Domestic indices continue to trade in green in late morning deals

Domestic equity indices continued to trade in green in late morning deals as market participants indulged in enlarging their positions. Hectic buying in SBI, Mahindra & Mahindra, Bharti Airtel, Adani Ports and Kotak Mahindra Bank stocks helped the markets to trade higher. Meanwhile, broader indices were also trading in green with BSE Mid cap index, Small cap index gaining in the range of 0.40-0.65%. Traders overlooked report that a slowdown in business activity of both the manufacturing and services sector pulled down the expansion of India’s private sector economy in September, according to a survey by HSBC. According to the survey carried out by the global banker, the headline flash composite Purchasing Managers’ Index (PMI) figure declined to 59.3 in September, lowest in 2024, from an upward revised figure of 60.7 in August. On the BSE sectoral front, traders were seen pilling up positions in Telecom, Oil & Gas, Energy, PSU and Realty, while selling was witnessed only in IT and TECK. 

On the global front, Asian markets were trading mostly in green as investors digested monetary policy decisions from Japan and China.  Data last showed China’s youth unemployment rate rose for a second straight month to its highest level this year, according to the National Bureau of Statistics, as the labor market cools down amid a weakening economy. Despite growing calls for lower interest rates, the People’s Bank of China unexpectedly left its key benchmark rate on hold. 

The BSE Sensex is currently trading at 84693.64, up by 149.33 points or 0.18% after trading in a range of 84642.87 and 84881.73. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.41%, while Small cap index up by 0.63%.

The top gaining sectoral indices on the BSE were Telecom up by 2.15%, Oil & Gas up by 1.99%, Energy up by 1.62%, PSU up by 1.52% and Realty up by 1.48%, while IT down by 0.67% and TECK down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.55%, Mahindra & Mahindra up by 2.51%, Bharti Airtel up by 1.47%, Adani Ports up by 1.15% and Kotak Mahindra Bank up by 1.11%. On the flip side, ICICI Bank down by 1.76%, HCL down by 1.24%, Infosys down by 1.23%, Tech Mahindra down by 0.85% and Indusind Bank down by 0.81% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that wagon makers are on track to achieve 20% growth in revenue this fiscal (FY25), riding on healthy order book. Additionally, improved scale of operations will propel operating margin around 100 basis points (bps) leading to higher cash accrual. That, along with modest capital expenditure (capex) plans, will keep the credit profiles of these companies stable. A CRISIL Ratings study of wagon manufacturers accounting for 65% of the industry capacity of around 40,000 wagons per annum, indicates as much.

According to the report, logistics cost accounts for 14% of India’s gross domestic product, significantly higher than 8-10% in the US and some European countries. To bridge the gap and improve efficiencies, the central government plans to increase the share of railways in transport. The cost of rail transport is half that of roads. Increasing wagon availability is a step in that direction. Over the past two fiscals, more than 90,000 wagons have been ordered, which is a record. That compares with an average 10,000 wagons annually over the past decade. The order flow is likely to sustain as the government aims to increase the share of rail transport to 45% by 2030 from 27% currently. The setting up of dedicated freight corridors is also adding to the demand for wagons.

The report said the order books of wagon makers rated by CRISIL Ratings were around 2.3 times their revenue last fiscal. Consequently, the industry, which used to operate at less than 50% capacity in fiscal 2021, is expected to operate at around 90% this fiscal. The upshot is that operating margins of wagon manufacturers rated by CRISIL Ratings should rise 100 bps to around 12.5% this fiscal, driving up cash accrual. The strong order flow will also spur capex of around Rs 800-1,000 crore by these companies this fiscal, primarily for backward integration into components, apart from additional wagon manufacturing capacity.

The CNX Nifty is currently trading at 25868.45, up by 77.50 points or 0.30% after trading in a range of 25849.50 and 25925.80. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.85%, Mahindra & Mahindra up by 2.56%, SBI up by 2.49%, BPCL up by 1.95% and Bajaj Auto up by 1.93%. On the flip side, Eicher Motors down by 1.62%, ICICI Bank down by 1.61%, HCL down by 1.37%, Infosys down by 1.23% and LTIMindtree down by 1.23% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 44.64 points or 0.24% to 18,303.21, Shanghai Composite strengthened 16.92 points or 0.61% to 2,753.73, Straits Times rose 15.13 points or 0.42% to 3,639.89, KOSPI increased 5.09 points or 0.2% to 2,598.46 and Taiwan Weighted added 73.49 points or 0.33% to 22,232.91. However, Jakarta Composite plunged 15.41 points or 0.2% to 7,727.59.