Benchmarks rebound sharply in morning trade

Indian equity benchmarks rebounded sharply and were trading higher with gains of around a percent in morning trade, driven by buying in the stocks of blue-chip ICICI Bank, SBI and Indusind Bank.  Traders took support with report stating that with the finance ministry seeking ‘justification’ for continuing the Interest Equalisation Scheme (IES) for exporters, the commerce department is exploring ways to revamp it to ensure the scheme meets the objectives outlined during its launch nine years ago. The scheme is currently set to expire on December 31. Some support also came as the income tax department has extended the deadline for filing income tax returns by corporates by 15 days till November 15 for assessment year 2024-25. Traders took a note of report that Reserve Bank of India (RBI) Governor Shaktikanta Das pointed out that institutions like the International Monetary Fund (IMF) and the World Bank need to extend greater access to resources and provide emerging economies with a more prominent role in decision-making processes. On the global front, Asian markets are trading mixed amid lingering concerns the US Fed will lower interest rates slower than previously anticipated after revised data showed US consumer sentiment unexpectedly improved in the month of October. 

The BSE Sensex is currently trading at 80154.68, up by 752.39 points or 0.95% after trading in a range of 79418.82 and 80215.79. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Bankex up by 1.44%, Basic Materials up by 1.20%, Metal up by 1.10%, Telecom up by 1.09% and PSU up by 1.01%, while Capital Goods down by 0.32%, Power down by 0.17%, Energy down by 0.12%, Industrials down by 0.06% and Utilities down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.15%, SBI up by 2.79%, Indusind Bank up by 2.69%, Mahindra & Mahindra up by 2.61% and Hindustan Unilever up by 2.12%. On the flip side, Axis Bank down by 0.45%, Larsen & Toubro down by 0.36% and Tech Mahindra down by 0.18% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that Oil marketing companies (OMCs) are expected to see a drop in operating profit to $12-14 per barrel in fiscal 2025 from $20 per barrel last fiscal. The decline is primarily due to discounts on Russian crude oil, a softening of diesel spreads, and inventory losses.

The report noted that stable retail fuel prices amid volatile oil prices will help support overall returns for the industry. Despite the decrease, the operating profit will still be higher than the $9-11 per barrel average over the past decade through fiscal 2024. This will partially support OMCs’ substantial capital expenditure (capex) requirements. An analysis of public sector OMCs rated by CRISIL Ratings, covering 90 per cent of the sector, confirms this trend

OMCs earn through two main channels: refining and marketing. In refining, they earn a gross refining margin (GRM) - the difference between the value of refined products at the refinery gate (benchmarked to international prices) and the cost of crude oil used in production. In marketing, they earn a margin on petrol, diesel, and other petroleum products sold.

While oil prices declined by 11 per cent year-on-year to an average of $83 per barrel in fiscal 2024, inventory value fluctuations had a marginal impact on overall GRM, reported at $12 per barrel. Core margins remained robust due to high diesel spreads, sustained by geopolitical uncertainties that disrupted global energy supply chains, keeping international prices elevated. Furthermore, stable retail fuel rates contributed to healthy marketing margins (net of operating expenses) of Rs 4 per litre or $8 per barrel, resulting in an overall profit of $20 per barrel for the year.

The CNX Nifty is currently trading at 24376.95, up by 196.15 points or 0.81% after trading in a range of 24134.90 and 24398.45. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Shriram Finance up by 6.86%, ICICI Bank up by 3.20%, SBI up by 2.73%, Indusind Bank up by 2.60% and Mahindra & Mahindra up by 2.50%. On the flip side, Coal India down by 2.88%, ONGC down by 1.10%, Axis Bank down by 0.66%, Larsen & Toubro down by 0.42% and Bharat Electronics down by 0.33% were the top losers.

Asian markets are trading mixed; Taiwan Weighted lost 84.64 points or 0.36% to 23,263.81, Hang Seng declined 43.91 points or 0.21% to 20,546.24, Straits Times fell 1.42 points or 0.04% to 3,591.99 and Jakarta Composite plunged 82.82 points or 1.08% to 7,611.84. On the flip side, Shanghai Composite strengthened 5.6 points or 0.17% to 3,305.30, KOSPI increased 27.37 points or 1.06% to 2,610.64 and Nikkei 225 surged 811.31 points or 2.14% to 38,725.23.