Wednesday brings marginal gain for Indian equities

Wednesday was yet another day with marginal gains for Indian equities. After a slightly positive beginning, indices witnessed volatility, as traders remained cautious ahead of the release of key US inflation report later in the week, which could impact expectations for how quickly the US Fed will cuts interest rates. However, markets gained traction during mid of the trading session, amid foreign fund inflows. Foreign institutional investors (FIIs) purchased shares worth Rs 1,503.76 crore on August 27. Traders took note of Indian Ambassador to Oman Amit Narang stating that discussions for the proposed free trade agreement (FTA) between India and Oman are at an advanced stage and both sides hope to conclude the pact early. He said the pact will give a significant push to bilateral trade and investment ties between the two countries. 

Sentiments were positive amid a private report stating that the government is finalising changes in various debt recovery laws to empower banks and other lenders to quickly resolve non-performing loans. The measures include enabling special Debt Recovery Tribunals (DRTs) to handle high-value cases and granting legal validity to e-notices sent by banks. Further, on a day of completion of ten years of successful implementation of the Pradhan Mantri Jan Dhan Yojana (PMJDY), Union Minister for Finance and Corporate Affairs Nirmala Sitharaman has said that ‘Universal and affordable access to formal banking services is essential for achieving financial inclusion and empowerment.’ But, the momentum on Dalal Street slowed down in the last leg of trade and finally indices ended just above neutral lines. 

On the global front, European markets were trading mostly in green, as French consumer confidence improved in August to the highest point since the start of the war in Ukraine. The survey results published by the statistical office INSEE showed that the consumer confidence index rose to 92 in August, in line with forecast, from 91 in July. This was the highest since February 2022. Asian markets settled mostly higher on Wednesday, after Malaysia's producer price inflation slowed somewhat in July. The figures from the Department of Statistics showed that producer prices rose 1.3 percent year-on-year in July, following a 1.6 percent increase in June. Prices have been rising since February. Among sectors, the annual price growth in mining eased to 2.2 percent from 4.6 percent in June, while the price index for agriculture, forestry, and fishing grew at a stable rate of 3.4 percent.

Finally, the BSE Sensex rose 73.80 points or 0.09% to 81,785.56, and the CNX Nifty was up by 34.60 points or 0.14% to 25,052.35.     

The BSE Sensex touched high and low of 82,039.26 and 81,578.32 respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose by 0.04%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were TECK up by 1.31%, IT up by 1.24%, Healthcare up by 0.91% and Telecom up by 0.48%, while Utilities down by 0.44%, Basic Materials down by 0.40%, FMCG down by 0.38%, Bankex down by 0.32% and Capital Goods down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.20%, Indusind Bank up by 2.17%, Infosys up by 2.06%, Sun Pharma up by 1.39% and Mahindra & Mahindra up by 0.58%. On the flip side, Asian Paints down by 1.24%, Maruti Suzuki down by 1.11%, Nestle down by 1.02%, Axis Bank down by 0.82% and Ultratech Cement down by 0.76% were the top losers.

Meanwhile, rating agency Crisil has said that revenue growth of road engineering, procurement and construction (EPC) companies is expected to moderate to 5-7 per cent next fiscal, as lower national highway awarding weighs on their order books. That said, the credit profiles of these companies will remain stable, supported by steady operating profitability and strong balance sheet.

It said this slowdown is attributed to procedural issues linked to the approval of cost estimates of projects and restrictions under model code of conduct before elections, transition-linked issues as the government explores build-operate-transfer (BOT) toll model for future projects in addition to its currently dominant modes of EPC and the hybrid annuity model (HAM). However, it said there would be some respite as prices of key raw materials - steel and bitumen -are down 5-17 per cent from their peaks in fiscal 2023.

Crisil Ratings senior director Manish Gupta said the revenue growth will be impacted this fiscal and the next - after a compound annual growth rate of 13 per cent over the past five years. Ministry of Road Transport and Highways (MoRTH) awarded an average of 12,500 km projects between fiscals 2022 and 2023, but the number dropped to 8,581 km last fiscal and is seen modest at 8,000 km this fiscal.

The CNX Nifty traded in a range of 24,964.65 and 25,129.60. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were LTIMindtree up by 6.54%, Wipro up by 3.37%, Divi's Lab up by 2.61%, Indusind Bank up by 2.35% and Bharti Airtel up by 2.21%. On the flip side, Asian Paints down by 1.29%, Adani Enterprises down by 1.27%, Nestle down by 1.15%, Maruti Suzuki down by 1.12% and Britannia down by 1.06% were the top losers.

European markets were trading mostly in green; France’s CAC rose 35.72 points or 0.47% to 7,601.50 and Germany’s DAX gained 152.13 points or 0.81% to 18,833.94, while UK’s FTSE 100 decreased 10 points or 0.12% to 8,335.46.

Asian markets settled mostly higher on Wednesday ahead the release of the Federal Reserve's preferred inflation gauge later this week for signals on US interest-rate cuts, while Nvidia's earnings also in focus. Market sentiments improved further by the broadly positive cues from Wall Street overnight and after a measure of US consumer confidence rose to a six-month high in August. Seoul shares gained marginally after North Korea said it test-fired a 240mm multiple rocket launcher with a new guiding system. Japanese shares rose as the yen dropped further following cautious remarks from BoJ policymaker Himino, who said that BoJ will adjust the degree of monetary accommodation if it has growing confidence that its outlook for economic activity and prices will be realized. However, Chinese shares dipped by weak corporate earnings and concerns over a renewed trade war between China and the west.