Sustain buying keeps markets higher in early noon

A sustain buying kept Indian equity benchmarks higher in early afternoon session, with both Sensex and nifty holding notable gains. The gaining rally was also aided with positive cues from other Asian markets. Domestic sentiments remained upbeat with the Reserve Bank of India’s (RBI) latest monthly Bulletin stating that in India, aggregate demand conditions are gathering momentum with revival in rural consumption on the back of growing incomes. This stimulus to demand is expected to reinvigorate the hitherto subdued participation of the private sector in total investment. Headline inflation moderated from its spike in June to 3.5 per cent in July, but this was primarily due to the downward statistical pull of base effects. Besides, Finance minister Nirmala Sitharaman asked public sector banks, or PSBs, to make concerted efforts to mobilise deposits by conducting special drives to sustainably fund credit growth.

On the global front, Asian markets were trading mostly in green, even after China's central bank left its benchmark lending rates unchanged after cutting the rates unexpectedly by 10 basis points last month. The People's Bank of China kept its one-year loan prime rate unchanged at 3.35 percent. Similarly, the five-year LPR, the benchmark for mortgage rates, was retained at 3.85 percent. 

The BSE Sensex is currently trading at 80898.74, up by 474.06 points or 0.59% after trading in a range of 80517.95 and 80938.28. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 0.57%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Bankex up by 1.22%, IT up by 0.72%, Utilities up by 0.63%, Energy up by 0.38% and Power up by 0.37%, while FMCG down by 0.40%, Capital Goods down by 0.23%, Consumer Durables down by 0.03% and Realty down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.83%, Bajaj Finserv up by 2.67%, Axis Bank up by 1.82%, Ultratech Cement up by 1.64% and Bajaj Finance up by 1.53%. On the flip side, Bharti Airtel down by 1.00%, ITC down by 0.53%, Tata Steel down by 0.45%, Mahindra & Mahindra down by 0.39% and JSW Steel down by 0.33% were the top losers.

Meanwhile, CRISIL Ratings in its latest report has said that India’s aim to blend 20 per cent ethanol in petrol by Ethanol Supply Year (ESY) 2025 or around 990 crore litre annually, will require effective utilisation of both grain and sugarcane feedstock to increase its supply. This will also help optimise sugar inventory, particularly considering the high carry-over stock expected at the end of the current season owing to the government restriction on diversion for ethanol production and exports.

As per the report, annual ethanol production from grains is expected to witness a significant increase to approximately 600 crore litre by the next season. This season’s production estimate is around 380 crore litre. The balance will have to be produced by processing ethanol from sugarcane, which is viable given the substantial capacity in place. Blending ethanol helps reduce India’s dependence on crude oil imports. The ethanol blending rate has steadily risen 200-300 basis points each season since ESY 2021. While grain utilisation for producing ethanol is not controlled, the government determines the quantum of sugarcane utilisation based on its estimation of demand-supply balance of sugar for the year ahead.

The report stated that the sugarcane production this year is expected to have been impacted by last year’s erratic rainfall. Consequently, ethanol production from the sugarcane route is expected to be restricted to around 250 crore litre (equivalent of 2.5 million tonne of sugar) this season. In the upcoming season 2025, gross sugar production is expected to be around 33.5 million tonne, with consumption at around 29.5 million tonne. Additionally, sugar inventories are projected to be healthy by the end of this season. Hence, allowing sugarcane - equivalent to the quantity required to produce 4 million tonne of sugar - for ethanol supply (around 390 crore litre) can be considered, while the larger remaining share will be sourced from grain-based route.

The CNX Nifty is currently trading at 24707.10, up by 134.45 points or 0.55% after trading in a range of 24607.20 and 24734.30. There were 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 2.93%, Bajaj Finserv up by 2.79%, Indusind Bank up by 2.74%, Shriram Finance up by 2.45% and HDFC Life Insurance up by 2.19%. On the flip side, ONGC down by 1.60%, Bharti Airtel down by 1.05%, Adani Enterprises down by 0.92%, Tata Consumer Products down by 0.81% and Cipla down by 0.80% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite gained 64.35 points or 0.86% to 7,531.18, Straits Times rose 22.98 points or 0.68% to 3,378.54, KOSPI increased 22.27 points or 0.83% to 2,696.63, Nikkei 225 surged 674.3 points or 1.77% to 38,062.92 and Taiwan Weighted added 19.47 points or 0.09% to 22,429.10, while Hang Seng declined 87.24 points or 0.5% to 17,482.33 and Shanghai Composite weakened 27.92 points or 0.96% to 2,865.75.