Markets extend opening gains on supportive global cues

Indian equity benchmarks started the new week on optimistic note tracking gains in global counterparts. Soon, domestic indices gained traction and are trading higher with gains of over half a percent each in early deals on account of value buying. Some support came as the Income-Tax (I-T) Department’s latest data showed that India’s net direct tax collection, after adjusting for refunds, grew 18.35 per cent to Rs 11.3 trillion between April 1 and October 10 of FY25. In the same period last year, tax collection stood at Rs 9.51 trillion. Traders largely overlooked the government data showing that India’s industrial production turned negative as it contracted by 0.1 per cent in August, mainly due to a decline in the mining and power generation sectors’ output, in addition to an almost flat expansion in the manufacturing sector. Now, investors are eyeing retail inflation and wholesale inflation figures for September to be out later in the day. 

On the global front, Asian markets are trading mostly higher, following the broadly positive cues from Wall Street on Friday, as traders react to the report showing producer prices in the U.S. were unexpectedly unchanged in September, reinforcing optimism the US Fed will continue lowering interest rates in the coming months, although hopes for another 50-basis point cut next month largely evaporated. Meanwhile, China's consumer inflation unexpectedly eased in September, while producer price deflation deepened, raising concerns about weak domestic demand. The Japanese stock market is closed for Sports Day.

Back home, insurance industry stocks are in focus as data released by the Life Insurance Council showed that life insurance companies reported a 14 per cent year-on-year growth in new business premiums for September, totaling Rs 35,020 crore. In stock specific development, Hindustan Aeronautics climbed as the Indian government approved to upgrade the company’s status to a Maharatna central public sector enterprise. However, Avenue Supermarts traded under pressure following Q2FY25 results. Also, market participants are eyeing Q2 numbers of HCL Tech and Reliance Industries to be out later in the day.

The BSE Sensex is currently trading at 81890.58, up by 509.22 points or 0.63% after trading in a range of 81541.20 and 81893.39. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.11%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Metal up by 0.99%, Bankex up by 0.79%, PSU up by 0.73%, Utilities up by 0.66% and Capital Goods up by 0.65%, while there was no loser on the BSE sectoral front.

The top gainers on the Sensex were JSW Steel up by 1.93%, HDFC Bank up by 1.71%, Larsen & Toubro up by 1.65%, Tech Mahindra up by 1.47% and Adani Ports & SEZ up by 1.24%. On the flip side, Ultratech Cement down by 0.85%, Bajaj Finance down by 0.58%, Maruti Suzuki down by 0.41%, Axis Bank down by 0.33% and Asian Paints down by 0.21% were the top losers.

Meanwhile, India’s industrial production, measured in terms of the Index of Industrial Production (IIP), turned negative as it contracted by 0.1 per cent in August 2024, after a gap of nearly two years, mainly due to a decline in the mining and power generation sectors’ output, in addition to an almost flat expansion in the manufacturing sector. According to the data released by the National Statistical Office (NSO), factory output growth has also been revised downwards for July to 4.7 per cent from the earlier estimate of 4.8 per cent. The IIP growth in August 2023 was 10.9 per cent. The Quick Estimates of IIP stood at 145.6 against 145.8 in August 2023. The last contraction in IIP was witnessed in October 2022, when the output index declined by 4.1 per cent. During April-August 2024-25, the IIP growth was 4.2 per cent lower against 6.2 per cent a year ago.

The data showed that the growth rates in mining, manufacturing and electricity during August 2024 were (-) 4.3 per cent, 01 per cent and (-) 3.7 per cent, respectively. It is likely that the decline in the growth of the mining sector is due to heavy rainfall in the month of August 2024. Within the manufacturing sector, top three positive contributors for the month of August 2024 are – ‘Manufacture of basic metals’ (3.0%), ‘Manufacture of electrical equipment’ (17.7%), and ‘Manufacture of chemicals and chemical products’ (2.7%). The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of August 2024 stood at 107.1, 145.9 and 212.3 respectively.

As per the use-based classification released by the NSO, the output of primary goods contracted by 2.6 per cent in August against a growth of 12.4 per cent a year earlier. The capital goods segment growth decelerated to 0.7 per cent in August 2024 from 13.1 per cent in the year-ago period. The expansion in the intermediate goods segment was 3 per cent down as compared to 7.4 per cent in the year-ago period. According to the data, infrastructure/construction goods reported a growth of 1.9 per cent in August 2024, down from a 15.7 per cent expansion in the year-ago period. Consumer durable goods production growth too slowed to 5.2 per cent during the reporting month compared to an expansion of 6 per cent in August 2023. Consumer non-durables output contracted by 4.5 per cent against a growth of 9.9 per cent in August 2023.

The CNX Nifty is currently trading at 25107.20, up by 142.95 points or 0.57% after trading in a range of 25017.50 and 25120.65. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Shriram Finance up by 1.94%, BPCL up by 1.76%, Larsen & Toubro up by 1.76%, HDFC Bank up by 1.71% and Wipro up by 1.67%. On the flip side, Ultratech Cement down by 0.81%, Bajaj Finance down by 0.75%, Maruti Suzuki down by 0.70%, Cipla down by 0.42% and Axis Bank down by 0.30% were the top losers.

Asian markets are trading mostly in green; Taiwan Weighted surged 94.97 points or 0.41% to 22,996.61, Shanghai Composite strengthened 53.32 points or 1.63% to 3,271.06, Jakarta Composite rose 37.61 points or 0.5% to 7,558.21, KOSPI increased 24.59 points or 0.95% to 2,621.50 and Straits Times was up by 15.73 points or 0.44% to 3,589.49, while Hang Seng was down by 84.56 points or 0.4% to 21,167.42.