Domestic indices trade higher in late morning deals

Domestic equity indices traded in green in late morning deals on account of buying in Infosys, Axis Bank, NTPC, Bharti Airtel and Power Grid companies’ stocks. Meanwhile, broader indices outperformed their large peers with BSE Mid cap index and Small cap index gaining in the range of 0.50-1.20%. Positive cues from the global markets supported domestic sentiments. Some support came in as private report said Indian consumer inflation probably held below the Reserve Bank of India's 4.0 per cent medium-term target for a second month in August thanks to a moderation in food price rises due to last year's high base. Shares of packaged snack companies, Gopal Snacks and Bikaji Foods International, gained after the Goods and Services Tax (GST) Council slashed GST on extruded and savoury items. In its 54th GST Council meeting held September 9, Indian Union Finance Minister Nirmala Sitharaman announced the GST rate cut for namkeens from 18 per cent to 12 per cent.

On the global front, Asian markets were trading mostly in green following positive cues from the US markets overnight. Sentiments got boost after China’s exports grew 8.7% year-on-year in August. On the BSE sectoral front, traders were seen pilling up positions in Telecom, Power, Utilities, IT and TECK, while selling was witnessed only in Metal and Oil & Gas.

The BSE Sensex is currently trading at 81762.63, up by 203.09 points or 0.25% after trading in a range of 81445.30 and 81801.22. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.54%, while Small cap index up by 1.17%.

The top gaining sectoral indices on the BSE were Telecom up by 1.62%, Power up by 1.51%, Utilities up by 1.41%, IT up by 1.18%, TECK up by 1.18% while, Metal down by 0.30%, Oil & Gas down by 0.17% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.37%, Infosys up by 1.34%, Axis Bank up by 1.32%, NTPC up by 1.15% and Bharti Airtel up by 1.00%. On the flip side, Bajaj Finance down by 1.70%, Bajaj Finserv down by 1.49%, Hindustan Unilever down by 0.87%, Mahindra & Mahindra down by 0.80% and SBI down by 0.48% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that revenues of organised gold jewellery retailers will increase 22-25% on-year this fiscal - a good 500-600 basis points (bps) more than the 17-19% expected earlier - following the sharp reduction in import duty announced in the full Union Budget. The incremental growth will be driven by higher volumes even as retail gold prices come down from their lifetime highs. The sudden price decline could lead to some inventory loss on existing stock, though its impact would be partially mitigated as improved demand limits spending on marketing and promotional campaigns. This will have the operating profitability moderating by 40-60 bps to 7.1-7.2%. 

The report said reduced inventory due to lower prices will bring working capital benefits despite the significant store additions planned. In the milieu, credit profiles will remain stable. A Crisil Ratings analysis of 58 gold jewellery retailers, which account for a third of the revenue of the organised jewellery sector, indicates as much. For the record, the organised sector accounts for slightly more than a third of the market, with the highly fragmented unorganised sector making up the rest. 

According to the report, with continuous gold price rise since Feb 2024, gold jewellery demand had remained tepid, and retailers’ revenues have been driven by higher realisations. However, the announcement of the duty cut from 15% to 6%, a whopping 9% decline, led to a fall in retail gold prices by Rs 4,500-5,000 per 10 gm in the fourth week of July 2024. This has resulted in better affordability for the purchasers and hence volumes may rise 3-5% this fiscal, on-year, for gold jewellery retailers, as compared to flattish volumes assumed earlier in May 2024. It also stated that gold prices remain higher than last year’s average by around 17% and are expected to remain firm as the festive and marriage seasons approach, driving H2 sales of jewellery retailers higher than the H1 of each fiscal. It further said while profitability will be lower, the cash flows of retailers will improve with higher revenues, allowing them to take up store expansion - seen at 12-14% of existing stores this fiscal. Still, working capital requirements will likely remain flattish as higher inventory requirements due to increased store counts will be partly offset by lower input prices. 

The CNX Nifty is currently trading at 24981.85, up by 45.45 points or 0.18% after trading in a range of 24896.80 and 25014.80. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Divi's Lab up by 3.16%, LTIMindtree up by 2.09%, Power Grid up by 1.37%, Axis Bank up by 1.36% and Infosys up by 1.33%. On the flip side, HDFC Life down by 3.43%, Shriram Finance down by 2.13%, SBI Life down by 2.10%, Bajaj Finance down by 1.86% and Bajaj Finserv down by 1.69% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 42.23 points or 0.24% to 17,239.19, Jakarta Composite gained 28.27 points or 0.37% to 7,731.01, Straits Times rose 14.81 points or 0.42% to 3,511.34 and Nikkei 225 surged 39.63 points or 0.11% to 36,255.38. However, Shanghai Composite weakened 11.99 points or 0.44% to 2,724.50, KOSPI dropped 6.15 points or 0.24% to 2,529.78 and Taiwan Weighted lost 55.94 points or 0.27% to 21,088.50.