Domestic indices trade in fine-fettle amid optimism about interest rate cut by US Fed

Indian equity benchmarks extended their previous session’s gains and Nifty and Sensex scaled fresh highs on Thursday following the mostly positive cues from Wall Street overnight as well as mostly firm cues from Asian counterparts, reflecting optimism about an interest rate cut by the US Fed in September following the release of weaker than expected US economic data. Traders also looked ahead to the closely watched monthly US jobs report on Friday for more clarity about the outlook for Fed interest rates. Domestically, domestic indices are trading in fine-fettle with gains of around half a percent in early deals amid foreign fund inflows. Foreign institutional investors (FIIs) were net buyers of worth Rs 5,484 crore on Wednesday. Sensex and Nifty are trading above their crucial 80,300 and 24,350 levels, respectively.

Traders took encouragement as a CRISIL Ratings report said that revenues of top 18 states, which account for 90 per cent of India's gross state domestic product, are likely to grow at a pace of eight to 10 per cent during the current financial year at Rs 38 lakh crore with robust GST collections and devolution of finances from the Centre, which comprise around 50 per cent of the aggregate state revenues. Market participants took note of report that S&P Global Ratings said a sovereign rating upgrade for India in the next 24 months is possible if the central government is able to prudently manage its finances and bring down fiscal deficit to 4 per cent of GDP. 

Meanwhile, SEBI has drastically cut the face value of debt securities to Rs 10,000 from Rs 100,000 at present to boost participation of retail investors in the corporate bond market. On the sectoral front, coal industry stocks are in focus as the government said that coal production from the captive and commercial coal mines grew by 35 per cent to 39.53 million tonnes (MT) in the first quarter of this fiscal. The coal production from captive and commercial coal mines was 29.26 MT in the first quarter of FY24. 

The BSE Sensex is currently trading at 80366.70, up by 379.90 points or 0.47% after trading in a range of 80113.81 and 80374.58. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.49%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were IT up by 1.31%, TECK up by 1.05%, PSU up by 0.93%, Utilities up by 0.87% and Power up by 0.84%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were NTPC up by 1.97%, ICICI Bank up by 1.84%, Tata Motors up by 1.72%, Infosys up by 1.65% and HCL Technologies up by 1.64%. On the flip side, HDFC Bank down by 1.34%, Indusind Bank down by 0.69%, Bajaj Finance down by 0.09%, Adani Ports & SEZ down by 0.08% and ITC down by 0.05% were the top losers.

Meanwhile, the S&P Global Ratings Director, Sovereign Ratings, YeeFarn Phua, has expressed optimism over the country’s rating upgrade and said that for India a sovereign rating upgrade is possible in the next 24 months if the central government is able to prudently manage its finances and bring down fiscal deficit to 4 per cent of Gross Domestic Product (GDP). He said the trigger for upgrade would be general government (Centre + states) deficit falling below 7 per cent of the GDP, and a lot of this would have to be driven by the central government.

The central government estimates to bring down fiscal deficit to 5.1 per cent of the GDP in the current fiscal, from 5.63 per cent in 2023-24. As per the fiscal consolidation roadmap, the deficit -- the difference between government expenditure and revenue -- will be brought down to 4.5 per cent by 2025-26. The rating agency had in May upgraded outlook for India to positive, from stable, while retaining the rating at 'BBB-'.

Phua further said the Indian economy has clocked an average of 8 per cent growth in the last three years, driven by domestic consumption and infrastructure investment that has made real difference on the ground. He added ‘We see the medium-term growth potential for India at 7 per cent’. He also said if the infrastructure bottlenecks are removed, that will lead to 8 per cent growth potential without the risk of overheating. S&P estimates India's economic growth at 6.8 per cent in the current fiscal, lower than 8.2 per cent in the last fiscal.

The CNX Nifty is currently trading at 24392.35, up by 105.85 points or 0.44% after trading in a range of 24319.15 and 24392.55. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were NTPC up by 1.88%, ICICI Bank up by 1.75%, Tata Motors up by 1.73%, HCL Technologies up by 1.71% and Infosys up by 1.62%. On the flip side, HDFC Bank down by 1.34%, Dr. Reddy's Lab down by 0.73%, Cipla down by 0.72%, Indusind Bank down by 0.65% and Adani Enterprises down by 0.51% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted jumped 310.22 points or 1.34% to 23,482.65, Nikkei 225 surged 251.94 points or 0.62% to 40,832.70, Jakarta Composite gained 46.83 points or 0.65% to 7,243.59, KOSPI increased 19.68 points or 0.7% to 2,813.69, Straits Times rose 18.87 points or 0.55% to 3,434.38 and Hang Seng was up by 10.76 points or 0.06% to 17,989.33, while Shanghai Composite was down by 12.93 points or 0.43% to 2,969.45.