Markets despite choppiness mange to post modest gains

Indian markets despite falling in red for a brief period during noon, followed a broad range and ended with modest gains on Tuesday. Traders though remained cautious in the F&O expiry week but the rebound in Chinese markets, which rose a day after marking their biggest loss in a month, boosted the morale of the local markets. Earlier, the markets made a flat but positive start getting some encouragement with Finance Minister Arun Jaitley’s statement that rolling out the ambitious GST regime is “certainly” doable in 2016 and he is in continuous touch with the Congress party in a bid to persuade them to cooperate. There was buzz in the infra sector from the very beginning, after a government appointed panel recommended an array of measures to revive public private partnership projects (PPP). The eight-member Vijay Kelkar Committee came up with host of recommendations, including a review of the model concession agreements, allowing fund raising through zero coupon bonds and setting up of independent sectoral regulators. It also called for a legal framework for PPPs in the form of PPP Act Law Policy.

On the global front, shrugging off the weak cues from the US markets, Asian markets ended mostly in green on Tuesday led by the China’s equity market rebound, as the oil climbed higher after suffering sharp cuts in last session. With trade turning normal after Christmas holidays, the Japanese markets too advanced supported by weaker yen. The European markets also made a positive start with some indices surging by over a percent, trimming their worst December drop since 2002.

Back home, the local markets were dragged in red for some time during noon, with benchmarks paring all their early gains on some profit booking in bluechips like Coal India, HCL Tech, HUL, BHEL, ONGC, BoB, Infosys, TCS and Tata Motors etc,  and on some weakness in rupee, which declined on month-end dollar demand from importers. Major bourses rebounded in the second half supported by positive start of the European markets. Also, there was report that FDI inflows during January-September period increased by 18 per cent to $26.51 billion. The government expects FDI inflows to rise by 40-45 per cent in the New Year while further steps could be on anvil to attract foreign capital. Stocks of liquor companies came under pressure after the Supreme Court upheld the Kerala government’s new excise policy restricting the sale and consumption of liquor at the bars in five star hotels only, thereby restricting other liquor bars from business. The liquor policy restricting the sale and consumption of liquor at the bars was upheld by the Kerala High Court on March 31. United Spirits lost over 2.5%, United Breweries was down by around a 1%, Tilaknagar Indusrties was down by around 2% and Radico Khaitan too lost about a percent. Broader markets made a mixed closing, with small caps finally giving up.

The market breadth remained in favour of decliners, as there were 1,472 shares on the gaining side against 1,180 shares on the losing side, while 259 shares remained unchanged.

Finally, the BSE Sensex gained 45.35 points or 0.17% to 26,079.48, while the CNX Nifty ended up by 3.80 points or 0.05% to 7,928.95.

The BSE Sensex traded in a range of 25994.45 and 26133.78. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices made a mixed closing; the BSE Mid cap index ended up by 0.42%, while Small cap index ended down by 0.13%.

The top gaining sectoral indices on the BSE were Auto up by 0.56%, Oil & Gas up by 0.24%, Bankex up by 0.24%, TECK up by 0.09%, Consumer Durables up by 0.01%, while Realty down by 0.92%, Capital Goods down by 0.46%, FMCG down by 0.42%, Metal down by 0.42%, PSU down by 0.19% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.76%, Mahindra & Mahindra up by 1.70%, Hero MotoCorp up by 1.18%, GAIL India up by 1.13% and Bharti Airtel up by 0.88%. On the flip side, BHEL down by 1.75%, Coal India down by 1.15%, Hindustan Unilever down by 0.88%, Tata Motors down by 0.61% and Dr. Reddys Lab down by 0.45% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) committee on medium-term path on financial inclusion, headed by RBI executive director Deepak Mohanty, has recommended that the government should transfer cash directly to persons instead of giving subsidies, and should replace interest subvention on agriculture loans with affordable universal crop insurance scheme. The group opined that the most efficient way for an effective financial inclusion is direct cash transfer which can be tried to address problems in the irrigation sector and instead of charging “abnormally low electricity tariffs” for agricultural use, equivalent cash can be transferred into beneficiaries’ accounts.

The committee which was set up in mid-July also recommended that linking credit accounts with unique identification number, or Aadhaar number, and share information with credit information companies to enhance stability of the credit system and improve access.  Currently, the government gives interest rate subvention of two per cent for short-term crop loans of up to Rs 3 lakh. Another three per cent subvention for prompt repayment lowers the effective cost further. Payments towards such subvention have increased rapidly over time. From less than Rs 2,500 crore in subvention in 2006, government’s subvention in 2016 is projected to be above Rs 12,500 crore.  Further, the committee recommended that a mandatory crop insurance scheme covering all crops should be introduced starting with small and marginal farmers with a monetary ceiling of Rs 2 lakh. Farmers will have to pay a nominal premium to get this insurance and the balance could come from government subsidy. Heavy use of technology, like satellite images for crop mapping and assess damage, could make the insurance scheme more efficient.

Among other major recommendations, the panel suggested stepping up efforts to include more women in the financial inclusion fold. The All-India Debt and Investment Survey (AIDIS) suggested that interest rates paid by female household head are, on average, higher than those paid by male household heads. In order to include more women, and with the government’s emphasis on the welfare of girl child, the panel recommended that a new welfare scheme, called Sukanya Shiksha that can be jointly funded by the central and state governments, be formed.  As per the Mohanty report, the mobile phones are the way forward for inclusion. Public sector banks account for only 14 per cent of the total mobile banking transactions worth Rs 270 billion, suggesting there is significant room for market players to grow. Besides, an eco-system should be developed where full-service banks, regional banks, non-banking finance companies, semi-formal financial institutions, as well as the newly-licensed payments banks and small finance banks, could work together for effective inclusion.

The CNX Nifty traded in a range of 7902.75 and 7942.15. There were 25 stocks in green against equal number of stocks in red on the index at last.

The top gainers on Nifty were Bajaj Auto up by 1.52%, ACC up by 1.47%, Ambuja Cement up by 1.41%, Grasim Industries up by 1.28% and Mahindra & Mahindra up by 1.22%. On the flip side, BHEL down by 1.69%, HCL Tech. down by 1.52%, Coal India down by 1.15%, Hindustan Unilever down by 0.92% and Power Grid Corpn. down by 0.84% were the top losers.

European markets were trading in green, UK’s FTSE 100 was up by 17.78 points or 0.28% to 6,272.42, France’s CAC gained 59.13 points or 1.28% to 4,677.08 and Germany’s DAX surged by154.3 points or 1.45% to 10,808.21.

Asian equity markets ended mostly higher on Tuesday as gains in health-care shares overshadowed losses in raw-material producers. China stocks closed higher after lawmakers approved a proposal to reform stock listings and the People's Bank of China said it would ‘flexibly’ use various policy tools to maintain appropriate liquidity and keep the Yuan stable. Japanese shares ended a choppy session higher as investors bought domestically-focused stocks and avoided taking large positions as the year draws to a close. Hong Kong stocks ended modestly higher, helped by calmer trading in mainland China after a sharp fall in the previous session.