Domestic indices erase all losses in late morning deals

Domestic equity indices erased all losses and were trading in green in late morning deals on account of buying by funds and retail investors. Buying in HDFC Bank, Infosys, Axis Bank, Kotak Mahindra Bank and JSW Steel companies’ stocks helped the markets to trade higher. Besides, some support came in as the latest data from the Reserve Bank of India showed that India's foreign exchange reserves rose by $7.53 billion to a new record high of $674.91 billion for the week ended August 2. Traders overlooked report that U.S.-based short-seller Hindenburg Research alleged that Madhabi Puri Buch, the chairperson of India’s market regulator, had previously held investments in certain offshore funds that were also used by the Adani group, calling into question a probe into fraud allegations against the conglomerate earlier this year. On the BSE sectoral front, traders were seen pilling up position in Realty, Consumer Durables, Telecom, Bankex and Metal, while selling was witnessed in Utilities, Power, Auto, FMCG and PSU. 

On the global front, Asian markets were trading mixed despite positive cues from global markets on Friday. Back home, in the stock specific development, Voltas rallied on strong Q1 results.

The BSE Sensex is currently trading at 79861.40, up by 155.49 points or 0.20% after trading in a range of 79226.13 and 79904.25. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.26%, while Small cap index up by 0.45%.

The top gaining sectoral indices on the BSE were Realty up by 0.75%, Consumer Durables up by 0.58%, Telecom up by 0.53%, Bankex up by 0.47% and Metal up by 0.44%, while Utilities down by 1.06%, Power down by 0.55%, Auto down by 0.51%, FMCG down by 0.36% and PSU down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were JSW Steel up by 1.72%, Infosys up by 1.32%, HDFC Bank up by 1.29%, Axis Bank up by 1.17% and Kotak Mahindra Bank up by 0.88%. On the flip side, Adani Ports down by 1.39%, Power Grid down by 1.00%, NTPC down by 0.98%, SBI down by 0.87% and Mahindra & Mahindra down by 0.63% were the top losers.

Meanwhile, the Global Trade Research Initiative (GTRI) has said that significant fall in prices, eroding consumer interest and competition with imports are some of the major challenges being faced by the domestic lab-grown diamond industry. It also said that while India faces the issue of production overcapacity, it continues to import lab-grown diamonds in large amounts and this issue needs deeper investigation. 

To address these challenges, GTRI said the government needs to take certain steps such as setting clear and consistent rules to standardize quality, certification, and market practices; issuing a Quality Control Order to check quality of imports; and investment in research and development to improve production processes, reduce costs, and enhance the quality of lab-grown diamonds. It also said that India's lab-grown diamond industry is facing a major challenge, with prices falling by 65 per cent in the past year, from Rs 60,000 to Rs 20,000 per carat due to local overproduction and oversupply from abroad. This sharp decline points to problems like overproduction, high imports, and lack of regulation, which are hurting consumer confidence. Urgent corrective steps are needed to get this high-growth industry back on track.

Meanwhile, GTRI said natural diamonds cost around Rs 3.5 lakh per carat and this price drop is making it difficult for manufacturers to repay loans taken for purchasing lab-grown diamond making machines, putting them under financial strain.  Lab-grown diamonds, as the name suggests, are created in laboratories replicating the natural high pressure, high temperature conditions under which diamonds are formed in the Earth's mantle. These diamonds are chemically, physically, and optically identical to natural diamonds. Natural diamonds come in various shapes, while lab-grown diamonds are usually square or rectangular. Lab-grown diamonds are produced in a rough form and need to be cut and polished, just like natural diamonds.  

The CNX Nifty is currently trading at 24450.45, up by 82.95 points or 0.34% after trading in a range of 24212.10 and 24472.80. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 1.92%, Grasim Industries up by 1.46%, HDFC Bank up by 1.35%, Infosys up by 1.34% and Axis Bank up by 1.28%. On the flip side, Apollo Hospital down by 1.57%, Adani Enterprises down by 1.36%, Adani Ports & SEZ down by 1.32%, NTPC down by 0.94% and Dr. Reddy's Lab down by 0.92% were the top losers.

Asian markets were trading mixed; Hang Seng advanced 16.23 points or 0.09% to 17,106.46, KOSPI increased 24.31 points or 0.93% to 2,612.74 and Taiwan Weighted added 255.11 points or 1.17% to 21,724.11. However, Jakarta Composite plunged 19.58 points or 0.27% to 7,237.42, Shanghai Composite weakened 1.82 points or 0.06% to 2,860.37 and Straits Times fell 23.46 points or 0.72% to 3,238.37.