shanghai Composite strengthened 2.33 points or 0.08% to 2,965.43, Straits Times rose 7.72 points or 0.23% to 3,321.86, KOSPI increased 10.13 points or 0.37% to 2,774.86, Nikkei 225 surged 394.84 points or 1.01% to 39,199.49 and Taiwan Weighted added 21.7 points or 0.1% to 22,835.40. However, Jakarta Composite plunged 20.44 points or 0.3% to 6,868.73.