Benchmarks continue to trade higher in late morning deals

Indian equity benchmarks continued to trade higher in late morning deals, amid value buying at lower levels and a rally in global markets. Traders took support as India has made significant progress in technology and innovation, securing the 49th rank in the Network Readiness Index 2024 (NRI 2024), an improvement of 11 places compared to last year. This year, the country not only climbed the rankings but also improved its overall score to 53.63, reflecting its consistent efforts in advancing technology, research, and digital infrastructure. Traders overlooked latest data by the Reserve Bank of India showed that India’s foreign exchange reserves fell by $1.9 billion to $653 billion, around six months low, in the week ended December 13. The reserves fell to their lowest since June 28. Sector-wise, paper industry stocks remained in watch as Crisil Ratings said operating margin of writing and printing paper manufacturers is set to contract 400-500 basis points to 15-16 per cent this financial year - following a similar correction last fiscal from the unusually high level of fiscal 2023 - driven by costlier hardwood and softwood and softening realisations. On the global front, Asian markets are trading higher after data showed the Fed's preferred reading on consumer price inflation rose less than expected in November, helping ease worries about the outlook for U.S. interest rates. 

The BSE Sensex is currently trading at 78618.41, up by 576.82 points or 0.74% after trading in a range of 78438.67 and 78744.95. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.18%, while Small cap index was down by 0.66%.

The top gaining sectoral indices on the BSE were Realty up by 2.00%, Metal up by 1.43%, Bankex up by 0.96%, Oil & Gas up by 0.73% and Energy up by 0.67%, while Industrials down by 0.34%, Capital Goods down by 0.09% and Healthcare down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.87%, HDFC Bank up by 1.60%, Bharti Airtel up by 1.54%, Tata Steel up by 1.53% and Bajaj Finance up by 1.37%. On the flip side, Zomato down by 0.75%, TCS down by 0.42% and Mahindra & Mahindra down by 0.29% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that operating margin of writing and printing paper manufacturers is set to contract 400-500 basis points to 15-16 per cent this financial year (FY25) - following a similar correction last fiscal from the unusually high level of fiscal 2023 - driven by costlier hardwood and softwood and softening realisations.

Further, it stated revenue is projected to decline 2-3 per cent this fiscal year-on-year - after a price-led decrease of 6-7 per cent last fiscal - largely reined in by subdued realisations. Volume is expected to grow a tepid 2-4 per cent this fiscal owing to the continued shift towards digital communication, partly offset by the government’s focus on expenditure in the education sector and increased work from office.

Gautam Shahi, Director, CRISIL Ratings, said that on the profitability front, two factors will drive the compression this fiscal. One, writing and printing paper realisation will continue to correct from the abnormal highs of fiscal 2023, driven by low-cost imports from China and East Asia amid modest demand, resulting in a decline of 5-7 per cent in writing and printing prices. Two, domestic wood costs will continue to surge due to increased demand from competing wood-based industries and reduced wood output caused by lower plantation during the pandemic. Besides, Shahi asserted that imported wood prices are expected to rise 18-20 per cent due to international supply disruptions.

The CNX Nifty is currently trading at 23762.20, up by 174.70 points or 0.74% after trading in a range of 23701.60 and 23806.50. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 2.89%, Trent up by 1.97%, Grasim Industries up by 1.83%, ITC up by 1.80% and Shriram Finance up by 1.57%. On the flip side, HDFC Life Insurance down by 0.61%, TCS down by 0.54%, Mahindra & Mahindra down by 0.34%, Power Grid Corporation down by 0.16% and Bajaj Auto down by 0.14% were the top losers.

All Asian markets are trading higher; Nikkei 225 surged 454.25 points or 1.17% to 39,156.15, Taiwan Weighted added 560.14 points or 2.49% to 23,070.39, Hang Seng advanced 127.54 points or 0.65% to 19,848.24, KOSPI increased 40.18 points or 1.67% to 2,444.33, Straits Times rose 34.57 points or 0.93% to 3,754.50, Jakarta Composite gained 87.46 points or 1.24% to 7,071.33 and Shanghai Composite strengthened 7.81 points or 0.23% to 3,375.88.