Sensex, Nifty trade higher with decent gains in early deals

Indian equity benchmarks made positive start on Wednesday tracking overnight gains on Wall Street overnight. Sensex and Nifty are trading higher with decent gains in early deals on account value buying with all the sectoral indices in green. Broader indices -- BSE Mid & Small cap indices are outperforming larger peers with gains of around a percent each. Sentiments got boost as Moody's Ratings said the Indian economy is projected to expand 6.6 per cent in the current fiscal year and said strong credit demand fuelled by robust economic growth will support the NBFC sector's profitability. It added that the Indian economy is estimated to have expanded 8 per cent in the 2023-24 fiscal year. However, in the markets, upside remained limited as some cautiousness prevailed with a private report that even as stocks have bounced back, foreign investors continue to remain aggressive sellers this month. On Tuesday, FIIs net sold stocks worth Rs 4,065 crore, taking the May month’s tally to Rs 33,540 crore.

On the global front, Asian markets are trading mixed, following the broadly positive cues from Wall Street overnight, as traders react to data showing producer prices in the U.S. increased by more than expected in the month of April, while they cautiously await the release of key consumer price inflation data later in the day. Meanwhile, South Korea and Hong Kong markets are closed for Buddha's birthday.

Back home, edible oil industry stocks are in focus as the Solvent Extractors' Association of India (SEA) said India's palm oil imports registered a 34.11 per cent jump on-year in April to 6,84,000 tonnes, buoyed by a fall in global prices. In stock specific development, Siemens traded with traction after it reported a strong 70 per cent year-on-year (YoY) surge in its net profit for Q2 on improved operational performance. Also, it will demerge and list its energy business.

The BSE Sensex is currently trading at 73274.77, up by 170.16 points or 0.23% after trading in a range of 73135.35 and 73301.47. 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 0.93%, while Small cap index was up by 1.11%.

The top gaining sectoral indices on the BSE were Realty up by 2.24%, Power up by 1.49%, Metal up by 1.48%, Oil & Gas up by 1.32%, Utilities up by 1.26%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 1.42%, NTPC up by 1.33%, Bajaj Finserv up by 0.77%, Axis Bank up by 0.73% and ITC up by 0.71%. On the flip side, Sun Pharma down by 0.60%, HDFC Bank down by 0.57%, Ultratech Cement down by 0.30%, JSW Steel down by 0.17% and Maruti Suzuki down by 0.16% were the top losers.

Meanwhile, expressing optimism over India’s economic growth prospects, Moody's Ratings has projected that the country’s economy to expand 6.6 per cent in the current fiscal year (FY25) and 6.2 per cent the following year and said strong credit demand fuelled by robust economic growth will support the non-bank finance companies (NBFCs) profitability. The Indian economy is estimated to have expanded 8 per cent in the 2023-24 fiscal year.

On the NBFCs, Moody's said robust economic conditions will help them preserve their asset quality even as rise in interest rates increase the debt burdens of their customers. It said ‘Funding costs for non-bank finance companies (NBFCs) in India are rising, but strong credit demand fuelled by country's robust economic growth will support the sector's profitability. Also, robust economic conditions will help them preserve their asset quality even as rises in interest rates increase the debt burdens of their customers’.

Aggregate year-on-year loan growth at NBFCs accelerated to 20.8 per cent in September 2023 from 10.8 per cent a year earlier, driven by demand for retail loans, including financing for housing and automobiles. Moody's Ratings expects loans at NBFCs to grow about 15 per cent in the next 12-18 months, driven by various types of lending, including infrastructure financing by large government-owned NBFCs and loans to small and medium-sized enterprises.

It said ‘Growth in unsecured retail loans will slow after the Reserve Bank of India (RBI) raised the risk weight of such credit assets for both banks and NBFCs by 25 percentage points in December 2023’. NBFCs will continue to play an important role in meeting credit needs among individuals and businesses in India's vast economy. The largest 20 NBFCs have strong market positions and long histories of providing specific types of loans, such as financing for housing or commercial vehicles. Also, most of them are owned by the government or by large corporate groups, which would lend stability to their funding in times of stress.

The CNX Nifty is currently trading at 22296.00, up by 78.15 points or 0.35% after trading in a range of 22241.60 and 22296.35. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Cipla up by 3.62%, Adani Enterprises up by 2.51%, Coal India up by 2.48%, Hindalco up by 1.75% and Tata Steel up by 1.45%. On the flip side, Eicher Motors down by 0.76%, Sun Pharma down by 0.63%, HDFC Bank down by 0.49%, Tata Consumer Products down by 0.34% and Bajaj Auto down by 0.27% were the top losers.

Asian markets are trading mixed; Taiwan Weighted surged 233.8 points or 1.11% to 21,219.65, Jakarta Composite rose 79.63 points or 1.12% to 7,163.39 and Nikkei 225 gained 77.11 points or 0.2% to 38,433.17. On the other hand, Straits Times fell 17.74 points or 0.54% to 3,295.61 and Shanghai Composite was down by 5.43 points or 0.17% to 3,140.34.