Benchmarks make optimistic start, extend gains on bargain buying

Indian equity benchmarks made optimistic start on Tuesday and soon gained traction to trade with gains of over a percent each in early deals tracking cues from Wall Street overnight as well as Asian peers in morning deals, as traders picked up stocks at lower levels after recent weakness following lackluster Q2 numbers and foreign fund outflows. Traders took encouragement as Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal said the government is confident of not only meeting the direct tax collection target for FY24, but also exceeding it. Some support also come as the National Sample Survey Office (NSSO) said the unemployment rate for people aged 15 years and above in urban areas dipped to 6.4 per cent in the July-September quarter. 

On the sectoral front, power stocks are in focus with a private report that the Centre will launch a production-linked incentive (PLI) scheme by the end of the current financial year to promote the manufacturing of transmission equipment. In stock specific development, GMR Airports traded with traction as in its October update, it said that it handled more than 10.7 million passengers across all airports which implies 9.2 per cent rise year-on-year (Y-o-Y).

The BSE Sensex is currently trading at 78159.11, up by 820.10 points or 1.06% after trading in a range of 77525.05 and 78175.35. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.39%, while Small cap index was up by 1.59%.

The top gaining sectoral indices on the BSE were Realty up by 2.14%, Auto up by 1.72%, Consumer Discretionary up by 1.65%, Telecom up by 1.58% and Power up by 1.55%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.65%, Adani Ports & SEZ up by 2.49%, Tata Motors up by 1.88%, Tech Mahindra up by 1.75% and TCS up by 1.60%. On the flip side, Bajaj Finserv down by 0.40% was the sole loser.

Meanwhile, CRISIL in its latest report has highlighted that the tariff hikes proposed by Donald Trump may pose threat to India’s exports but the country’s surplus in services trade and robust remittances flow may provide comfort. The report stated that India’s export sector is navigating multiple challenges, including geopolitical uncertainties and these factors could pose risks to India’s export performance. It said the surplus in services trade and robust remittances flow provide some comfort and should help keep the current account in safe zone.

The report highlighted that the fiscal year began on a positive note, with steady growth in merchandise exports during the first quarter. However, the momentum faltered in the second quarter, as exports witnessed a contraction. However, the situation improved in October, when merchandise exports staged a remarkable comeback, growing at 17.3 per cent year-on-year-the fastest pace in 28 months. This rebound followed a meagre 0.5 per cent growth in September and an average contraction of 5.8 per cent in July and August. In October, India’s exports surged to $39.2 billion, driven by robust growth in core exports (27.7 per cent) and the gems and jewellery sector (8.7 per cent). The key contributors within the core segment included engineering goods, electronic goods, chemicals, textiles, marine products, and rice. However, oil exports contracted during this period. Despite this recovery, sustaining the growth remains a concern amid external pressures.

The report also mentioned that U.S. tariffs on Chinese imports, combined with China’s economic slowdown, have intensified competition in Asian markets, including India. This has led to aggressive exports from China, adding pressure on India’s trade balance. The United States has announced tariff hikes on Chinese imports (and more could follow with Trump coming in as the new President). Coupled with the slowdown in the Chinese economy, this is triggering aggressive exports from China to Asian markets, including India. Additionally, growth in imports this fiscal has outpaced exports, widening the trade deficit-a trend that warrants close monitoring. The report outlined that India’s services trade surplus and strong remittances will continue to provide stability, while the merchandise trade deficit remains a concern, these factors are expected to keep the current account within a safe zone.

The CNX Nifty is currently trading at 23702.60, up by 248.80 points or 1.06% after trading in a range of 23517.10 and 23702.60. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Trent up by 3.86%, Mahindra & Mahindra up by 2.74%, Adani Ports & SEZ up by 2.43%, BPCL up by 2.14% and Eicher Motors up by 1.91%. On the flip side, Bajaj Finserv down by 0.47%, HDFC Life Insurance down by 0.25%, SBI Life Insurance down by 0.21% and Hindalco down by 0.08% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted jumped 344.1 points or 1.5% to 22,890.64, Nikkei 225 surged 256.89 points or 0.67% to 38,477.74, Jakarta Composite gained 69.09 points or 0.96% to 7,203.37,  Hang Seng advanced 52.92 points or 0.27% to 19,629.53, Straits Times rose 32.3 points or 0.86% to 3,764.85 and KOSPI increased 6.99 points or 0.28% to 2,476.06, while Shanghai Composite was down by 12.84 points or 0.39% to 3,311.01.