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In a range-bound session, Indian equity benchmarks closed flat on a positive bias on Tuesday amid gains in Utilities, Consumer Discretionary, Auto and TECK shares. Indices opened a day with good gap, as the government data showed India's retail inflation in August marginally eased to 5.3%, staying within Reserve Bank of India's comfort zone for a second month. Inflation in the food basket was 3.11% in August compared to 3.96% in the preceding month. Some optimism also came as Union finance minister Nirmala Sitharaman has reiterated that the disinvestment plan of the government was on track and the Development Finance Institution (DFI), announced in the Budget, will become operational soon. Additional support also came with India Ratings and Research’s report stated that inflation rates are expected to decline till at least November this year. The retail inflation in August 2021 declined both sequentially and on a year-over-year basis to 5.30 per cent. The strong base effect resulted in the decline in retail inflation. It is the seventh consecutive month of retail inflation remaining in excess of 5 per cent and the 23rd consecutive month of retail inflation remaining in excess of RBI's targeted inflation rate of 4 per cent.

But, key indices cut most of their gains in late afternoon session after data showing that the wholesale price-based inflation rose marginally to 11.39% in August, mainly due to higher prices of manufactured goods, even as prices of food articles softened. In July 2021, WPI inflation stood at 11.16%. However, key indices managed to end session in green, taking support from Commerce and Industry Minister Piyush Goyal’s statement that India and the UK are moving towards an early harvest trade agreement, with a comprehensive free trade agreement (FTA) the next step. The UK’s Department for International Trade (DIT) said the talks between the two ministers focussed on the ‘scope and ambition’ for a UK-India free trade agreement (FTA), following the close of the UK’s formal consultation process ahead of the negotiations on August 31.

On the global front, Asian markets ended mixed on Tuesday, while European markets were trading mostly in red as investors awaited U.S inflation data for more clues on the health of the world's largest economy and when the Federal Reserve could start rolling back easy credit and other stimulus. Back home, on the sectoral front, insurance industry’s stocks were in action as Regulator IRDAI allowed insurers to continue selling and renewing short-term Covid specific health insurance policies till March 2022. NBFC stocks’ too were in watch as ICRA Ratings in its report states that the asset under management of the non-banking financial company segment declined in Q1 of 2021-22 on lower disbursements and portfolio rundown.

Finally, the BSE Sensex rose 69.33 points or 0.12% to 58,247.09 and the CNX Nifty was up by 24.70 points or 0.14% to 17,380.00.   

The BSE Sensex touched high and low of 58,482.62 and 58,214.29, respectively and there were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.09%, while Small cap index was up by 0.63%.

The top gaining sectoral indices on the BSE were Utilities up by 1.64%, Consumer Discretionary up by 1.34%, Auto up by 1.17%, TECK up by 1.02% and Consumer Durables up by 0.95%, while Metal down by 0.37%, FMCG down by 0.22%, Energy down by 0.04% and Basic Materials down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.07%, HCL Technologies up by 2.54%, Kotak Mahindra Bank up by 1.67%, Bajaj Auto up by 1.62% and Tech Mahindra up by 1.55%. On the flip side, HDFC down by 1.07%, Nestle down by 0.97%, Ultratech Cement down by 0.87%, Hindustan Unilever down by 0.78% and Tata Steel down by 0.74% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that the asset under management of the non-banking financial company (NBFC) segment declined in the first quarter of 2021-22 due to lower disbursements and portfolio rundown. After witnessing an uptick in Q3 and Q4 FY2021, disbursements for NBFCs and housing finance companies (HFCs) declined again in Q1 FY22, and was down by about 55 per cent on a sequential basis. Given this subdued disbursements and portfolio rundown in the absence of any moratorium like in Q1 FY2021, the (AUM) for NBFC-segment shrunk in Q1 FY2022, while the HFC AUM remained flat.

According to the report, while the disbursements of the sector revived quite sharply in July 2021 on the back of the pent-up demand, sustainability of the same would depend on the broader macro-economic indicators. It also said that the second wave has temporarily pushed back the revival for the sector. Icra expects overall disbursements for FY2022 to be higher by about 6-8 per cent on a year-on-year basis, on the back of the two consecutive years of year-on-year contraction. From an AUM perspective, the sector is expected to grow at 8-10 per cent in FY2022. Growth would be driven by the improvement in demand from all key target segments vis-a-vis FY2021, on the back of a low base.

The report further said the headline asset quality numbers are expected to moderate, as the trend in the collection efficiencies (CE) continues to remain encouraging. The agency holds its expectation of a 50-100 basis points (bps) rise (net of recoveries and written offs) in the overdues in FY2022, assuming there are no further COVID-19 induced lockdowns. 

The CNX Nifty traded in a range of 17,438.55 and 17,367.05 and there were 32 stocks advancing against 17 stocks declining, while 1 stock remain unchanged on the index.     

The top gainers on Nifty were Indusind Bank up by 3.93%, HCL Technologies up by 2.37%, Hero MotoCorp up by 2.01%, Adani Ports and SEZ up by 1.53%, Tata Motors up by 1.51% and Bajaj Auto up by 1.49%. On the flip side, Ultratech Cement down by 1.13%, HDFC down by 1.04%, BPCL down by 1.03%, Nestle down by 1.03% and Tata Steel down by 0.82% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 19.62 points or 0.28% to 7,048.81 and France’s CAC decreased 0.55 points or 6672.19% to 36.90, while Germany’s DAX increased 0.10 points or 15697.72% to 14.95.

Asian markets ended mixed on Tuesday ahead of crucial US inflation data for more clues on when the US central bank will taper stimulus. Chinese shares declined as investors worried about the regulatory crackdown on technology companies and a widening liquidity crisis for the China’s highly indebted property giant Evergrande Group. Meanwhile, Japanese share ended higher due hopes for an economic reopening as Japan is on track to reach the vaccination levels of the United States and Europe, while continued optimism of new fiscal stimulus ahead of the ruling Liberal Democratic Party’s leadership race scheduled for September 29 too supported market sentiments.

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