Domestic indices trade with gains of over half percent

Domestic equity markets trimmed some of their gains but continued to trade higher by over half a percent in late morning deals as traders opted to buy beaten down but fundamentally strong stocks. Buying in Larsen & Toubro, Tech Mahindra, Adani Ports and HCL companies’ stocks supported the markets to trade higher. Meanwhile, broader indices outperformed their large peers with BSE Mid cap index and Small cap index gaining in the range of 1.10-1.40%.  Falling crude oil prices supported domestic sentiments. Market participants overlooked private report that New Delhi’s trade and investment relationship with Dhaka may have entered a phase of uncertainty after Bangladesh Prime Minister Sheikh Hasina resigned following weeks of violent demonstrations and their Army chief declared that an interim government will now run the country.

On the global front, Asian markets were treading mostly in green despite negative cues from the US markets overnight. Japanese market (Nikkei 225) rebounded sharply on Tuesday after the Nikkei 225 dropped over 14% in the previous session. Back home, in the stock specific development, Marico tumbled on concerns that it could be impacted by ongoing crisis in Bangladesh.

The BSE Sensex is currently trading at 79282.56, up by 523.16 points or 0.66% after trading in a range of 78981.97 and 79852.08. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.14%, while Small cap index up by 1.38%.

The top gaining sectoral indices on the BSE were Realty up by 1.69%, Basic Materials up by 1.60%, Capital Goods up by 1.37%, Oil & Gas up by 1.35% and Consumer Disc up by 1.30%, while there were no losers.  

The top gainers on the Sensex were Larsen & Toubro up by 2.38%, JSW Steel up by 2.20%, Tech Mahindra up by 2.15%, Adani Ports up by 2.14% and HCL up by 2.01%. On the flip side, Bharti Airtel down by 0.65%, HDFC Bank down by 0.19% and ICICI Bank down by 0.12% were the few losers.

Meanwhile, credit rating agency ICRA in its latest report has said that the Indian mining and construction equipment (MCE) industry has reported a 5% YoY growth in volumes in Q1 FY25 as per the initial data released by the Indian Construction Equipment Manufacturers Association (ICEMA). While this growth has been modest, compared to the 20% YoY expansion seen in Q1 FY24, the industry was, in fact, bracing for a contraction in domestic demand in H1 FY25. This expectation was in line with the previous election cycles, driven by a slowdown in the new project award activity (due to the Model Code of Conduct in place on account of the Parliamentary Elections in April-June 2024) and the monsoon-related impact on construction activities in Q2 FY25. Nonetheless, the performance in Q1 reflects customer optimism over the government’s sustained focus on infrastructure development and the consequent impact on MCE demand.

According to the report, in Q1 FY25, the growth in domestic sales (+5% YoY) was driven by the earthmoving and concreting equipment segments, which saw 5% and 8% YoY growth, respectively. The road (+1% YoY), material handling (+1% YoY), and material processing equipment (-2% YoY) segments reported flattish volumes. Road construction drives 35-45% of MCE sales in India followed by mining (20-30% share), real estate (10-20%), and others. The trends seem to have been mixed across the sectors in Q1 FY25. The execution data from MoRTH reflects a decline in road execution by 14% YoY in Q1 FY25. In contrast, mining of coal (+8% YoY production as per Coal India), iron ore (+4% YoY in Apr-May), and limestone (+2.6% YoY in Apr-May) reported continued traction, indicating strong demand momentum in the user industries like energy, steel, and cement. Healthy residential real estate demand supported concreting equipment volumes while YoY growth seen in port cargo traffic and rail freight is likely to have aided the demand for material handling equipment.

The report said going forward, the pace of awarding activity in the road sector has remained muted over the last 15 months due to the pending Cabinet approval for the revised cost pertaining to the Bharatmala PariyojnaI plans; receipt of the same will be crucial for pushing up the pace of awards in the current fiscal. In other segments - healthy outlay in Budget FY24-25 for the Jal Jeevan Mission, the PM Gram Sadak Yojana, and the PM Aawas Yojana - schemes which have been among the major drivers for new equipment demand - is a positive. While a pick-up in state government capex could yield a faster turnaround in construction activity/MCE volumes, given the severity of the monsoons in several states so far, the same will be more ascertainable only after a few months.

The CNX Nifty is currently trading at 24228.35, up by 172.75 points or 0.72% after trading in a range of 24131.00 and 24382.60. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Adani Enterprises up by 2.87%, Britannia up by 2.38%, HCL up by 2.36%, Larsen & Toubro up by 2.32% and Grasim Industries up by 2.23%. On the flip side, HDFC Life Insurance down by 1.86%, SBI Life down by 1.74%, Shriram Finance down by 1.49%, Bharti Airtel down by 0.62% and HDFC Bank down by 0.37% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted added 670.14 points or 3.38% to 20,501.02, Jakarta Composite gained 78.52 points or 1.1% to 7,138.17, KOSPI increased 94.89 points or 3.89% to 2,536.44 and Nikkei 225 surged 2825.19 points or 8.98% to 34,283.61. However, Hang Seng declined 11.8 points or 0.07% to 16,686.56, Shanghai Composite weakened 8.94 points or 0.31% to 2,851.76, Straits Times fell 22.88 points or 0.71% to 3,220.79.