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The local equity markets have pared some of their gains but are still trading in positive terrain in noon session. Both Sensex and Nifty were trading above the crucial 59700 and 17800 levels, respectively amid foreign fund inflows and cooling crude oil prices. Foreign Institutional Investors (FIIs) were net buyers in the capital markets, as they purchased shares worth Rs 2,913.09 crore on Thursday, exchange data showed. Sentiments got boost with report that India and US will 'very soon' hold the next ministerial-level meeting of the Trade Policy Forum (TPF) in America to discuss ways for promoting trade and investment between the countries. The forum is an inter-agency collaboration led by the US Trade Representative (USTR). However, markets pared some of their gains as India Ratings in its latest report has said that falling wage growth is emerging as a bigger worry in India as it leads to tepid demand and results in under-utilisation of capacity, further widening the output gap. On the global front, Asian markets were trading mostly higher with investors largely pricing in more interest rate hikes aimed at taming runaway inflation.

The BSE Sensex is currently trading at 59781.47, up by 93.25 points or 0.16% after trading in a range of 59744.65 and 60119.80. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.05%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Bankex up by 0.63%, FMCG up by 0.59%, PSU up by 0.54%, Healthcare up by 0.46% and Basic Materials was up by 0.32%, while Telecom down by 0.52%, Utilities down by 0.45%, Realty down by 0.43%, Capital Goods down by 0.35% and Power was down by 0.35% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.70%, SBI up by 1.78%, Hindustan Unilever up by 1.47%, Dr. Reddy's Lab up by 0.76% and Nestle was up by 0.70%. On the flip side, Larsen & Toubro down by 1.23%, Mahindra & Mahindra down by 1.02%, Bajaj Finserv down by 0.77%, Titan Co down by 0.58% and Sun Pharma was down by 0.57% were the top losers.

Meanwhile, despite economic recovery gains, India Ratings in its latest report has said that falling wage growth is emerging as a bigger worry in India as it leads to tepid demand and results in under-utilisation of capacity, further widening the output gap. According to the report, households accounting for 44-45 per cent of the GVA have witnessed a decline in nominal wage growth to 5.7 per cent during FY17-FY21 from a high of 8.2 per cent during FY12-16, implying that wage growth in real terms is close to just about 1 per cent. This worrying trend comes despite India seeing an overall economic growth of 13.5 per cent in the first quarter of the current fiscal.

The decline in wage growth at both the rural and urban levels translated into lower purchasing power of households. As per the report, at the nominal level, urban and rural areas saw 2.8 per cent and 5.5 per cent wage growth in year-on-year, respectively, but in real terms, which when adjusted to inflation, was a negative 3.7 per cent and negative 1.6 per cent in June 2022. The report said that the recovery in wage growth is going to be critical for a sustainable and durable recovery in private final consumption expenditure and overall GDP growth in FY23 as much of the consumption demand of the household sector is driven by it.

The report further said the better way to assess the recovery in GDP/gross value added (GVA) is to compare the growth trend taking the pre-pandemic period as the annualised growth does not provide a true picture of the recovery due to the low base of FY21 and FY22. Accordingly, GDP shows a compounded annual growth rate of just 1.3 per cent during Q1FY20 - Q1FY23 against 6.2 per cent during Q1FY17 - Q1FY20.

The report also said that despite some moderation, high inflationary pressures at both the consumer and wholesale levels is also worrying. India's retail and wholesale inflation came in at 6.7 per cent and 13.9 per cent, respectively, in July 2022, down from the peak of 7.8 per cent in April and 16.7 per cent in May 2022. The agency expects the retail inflation to stay elevated at 6.8 per cent in August due to costly cereals and services. Accordingly, it expects the central bank to continue with rate hikes in the range of 25-50 bps in the remainder of FY23.

The CNX Nifty is currently trading at 17841.95, up by 43.20 points or 0.24% after trading in a range of 17821.55 and 17925.95. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Adani Ports up by 3.49%, Shree Cement up by 3.03%, Indusind Bank up by 2.70%, SBI up by 1.82% and Hindustan Unilever was up by 1.43%. On the flip side, Larsen & Toubro down by 1.21%, Mahindra & Mahindra down by 1.13%, Bajaj Finserv down by 0.83%, HDFC Life Insurance down by 0.71% and Maruti Suzuki was down by 0.69% were the top losers.

Asian markets were trading mostly higher; Nikkei 225 surged 149.47 points or 0.53% to 28,214.75, Straits Times advanced 22.26 points or 0.69% to 3,255.87, Shanghai Composite gained 25.39 points or 0.78% to 3,260.98 and Hang Seng was up by 494.35 points or 2.62% to 19,348.97. On the other side, Jakarta Composite was down by 4.73 points or 0.07% to 7,227.29.

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