Domestic indices trade above natural lines in late morning deals

Domestic equity markets traded above natural lines in late morning deals on account of buying in Tech Mahindra, NTPC, Nestle, Kotak Mahindra and Bharti Airtel companies' stocks. There was some encouragement in the markets as Prime Minister Narendra Modi said India is becoming a major stakeholder in the global supply chain and this growing capacity is the foundation of the country’s economic growth. He added innovation and collaboration are India’s greatest strengths on its development journey. However, upside was capped as traders remained cautious ahead of the crucial two-day US Fed meeting starting tonight. On the BSE sectoral front, traders were seen pilling up positions in TECK, IT, Telecom, Utilities and FMCG, while selling was witnessed in PSU, Industrials, Metal, Basic Materials and Capital Goods.

On the global front, Asian markets were trading mostly in green following positive cues from the US markets overnight. Back home, in the stock specific development, Firstsource Solutions soared after the company has inked a pact with Microsoft to deliver cutting-edge digital transformation services to clients worldwide.

The BSE Sensex is currently trading at 83070.81, up by 82.03 points or 0.10% after trading in a range of 82866.68 and 83128.78. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.03%, while Small cap index down by 0.43%.

The top gaining sectoral indices on the BSE were TECK up by 0.46%, IT up by 0.41%, Telecom up by 0.27%, Utilities up by 0.21% and FMCG up by 0.20%, while PSU down by 0.63%, Industrials down by 0.42%, Metal down by 0.35%, Basic Materials down by 0.30% and Capital Goods down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.06%, NTPC up by 0.99%, Nestle up by 0.96%, Kotak Mahindra Bank up by 0.91% and Bharti Airtel up by 0.82%. On the flip side, Tata Motors down by 1.98%, Tata Steel down by 1.04%, Adani Ports down by 0.87%, Power Grid Corp down by 0.74% and Maruti Suzuki down by 0.69% were the top losers.

Meanwhile, Crisil ratings in its latest report has said that credit profiles of flexible packaging players will continue to remain subdued this fiscal on elevated debt levels, which had burgeoned, over the past three fiscals due to sizeable capacity expansions. However, steady domestic demand (accounting for around 75% of sectoral volumes) and negligible capacity additions will partially offset the demand-supply imbalance this fiscal. Consequently, capacity utilization levels shall improve by 400-450 basis points (bps) and realizations will stabilize driving a modest 7-8% revenue recovery. This comes on the back of a steep 10-11% decline last fiscal as excess supply resulted in sharp drop in realisations. 

In the milieu, the report said the operating margin will recover by 150-200 bps from the decadal low of around 6% last fiscal, backed by stable raw material prices and improving capacity utilisation. Operating margins had dropped around 430 bps last fiscal owing to lower operating leverage and sharp fall in realisations due to oversupply. A CRISIL Ratings analysis of seven large flexible packaging players, accounting for over 60% of the domestic capacity, indicates as much. It said the industry primarily comprises bi-axially oriented polypropylene (BOPP) and bi-axially oriented polyethylene (BOPET) films. BOPET films have diverse end-use applications due to their higher oxygen-retention power, high tensile strength, longer shelf life and better print quality. BOPP films, with better moisture resistance properties and lower cost, are ideal for packaging food products.

According to the report, domestic demand, comprising nearly three-fourths of the sectoral volume, will mirror the fast moving consumer goods (FMCG) segment, which accounts for more than 80% of flexible packaging demand. Growth in the FMCG sector will be driven by improving rural demand, supported by expectation of a good monsoon and higher MSPs, and stable urban demand. On the other hand, persistent weakness in the European Union and currency-related challenges in African markets will restrict export growth to 2-4% despite demand from the US picking up.

The CNX Nifty is currently trading at 25427.75, up by 44.00 points or 0.17% after trading in a range of 25352.25 and 25428.35. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Hero MotoCorp up by 2.63%, Britannia up by 1.36%, Bajaj Auto up by 1.33%, LTIMindtree up by 1.25% and Tech Mahindra up by 1.21%. On the flip side, Tata Motors down by 1.98%, BPCL down by 1.10%, Tata Steel down by 0.94%, Adani Ports down by 0.92% and Eicher Motors down by 0.88% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 271.87 points or 1.56% to 17,693.99, Jakarta Composite gained 6.87 points or 0.09% to 7,819.00 and Straits Times rose 24.07 points or 0.67% to 3,594.50. However, Nikkei 225 slipped 471.62 points or 1.29% to 36,110.14.