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Indian equities continued their firm trade in the afternoon session on back of sustained buying in frontline counters. The sentiments in the market were supportive on report that showed foreign institutional investors remained net buyers of Indian stocks on July 28. FIIs have net bought shares worth Rs 1,637.69 crore, as per provisional data available on the NSE. Additional support came in with RBI’s data showing that bank credit rose by 12.89 per cent to Rs 122.81 lakh crore and deposits by 8.35 per cent to Rs 168.09 lakh crore in the fortnight ended July 15, 2022. Traders were getting comfort as commerce ministry said the manufacturing sector attracted foreign direct investments worth $21.34 billion in 2021-22, an increase of 76 per cent year-on-year. On the global front, Asian markets were trading mixed as traders were focused on a possible slowdown in the pace of rate hikes rather than a US recession after data showed its economy shrinking for a second straight quarter. Back home, the market breadth favoring positive trend; there were 2022 shares on the gaining side against 1168 shares on the losing side while 165 shares remain unchanged.

The BSE Sensex is currently trading at 57387.35, up by 529.56 points or 0.93% after trading in a range of 57104.81 and 57531.75. 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 1.02%, while Small cap index was up by 1.20%.

The top gaining sectoral indices on the BSE were Metal up by 4.05%, Basic Materials up by 2.31%, Consumer Durables up by 1.74%, Auto up by 1.55% and IT up by 1.55%, while Healthcare down by 0.35%, and FMCG was down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 7.27%, Bajaj Finserv up by 2.36%, Indusind Bank up by 2.31%, Infosys up by 2.08% and HDFC was up by 1.77%. On the flip side, Dr. Reddy's Lab down by 3.91%, Sun Pharma down by 0.80%, Hindustan Unilever down by 0.70%, Kotak Mahindra Bank down by 0.45% and Nestle was down by 0.45% were the top losers.

Meanwhile, Credit Rating Agency ICRA in its latest report has revised retail sector outlook to stable from negative. It said the retail sector is coming out of the woods and is expected to surpass its pre-pandemic levels of revenues and earnings in FY2023, following two years of sub-par financial performance. It stated retail firms in its sample set will see an increase in sales of 12-13% year over year in FY2023, which is a 5–6% increase above pre-pandemic levels. Their operational profit margins (OPMs), driven by the advantages of operating leverage, are anticipated to increase YoY by 150 bps to 8.2% (comparable to FY2020).

The report further said the level of discounting by the retail industry remained low during FY2021 and FY2022 (compared to FY2020) as retailers attempted to protect their gross margins against the backdrop of reduced sales. With footfalls and revenues surpassing the pre-pandemic levels in FY2023, it expects the level of discounting to go up as retailers compete to grab a higher share of the consumer’s wallet. Besides material costs, rental, employee costs, and selling/promotional expenses are the other key cost heads of a retail entity, typically accounting for 29-30% of its total cost.

ICRA said after the strict cost rationalization seen in FY2021, retailers largely rolled back the cuts on employee expenses and advertising expenses in FY2022. Retailers undertook rental negotiations in FY2022, following the sporadic restrictions on mobility. However, it said the extent of concessions received was markedly lower vis-a-vis FY2021. While these costs will rise further in FY2023, the OPM will expand as a result of healthy revenue growth and the benefits of economies of scale.

The CNX Nifty is currently trading at 17101.50, up by 171.90 points or 1.02% after trading in a range of 17018.15 and 17141.75. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were SBI Life Insurance up by 8.57%, Tata Steel up by 7.32%, Hindalco up by 4.24%, JSW Steel up by 2.41% and Bajaj Finserv was up by 2.40%. On the flip side, Dr. Reddy's Lab down by 3.97%, Sun Pharma down by 0.88%, Hindustan Unilever down by 0.70%, Cipla down by 0.65% and Nestle was down by 0.46% were the top losers.

Asian markets were trading mixed; Shanghai Composite declined 27.76 points or 0.85% to 3,254.82, Straits Times trembled 15.43 points or 0.48% to 3,205.22, Nikkei 225 slipped 13.84 points or 0.05% to 27,801.64 and Hang Seng was down by 501.29 points or 2.43% to 20,121.39.

On the other hand, Jakarta Composite soared 32.62 points or 0.47% to 6,989.44, KOSPI rose 16.22 points or 0.67% to 2,451.49 and Taiwan Weighted was up by 108.17 points or 0.73% to 15,000.07.

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