Benchmarks continue to trade higher in morning deals

Indian equity benchmarks continued to trade higher in morning deals, driven by positive global market trends as optimism grows that the US Federal Reserve may begin cutting interest rates by September. Traders took support with latest data released by the Reserve Bank of India showing that net foreign direct investment (FDI) during the April-June period of the current financial year was $6.9 billion, compared to $4.7 billion in the year-ago period. The increase was due to an improvement in gross inward FDI, which grew by 26.4 per cent year-on-year (Y-o-Y) to $22.5 billion during Q1 of 2024-25. Traders overlooked Crisil Ratings’ report stated that the weakness in oil, gems, and jewellery exports led to the contraction in India’s merchandise exports in July. Another factor that contributed to the fall in merchandise exports in July was the high domestic demand for oil products, which led to an increase in imports and a decrease in exports. On the global front, Asian markets are trading mostly in green as investors awaited cues from the FOMC meeting minutes along with speeches by Fed Chair Jerome Powell and other Fed speakers this week for additional clues on the interest rate trajectory. 

The BSE Sensex is currently trading at 80840.52, up by 415.84 points or 0.52% after trading in a range of 80517.95 and 80923.71. 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 0.19%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were IT up by 1.06%, Bankex up by 0.78%, TECK up by 0.66%, Auto up by 0.46% and Utilities up by 0.43%, while Capital Goods down by 0.38%, Consumer Durables down by 0.28%, Industrials down by 0.14%, Realty down by 0.09% and Metal down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 1.68%, TCS up by 1.42%, Ultratech Cement up by 1.39%, Axis Bank up by 1.34% and Bajaj Finserv up by 1.25%. On the flip side, Bharti Airtel down by 0.97%, Tata Steel down by 0.75%, JSW Steel down by 0.32%, Tata Motors down by 0.30% and Adani Ports &SEZ down by 0.21% were the top losers.

Meanwhile, Fitch Ratings has said that operating costs of Indian mining companies are likely to rise significantly if states impose additional mining taxes, as allowed by the Supreme Court in a recent judgment. On August 14, the Supreme Court ruled that mineral-rich states can collect past dues on royalty and taxes on mines and mineral-bearing land from April 1, 2005, from both the Centre and mining lease holders. A nine-judge Constitution bench directed that the past dues be paid in a staggered manner over the next 12 years, starting from April 1, 2026. 

The rating agency said ‘We see increased risks from a sustained weakening of the companies’ EBITDA margins due to the prospective levies.’ At the same time, Fitch expects limited financial impact from the payment of past dues, as the court has provided a long timeframe of 12 years for the payment of such dues, starting from the financial year 2026-27. 

It said ‘We believe the steel and mining sector companies are more at risk from state-imposed taxes than sectors such as power and cement.’ Metal and mining companies have limited ability to pass on the potential increase in operating costs, as their products track global prices. It argued ‘We believe additional state taxes on coal will lead to an increase in electricity prices, as fuel cost changes are passed through to consumers under the power purchase agreements of most of the domestic coal-based power plants, and more than two-thirds of India’s power generation remains coal-based. The higher prices should quicken the pace of investments and growth in renewable power generation.’ It stated ‘We think that the impact of the court ruling will become gradually clearer in the next few quarters. A key unknown is whether individual states will raise demands for past dues or impose additional taxes’.

The CNX Nifty is currently trading at 24707.55, up by 134.90 points or 0.55% after trading in a range of 24607.20 and 24729.25. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.69%, SBI Life Insurance up by 2.24%, BPCL up by 1.89%, HDFC Life Insurance up by 1.73% and Indusind Bank up by 1.67%. On the flip side, ONGC down by 1.64%, Bharti Airtel down by 1.00%, Tata Steel down by 0.70%, Cipla down by 0.67% and JSW Steel down by 0.48% were the top losers.

Asian markets are trading mostly in green; Jakarta Composite gained 56.86 points or 0.76% to 7,523.69, Straits Times rose 19.98 points or 0.6% to 3,375.54, KOSPI increased 20.75 points or 0.78% to 2,695.11, Nikkei 225 surged 670.47 points or 1.79% to 38,059.09 and Taiwan Weighted added 37.12 points or 0.17% to 22,446.75.

On the flip side, Hang Seng declined 63.23 points or 0.36% to 17,506.34 and Shanghai Composite weakened 28.49 points or 0.99% to 2,865.18.