Domestic indices trade flat with positive bias in late morning deals

Domestic equity indices traded flat with positive bias in late morning deals. Buying in TCS, Tech Mahindra, ITC and Mahindra & Mahindra companies’ stocks helped the markets to trade above neutral lines. Traders were getting some encouragement as government data showed India's wholesale inflation, measured using the Wholesale Price Index, eased by 2.04 per cent on an annual basis in July as against a 16-month high of 3.36 per cent in June. However, broader indices underperformed their large peers with BSE Mid cap index and Small cap index falling in the range of 0.60-0.90%. Traders remained on sidelines ahead to the release of U.S. CPI data later in the day for further direction. On the BSE sectoral front, traders were seen pilling up position in IT, TECK and FMCG, while selling was witnessed in Metal, Basic Materials, Power, Capital Goods and Industrials. 

On the global front, Asian markets were trading mostly in green following positive cues from the US markets overnight. Back home, shares of major mining companies, including Tata Steel, MOIL, and NMDC fell following a Supreme Court ruling related to state taxes and royalties on minerals. The court’s decision allowed states to collect past dues in the form of tax and royalty from April 2005. This ruling caused a notable drop in the stock prices of these mining companies.

The BSE Sensex is currently trading at 79052.34, up by 96.31 points or 0.12% after trading in a range of 78895.72 and 79122.42. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.64%, while Small cap index down by 0.89%.

The top gaining sectoral indices on the BSE were IT up by 1.07%, TECK up by 1.02% and FMCG up by 0.11%, while Metal down by 2.10%, Basic Materials down by 1.36%, Power down by 1.26%, Capital Goods down by 1.11% and Industrials down by 1.06% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.25%, Tech Mahindra up by 1.63%, ITC up by 1.54%, Mahindra & Mahindra up by 1.54% and HCL up by 1.47%. On the flip side, Tata Steel down by 3.16%, Adani Ports down by 1.85%, JSW Steel down by 1.84%, Ultratech Cement down by 1.79% and ICICI Bank down by 0.92% were the top losers.

Meanwhile, Credit rating agency ICRA in its latest report has said that the state-owned power distribution companies (discoms) are facing financial constraints despite improving their aggregate technical and commercial losses. The agency has cited delays in realising payments from state government departments for power supply as one of the reasons for the constrain of discom finances and assigned a negative outlook for the power distribution segment.

According to the report, the all-India aggregate technical and commercial (AT&C) losses for state-owned discoms declined from 23 per cent in FY2021 to 16.5 per cent in FY2022 and further to 15.8 per cent in FY2023 due to infrastructure upgrades and higher subsidy payout. Despite this progress, losses remain particularly high at over 20 per cent for the discoms in Bihar, Jharkhand, Madhya Pradesh, Odisha and Uttar Pradesh. The performance of state-owned discoms remains constrained by inadequate tariffs relative to the cost of supply, higher-than-regulator-approved AT&C losses, and a considerable debt burden. Further, delays in realising payments from state government departments for power supply constrain the discom finances. The agency further said its outlook for the power distribution segment remains negative.

The report said the tariff-determination process for state discoms has improved, following the General Elections, with 22 of the 28 states issuing the orders for FY2025 as of July 2024 against only 11 states as of May 2024. However, the tariff hikes remain modest with a median 1.7 per cent rise for FY2025, lower than the 2.5 per cent approved for FY2024. Despite an uptrend in tariff hikes in a few states in recent years, discoms continue to incur losses due to increases in power purchase costs, operating inefficiencies in a few large states, and a high debt burden. The median five-year CAGR for power purchase cost was over 5 per cent for the period, leading up to FY2023, whereas the increase in tariffs has been lower.

The CNX Nifty is currently trading at 24150.95, up by 11.95 points or 0.05% after trading in a range of 24099.70 and 24196.50. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Apollo Hospital up by 2.96%, TCS up by 2.29%, Mahindra & Mahindra up by 1.63%, ITC up by 1.51% and HCL up by 1.49%. On the flip side, Divi's Lab down by 3.57%, Coal India down by 3.55%, Tata Steel down by 2.77%, Hero MotoCorp down by 2.35% and Adani Ports down by 1.80% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite gained 47.3 points or 0.64% to 7,403.94, Straits Times rose 14.03 points or 0.43% to 3,272.60, KOSPI increased 18.67 points or 0.71% to 2,640.17, Nikkei 225 surged 208.72 points or 0.58% to 36,441.23 and Taiwan Weighted added 230.68 points or 1.06% to 22,027.25, while Shanghai Composite weakened 11.62 points or 0.41% to 2,856.33 and Hang Seng declined 77.45 points or 0.45% to 17,096.61.