Domestic indices trade higher with gains of over half percent

Domestic equity indices were trading higher with gains of over half percent in late morning deals as investors opted to buy beaten down but fundamentally strong stocks. Meanwhile, broader indices outperformed their large peers with BSE Mid cap index and Small cap index gaining in the range of 1.40-1.75%. Hectic buying in Mahindra & Mahindra, HDFC Bank, Axis Bank, NTPC and Adani Ports companies’ stocks helped the markets to magnify their gains. Traders were getting some encouragement with Commerce and Industry Minister Piyush Goyal’s statement that India is poised to attract $100 billion in investments from the United Arab Emirates in the coming years.  The sentiments were further supported by Indian rupee appreciating 7 paise to 83.93 against the dollar at the Interbank Foreign Exchange on increased selling of the US currency by exporters and banks.

On the global front, Asian markets were trading mostly in red following negative cues from the US markets overnight. Back home, on the BSE sectoral front, traders were seen pilling up positions in Power, Capital Goods, PSU, Industrials and Utilities, while selling was witnessed in Metal, IT and TECK. In the stock specific development, Ola Electric Mobility fell after the Central Consumer Protection Authority (CCPA) served a show cause notice to the company on Monday.    

The BSE Sensex is currently trading at 81562.64, up by 512.64 points or 0.63% after trading in a range of 80813.07 and 81562.67. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.42%, while Small cap index up by 1.75%.

The top gaining sectoral indices on the BSE were Power up by 2.00%, Capital Goods up by 1.94%, PSU up by 1.91%, Industrials up by 1.89% and Utilities up by 1.78%, while Metal down by 0.67%, IT down by 0.09% and TECK down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.05%, Adani Ports up by 2.79%, NTPC up by 2.28%, HDFC Bank up by 1.81% and Axis Bank up by 1.55%. On the flip side, Tata Steel down by 2.47%, JSW Steel down by 2.20%, Tata Motors down by 1.54%, Titan down by 1.49% and TCS down by 1.00% were the top losers.

Meanwhile, Crisil Ratings in its latest report has said that operating losses, denoted by the gap between average cost of supply (ACS) and average revenue realised (ARR) per unit of power, of 30 state power distribution companies (discoms) will remain sizeable at 40-45 paise per unit this fiscal despite a 15-20% reduction on-year.  It said elevated cost of supply and subdued tariff hikes have kept operating losses elevated and led to an increase in borrowings to fund the losses. That, in turn, will keep credit profiles weak and discoms reliant on timely government support.

According to the report, there are multiple reasons for the slow growth in ARR.  First, even at the national level, despite improvement, there have been delays in the release of tariff orders. For instance, discoms in 10 of the 36 states and union territories (UTs) witnessed delayed or no release of tariff orders for fiscal 2024 (14 states and UTs for fiscal 2023 and 22 for fiscal 2022). Second, regulatory support mechanisms such as automatic pass through have been implemented in only 15 states and UTs. Third, the improvement in billing efficiency has been slow and it remains below 90%, impacting the revenue of discoms and keeping the ACS-ARR gap at 40-45 paise per unit this fiscal. That said, it will be only the second instance of the gap narrowing below 50 paise per unit in the past five fiscals.

The report said while the operating losses are expected to slip from more than Rs 30,000 crore in the past two fiscals to Rs 25,000-30,000 crore this fiscal, they will remain large, leading to increased debt in balance sheets to fund the losses and keeping the credit profiles weak. That makes a continued improvement in subsidy realisation from state governments crucial for the discoms. While subsidy disbursements from states have been more than 100% and timely over the past three years, any dilution in state support or delay in subsidy realisations will pose downside risks to the estimates of operating losses.

The CNX Nifty is currently trading at 24964.20, up by 168.45 points or 0.68% after trading in a range of 24756.80 and 24968.10. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Trent up by 5.78%, Bharat Electronics up by 3.48%, Mahindra & Mahindra up by 2.95%, Adani Ports up by 2.72% and NTPC up by 2.26%. On the flip side, Tata Steel down by 2.47%, JSW Steel down by 2.10%, SBI Life Insuran down by 1.73%, Titan down by 1.63% and Tata Motors down by 1.50% were the top losers.

Asian markets were trading mostly in red; Hang Seng declined 1524.74 points or 6.6% to 21,575.04, Straits Times fell 3.4 points or 0.09% to 3,595.79, KOSPI dropped 9.34 points or 0.36% to 2,601.04, Nikkei 225 slipped 425 points or 1.08% to 38,907.74 and Taiwan Weighted lost 131.25 points or 0.58% to 22,571.31. However, Jakarta Composite gained 28.11 points or 0.37% to 7,532.25 and Shanghai Composite strengthened 123.52 points or 3.7% to 3,460.02.