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Indian equity benchmarks ended in green on Wednesday tracking gains mainly in IT, TECK and Capital Goods stocks. The benchmarks opened lower taking cues from weak Asian markets. Traders remained cautious with rising coronavirus cases in the country. India has recorded a spike of 40,215 fresh Covid-19 cases in the last 24 hours, taking the total caseload to 30,944,949, according to Worldometer. The death count increased to 411,439 with 623 new fatalities, the data showed.  However, markets soon staged sharp recovery, taking support from report that the government may extend the scheme for investment promotion 2017-20, with an aim to attract investors and promote economic growth of the country. Sentiments remained positive as wholesale price-based inflation eased marginally to 12.07 per cent in June as crude oil and food items witnessed some softening in prices. However, WPI inflation remained in double digit for the third consecutive month in June, mainly due to a low base of last year. WPI inflation was (-) 1.81 per cent, in June 2020. 

Traders took note of report that global rating agency Standard and Poor’s has affirmed India’s sovereign rating at BBB- and maintained a stable outlook on gradual recovery in the economy. It said India’s recovery will gather pace through the second half of FY22 and into the following year, helping to stabilise the country’s overall credit profile. Meanwhile, Finance Secretary T V Somanathan has underlined the need for improving the fiscal position of the government through reforms in farm, food and fertilizer subsidies so that additional funds can be generated for development of infrastructure and education system. He said that farm, food and fertilizer reforms are administratively easy but politically difficult in view of the ramifications.

On the global front, Asian markets settled lower on Wednesday as a sharp increase in U.S. consumer prices in June fanned market worries that the Federal Reserve may raise rates sooner than expected. Investors awaited Fed Chair Jerome Powell's congressional testimony before Congress for any hints on the central bank's monetary policy outlook. European markets were trading in red as investors fretted about the impact higher prices will have on economies around the world. Official data showed earlier today that U.K. consumer inflation rose to 2.5 percent in June from 2.1 percent in May. The rate was forecast to climb to 2.2 percent. Back home, on the sectoral front, power stocks were in action as rating agency Icra said demand for electricity in India is expected to grow 6 per cent in 2021-22 as compared to the previous fiscal year. It has also estimated power generation capacity addition at 17- 18 GW for the ongoing fiscal year. Fertilizers industry’s stocks too were in focus as Fertiliser Minister Mansukh Mandaviya said that the government is planning to liberalise the Market Development Assistance (MDA) policy. He added ‘The expansion of this policy will fully complement the government’s ‘Swachh Bharat Abhiyan’. The MDA policy was earlier limited to city compost only.

Finally, the BSE Sensex rose 134.32 points or 0.25% to 52,904.05, while the CNX Nifty was up by 41.60 points or 0.26% to 15,853.95.   

The BSE Sensex touched high and low of 52,978.58 and 52,611.97, respectively and there were 16 stocks advancing against 14 stocks declining on the index.    

The broader indices ended in green; the BSE Mid cap index rose 0.21%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were IT up by 2.25%, TECK up by 1.89%, Capital Goods up by 0.90%, Healthcare up by 0.28% and Metal up by 0.21%, while Realty down by 1.00%, Oil & Gas down by 0.78%, Energy down by 0.65%, Auto down by 0.25% and FMCG down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.69%, HCL Technologies up by 2.09%, Infosys up by 2.07%, Larsen & Toubro up by 2.05% and Tata Steel up by 1.28%. On the flip side, Maruti Suzuki down by 1.32%, Hindustan Unilever down by 0.81%, Nestle down by 0.78%, Dr. Reddy's Lab down by 0.74% and Reliance Industries down by 0.65% were the top losers.

Meanwhile, S&P Global Ratings has affirmed India's sovereign rating at the lowest investment grade of 'BBB-' for the 14th year in a row with a stable outlook, and said that the country's strong external settings will act as a buffer against financial strains despite elevated government funding needs over the next 24 months. It stated that the sovereign credit ratings on India reflect the economy's above-average long-term real GDP growth, sound external profile, and evolving monetary settings.

It also said India's democratic institutions promote policy stability and compromise, and also underpin the ratings. These strengths are balanced against vulnerabilities stemming from the country's low per capita income and weak fiscal settings, including consistently elevated general government deficits and indebtedness. It has forecast economic activity in India to begin to normalise throughout the remainder of fiscal 2022, resulting in real GDP growth of about 9.5 per cent. It noted that a significant proportion of this rebound will be due to the very weak base in the prior fiscal year, when the economy contracted by a record 7.3 per cent.

S&P further said India's fiscal settings are weak, and deficits will remain elevated over the coming years even as the government undertakes some consolidation. The country's strong external settings help buffer the risks associated with the government's high deficits and debt stock, S&P said while affirming 'BBB-' long-term and 'A-3' short-term unsolicited foreign and local currency sovereign ratings on India.

The CNX Nifty traded in a range of 15,877.35 and 15,764.20 and there were 22 stocks advancing against 28 stocks declining on the index.  

The top gainers on Nifty were Wipro up by 6.99%, Tech Mahindra up by 2.56%, Infosys up by 2.10%, HCL Technologies up by 2.06% and Larsen & Toubro up by 1.80%. On the flip side, Maruti Suzuki down by 1.42%, Adani Ports &SEZ down by 1.04%, Hindustan Unilever down by 0.99%, Nestle down by 0.94% and Titan company down by 0.85% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 31.83 points or 0.45% to 7,092.89, France’s CAC decreased 11.37 points or 0.17% to 6,547.10 and Germany’s DAX decreased 17.49 points or 0.11% to 15,772.15.

Asian markets settled lower on Wednesday tracking pulled back of US stocks from record highs overnight due to sharp increase in US consumer prices in June, that fanned worries that the Federal Reserve may raise rates sooner than expected. Meanwhile, global investors also awaited Fed Chair Jerome Powell's congressional testimony before Congress for any hints on the central bank's monetary policy outlook. Chinese shares declined because of escalating Sino-US tensions. The US government strengthened its warnings to businesses about the growing risks of having supply chain and investment links to China's Xinjiang region. Investors also reacted to comments from China's premier that the country will keep its economic operations within a reasonable range over the next 18 months and take comprehensive measures to ease rising commodity prices.

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