Firm trade persists over Dalal Street

A firm trade continued over the Dalal Street in early afternoon deals, with both Sensex and Nifty holding over half a percent gains, aided by positive cues from other Asian markets along with strong buying at almost all sector except Oil & Gas and Metal, as traders looked to pick up stocks at reduced levels. Sentiments remained upbeat, as the Goods and Services Tax (GST) Council in its 54th meeting has made various recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST. The GST rate on cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab is reduced from 12% to 5%.

On the global front, Asian markets were trading mostly in green, after Taiwan's foreign trade surplus increased notably in August as exports grew faster than imports. The preliminary figures from the Ministry of Finance revealed that the trade surplus rose to $11.49 billion in August from $8.60 billion in the corresponding month last year. The surplus also grew significantly from $4.83 billion in July. The expected surplus was $4.9 billion.

Back home, auto component sector stocks were in watch, as Commerce Minister Piyush Goyal has expressed confidence that the auto component sector will reach the $100 billion export target by 2030, making the sector one of the largest job creators in the country.

The BSE Sensex is currently trading at 81992.46, up by 432.92 points or 0.53% after trading in a range of 81445.30 and 82020.02. 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 by 0.62%, while Small cap index was up by 1.20%.

The top gaining sectoral indices on the BSE were Telecom up by 1.94%, TECK up by 1.74%, IT up by 1.72%, Power up by 1.64% and Utilities up by 1.54%, while Oil & Gas down by 0.03% and Metal down by 0.03% were the only losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.94%, Bharti Airtel up by 1.66%, Power Grid up by 1.63%, Adani Ports & SEZ up by 1.54% and Titan up by 1.35%. On the flip side, Bajaj Finserv down by 1.60%, Bajaj Finance down by 1.19%, ICICI Bank down by 0.54%, Mahindra & Mahindra down by 0.32% and Hindustan Unilever down by 0.24% were the top losers.

Meanwhile, credit rating agency ICRA in its latest report has said that the Indian IT services industry is likely to see a second consecutive year of mild revenue growth of 4-6% in FY2025. Despite persisting challenges, ICRA projects the industry’s operating profit margin (OPM) to remain healthy at around 22% in FY2025, with attrition levels having declined considerably and expected to stabilise over the near term. Despite expectations of continued subdued growth, ICRA maintains its Stable outlook on the Indian IT services industry, led by a well-established business position, expectation of healthy earnings and cash flow generation, and strong balance sheets of the industry players.

According to the report, revenue growth for the Indian IT services companies has remained tepid in the last five-six quarters as the industry continues to face challenges from macro-economic headwinds in key markets. Accordingly, ICRA’s sample set companies recorded a modest YoY growth of around 5.5% in revenues in USD terms in FY2024, against 9.2% in FY2023. In terms of geographic split of revenues, the Indian IT services industry generates a lion’s share from the US, followed by Europe and the Rest of the World (RoW) markets. ICRA’s sample set companies generated 55-60% of its Q1 FY2025 revenues from the US, 22-25% from Europe, and the balance from the RoW markets. 

Thus, the report said the industry remains susceptible to macroeconomic uncertainties and any adverse regulatory changes in these markets, for example, the revenue growth from the US witnessed a sharp moderation in recent quarters as macroeconomic headwinds continue to intensify. However, despite the moderation, growth in Europe has been more resilient compared to the US. Higher adoption of generative AI (Gen-AI) remains a key monitorable for the industry, over the medium to long term. Leading Indian IT services companies have trained a sizeable portion of their employee base in Gen-AI skills and have already started ramping up their capability and service offerings, to deliver AI-based solutions to their clients. While the order book or revenue contribution from Gen-AI deals so far is limited, it is likely to pick up over the medium term as overall technology adoption is more pervasive.  

The CNX Nifty is currently trading at 25072.80, up by 136.40 points or 0.55% after trading in a range of 24896.80 and 25074.55. There were 36 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Divi's Lab up by 3.99%, LTIMindtree up by 3.50%, Bharti Airtel up by 1.97%, Infosys up by 1.88% and Adani Ports & SEZ up by 1.76%. On the flip side, HDFC Life Insurance down by 3.54%, Bajaj Finserv down by 1.76%, SBI Life Insurance down by 1.70%, Shriram Finance down by 1.63% and Bajaj Finance down by 1.28% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 68.72 points or 0.4% to 17,265.68, Jakarta Composite gained 42.46 points or 0.55% to 7,745.20, Shanghai Composite strengthened 7.42 points or 0.27% to 2,743.91 and Straits Times rose 18.49 points or 0.53% to 3,515.02, while KOSPI dropped 12.50 points or 0.5% to 2,523.43, Nikkei 225 slipped 56.59 points or 0.16% to 36,159.16 and Taiwan Weighted lost 80.36 points or 0.38% to 21,064.08.