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Sensex, Nifty extend opening gains in early deals on value buying
Jul-26-2024

Indian equity benchmarks started the session in green on Friday on account of bargain hunting after continued selling pressure in the markets in previous sessions. Sensex and Nifty soon add some strength and are trading firm with gains of around half a percent each in early deals, as signs of cooling inflation in the world's largest economy, US, boosted hopes for Fed rate cuts. Domestically, traders took encouragement as Reserve Bank of India Deputy Governor M Rajeshwar Rao said Indian financial system looks stronger than in the past and the country's economy is an outlier even as strong headwinds globally. Investors continue keeping close eye on earning reactions. 

On the global front, Asian markets are trading mixed, following the mixed cues from Wall Street overnight, as concerns about a slowdown in Chinese growth more than offset strong U.S. GDP data and signs of cooling inflation that continued to raise hopes the US Fed will cut interest rates as early as September. Traders also reacted to the latest inflation figures from Tokyo that showed Tokyo's core inflation rate accelerated for a third month in July.

Back home, auto component industry stocks are in focus as the Automotive Component Manufacturers Association of India (ACMA) said the turnover of India’s automotive component industry registered a growth of 9.8 per cent in the financial year 2023-24. The turnover stood at Rs 6.14 lakh crore ($74.1 billion) during the year. In stock specific development, SJVN jumped on bagging pump project. The company has received a Letter of Intent from the Government of Mizoram for the allotment of the Darzo Lui pumped storage project.

The BSE Sensex is currently trading at 80374.17, up by 334.37 points or 0.42% after trading in a range of 80013.60 and 80390.24. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.06%, while Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were Telecom up by 2.07%, Metal up by 1.82%, TECK up by 1.73%, Realty up by 1.61% and IT up by 1.50%, while FMCG down by 0.22% and Bankex down by 0.08% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.19%, Infosys up by 2.16%, JSW Steel up by 1.84%, Tata Steel up by 1.81% and HCL Technologies up by 1.46%. On the flip side, Tech Mahindra down by 1.87%, HDFC Bank down by 0.84%, Nestle down by 0.76%, Hindustan Unilever down by 0.59% and Tata Motors down by 0.48% were the top losers.

Meanwhile, expressing optimism over India’s financial system, Reserve Bank of India Deputy Governor M Rajeshwar Rao has said that Indian financial system looks stronger than in the past and the country's economy is an outlier even as strong headwinds globally. He also highlighted that India has achieved the highest climate change performance index (CCPI) score among G20 members in 2024, which reflects the country's unwavering commitment to this cause. He said ‘This also shows that by aligning economic policies with climate action, we can spur green investments, enhance energy efficiency, and foster sustainable development across the sectors’.

Rao said the global financial system is facing strong headwinds from various quarters, including high levels of public debt, stretched asset valuations, economic and financial fragmentation, geopolitical tensions, and risks arising from increasing cyber threats. He added ‘Amidst these global challenges, the Indian economy is an outlier which shows strong macroeconomic fundamentals. Economic activity is growing steadily, supported by a financial system that looks stronger than in the past’. He further said the Indian banking sector, in particular, has demonstrated significant improvement in key metrics such as capital adequacy, asset quality, and profitability, supported by robust macroeconomic fundamentals and business confidence. There has been sustained growth in credit expansion, primarily driven by personal loans and loans to services sector.

He said ‘however, despite the financial system exhibiting strong performance and healthy financials, as a regulator and supervisor, we need to remain vigilant to the risks on the horizons. We have been flagging our concerns on strong credit growth in certain segments of unsecured retail loans. Increase in use of technology has also increased threat of cyber risks’. On climate risks and the leadership challenge, he said from an Indian perspective, the country's diverse topography, with snow-clad mountains, fertile plains, deserts and a long coastline with different temperature and precipitation patterns, generates diverse set of risks with attendant challenges for growth and inflation.

The agricultural sector, heavily reliant on monsoon rains, plays a critical role in India's economy and food security. The El Nino event of 2023-24 exemplifies this vulnerability, leading to hotter summers, reduced productivity, inadequate monsoons affecting reservoir levels, and lower agricultural production. He said these factors have cascading effect on inflation due to food price fluctuations. An added element is the dependence on agriculture that has bearing on their spending patterns and resultantly impact the country's growth. He said ‘Climate-related events also adversely impact the credit quality and loan-repayment capabilities of the borrowers. They can wipe out the assets created from institutional finance thereby impacting health of financial institutions’.

The CNX Nifty is currently trading at 24516.20, up by 110.10 points or 0.45% after trading in a range of 24410.90 and 24531.25. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.31%, Eicher Motors up by 2.29%, Bharti Airtel up by 2.16%, LTIMindtree up by 2.14% and Shriram Finance up by 1.96%. On the flip side, Tech Mahindra down by 2.57%, HDFC Bank down by 0.85%, ONGC down by 0.74%, Nestle down by 0.74% and Hindustan Unilever down by 0.62% were the top losers.

Asian markets are trading mixed; Nikkei 225 surged 47.09 points or 0.12% to 37,916.60, Jakarta Composite gained 34.87 points or 0.48% to 7,275.15, Hang Seng advanced 28.94 points or 0.17% to 17,033.91 and KOSPI increased 17.80 points or 0.66% to 2,728.45. On the other hand, Taiwan Weighted lost 789.47 points or 3.45% to 22,082.37, Shanghai Composite weakened 5.51 points or 0.19% to 2,881.23 and Straits Times was down by 4.15 points or 0.12% to 3,426.30.
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