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Sensex, Nifty turn positive in late morning session
May-24-2022

Erasing all of their losses, Indian equity benchmarks turned positive in late morning session, despite negative cues from other Asian markets. Sentiments were positive, as capital markets regulator Sebi allowed mutual funds to launch passively managed Equity-Linked Savings Schemes (ELSS). However, gains were limited, amid a private report stating that the Centre's decision to cut excise duty on petrol and diesel will put pressure on the fiscal deficit which has been estimated at 6.4 per cent of GDP for the current financial year.

On the global front, Asian markets were trading mostly in red, after the manufacturing sector in Japan continued to expand in May, albeit at a slower pace, the latest survey from Jibun Bank showed on Tuesday with a manufacturing PMI score of 53.2. That's down from 53.5 in April, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

The BSE Sensex is currently trading at 54428.03, up by 139.42 points or 0.26% after trading in a range of 54021.27 and 54463.13. There were 13 stocks advancing against 16 stocks declining, while 1 stock remained unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.37%, while Small cap index was down by 0.26%.

The top gaining sectoral indices on the BSE were Bankex up by 0.74%, Auto up by 0.27%, PSU up by 0.19%, Metal up by 0.13% and Telecom up by 0.08%, while IT down by 0.85%, TECK down by 0.81%, Healthcare down by 0.75%, FMCG down by 0.70% and Capital Goods down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.16%, Power Grid up by 1.63%, Dr. Reddy's Lab up by 1.60%, Kotak Mahindra Bank up by 1.43% and Mahindra & Mahindra up by 1.31%. On the flip side, Hindustan Unilever down by 2.30%, HCL Tech. down by 1.78%, Tech Mahindra down by 1.61%, Bajaj Finserv down by 1.22% and Infosys down by 0.97% were the top losers.

Meanwhile, Moody's Investors Service has said that the prolonged high temperatures, which are affecting much of the northwest of the country, will curb wheat production and could lead to extended power outages, exacerbating already high inflation and hurting growth, are credit negative for India. It noted that over the longer term, India's highly negative credit exposure to physical climate risks means its economic growth will likely become more volatile as it faces increasing, and more extreme incidences of climate-related shocks.

The report said the Indian government has revised its estimates for wheat production by 5.4 percent to 105 million tonnes for the crop year ending June 2022, given lower yields amid higher temperatures. The lower production, and fears that a surge in exports to capitalize on high global wheat prices would add to inflationary pressures domestically, have prompted the government to ban the export of wheat and to divert it toward local consumption instead.  Although the move will partially offset inflationary pressures, it will hurt exports and subsequently growth. The ban comes at a time when India - the world's second-largest wheat producer - could have been capitalizing on the global output gap from wheat following the Russia-Ukraine military conflict.

The agency further said India's export partners will likely face a further surge in wheat prices because of the ban. They include Bangladesh, which absorbed 56.8 percent of India's wheat exports in fiscal 2021, Sri Lanka (8.3 percent), UAE (6.5 percent), and Indonesia (5.4 percent). It also said that further drawdowns in coal inventory could lead to prolonged power outages in industrial and agricultural production, leading to significant cuts to output and weighing further on India's economic growth - particularly if the heatwaves continue beyond June.

The CNX Nifty is currently trading at 16237.00, up by 22.30 points or 0.14% after trading in a range of 16117.10 and 16262.80. There were 20 stocks advancing against 29 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were HDFC up by 2.10%, Dr. Reddy's Lab up by 1.83%, Kotak Mahindra Bank up by 1.55%, Power Grid up by 1.51% and Mahindra & Mahindra up by 1.36%. On the flip side, Divi's Lab down by 4.95%, Grasim Industries down by 4.17%, ONGC down by 2.64%, Hindustan Unilever down by 2.27% and HCL Tech. down by 1.80% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 340.19 points or 1.66% to 20,129.87, Nikkei 225 slipped 221.94 points or 0.82% to 26,779.58, Taiwan Weighted dropped 146.02 points or 0.9% to 16,010.39, Shanghai Composite declined 39.91 points or 1.27% to 3,106.95 and KOSPI fell 29.77 points or 1.12% to 2,617.61. On the flip side, Straits Times advanced 1.77 points or 0.06% to 3,215.42 and Jakarta Composite soared 74.19 points or 1.08% to 6,914.97.

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