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Domestic indices trade higher with decent gains on value buying
Sep-16-2024

Indian equity benchmarks made positive start on Monday amid growing expectations of interest rate cuts by the Federal Reserve and other central banks. Domestic indices are trading higher with decent gains in early deals on account of value buying. Foreign fund inflows aided domestic sentiments. Foreign Portfolio Investors (FPIs) continued their bullish stance on Indian stocks, infusing Rs 16,881.03 crore in the second week of September, according to data from the National Securities Depository (NSDL). Some support came as India’s foreign exchange reserves have been rising for months now, hitting several all-time highs. The forex kitty increased by $66 billion so far this year and is currently at $689.235 billion. Besides, according to the payroll data, Employees’ State Insurance Corporation (ESIC) recorded a 13.32 per cent increase in subscribers addition to 22.53 lakh in July, 2024 compared to the figure of a year ago. 

On the global front, Asian markets are trading mixed with some of the major markets in the region closed, following the broadly positive cues from global markets on Friday, as traders remain cautious ahead of central bank meetings in the U.S., Japan and the U.K. later in the week. The Japanese stock market is closed for Respect for the Aged Day. China is closed for Mid-Autumn Festival, South Korea is closed for Chuseok Thanksgiving Day, Malaysia is closed for Malaysia Day and Indonesia is closed for Prophet Muhammad's birthday.

Back home, sugar stocks are buzzing followed the government's decision to permit sugar mills and distilleries to produce rectified spirit and extra-neutral alcohol from sugarcane juice and B-heavy molasses. This move is anticipated to provide increased production flexibility for ethanol and other alcohol-based products, thereby supporting the industry’s diversification strategies. In stock specific development, Adani Power surged after it won a bid to supply 6,600 MW of bundled renewable and thermal power to Maharashtra for the long term. Lumax Auto soared after acquiring a majority stake in Greenfuel Energy Solutions.

The BSE Sensex is currently trading at 83144.87, up by 253.93 points or 0.31% after trading in a range of 82904.76 and 83184.34. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.30%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Power up by 1.87%, Utilities up by 1.86%, Realty up by 1.11%, Metal up by 0.72% and Capital Goods up by 0.62%, while FMCG down by 0.43%, Telecom down by 0.20% and IT down by 0.10% were few the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.56%, Tata Steel up by 0.88%, Axis Bank up by 0.85%, JSW Steel up by 0.83% and Bajaj Finance up by 0.83%. On the flip side, Hindustan Unilever down by 2.38%, Nestle down by 0.36%, Asian Paints down by 0.25%, TCS down by 0.12% and Infosys down by 0.10% were the top losers.

Meanwhile, expressing some cautiousness over the country’s inflation, the Reserve Bank of India (RBI) Governor Shaktikanta Das said that inflation in India has moderated but still there is a distance to cover. He said ‘Inflation has moderated from its peak of 7.8 per cent in April 2022 into the tolerance band of +/- 2 per cent around the target of 4 per cent, but we still have a distance to cover and cannot afford to look the other way’.

He further said while global economic activity and trade have largely withstood downside risks, the last mile of disinflation has proved to be challenging, giving rise to financial stability risks. He said ‘The momentum of global disinflation is slowing, warranting caution in easing monetary policy’ and added monetary policy management by central banks has to be prudent and supply side measures by government have to be proactive.

Das noted that market expectations of rate cuts are now regaining momentum, especially after indications of a policy pivot from the US Fed, but the adverse spillovers from the ‘higher for longer’ interest rate scenario remains a contingent risk. On the other hand, there are central banks which naturally and justifiably remain averse to premature loosening of policy before inflation has been durably reined in in their countries. He added central banks in these countries need to remain watchful of their domestic inflation-growth balance and make policy choices.

India’s retail inflation based on movement in consumer price index (CPI) was at 3.65 per cent in August, making it the second consecutive month of sub-4 per cent inflation. The government has tasked the RBI to ensure that inflation remains at 4 per cent with a margin of 2 per cent on either side. The RBI’s projections indicate that inflation is likely to ease from 5.4 per cent in 2023-24 to 4.5 per cent in 2024-25 and 4.1 per cent in 2025-26.

The CNX Nifty is currently trading at 25,418.05, up by 61.55 points or 0.24% after trading in a range of 25,366.00 and 25,445.70. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 1.64%, NTPC up by 1.22%, Kotak Mahindra Bank up by 1.00%, Axis Bank up by 0.98% and L&T up by 0.91%. On the flip side, Hindustan Unilever down by 2.18%, Britannia Industries down by 1.42%, SBI Life Insurance down by 0.59%, Hero Moto Crop down by 0.50% and HDFC Life down by 0.30% were the top losers.

Asian markets are trading mixed; Hang Seng declined 50.93 points or 0.29% to 17,318.16 and Straits Times fell 12.7 points or 0.36% to 3,549.95, while Taiwan Weighted was up by 60.73 points or 0.28% to 21,820.38.
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