Post Session: Quick Review

Thursday’s session turned out to be a fabulous day of trade for Indian equity benchmarks where frontline gauges recaptured their crucial 27,500 (Sensex) and 8,500 (Nifty) levels, as traders opted to buy beaten down but fundamentally strong stocks after yesterday’s drubbing. Markets made a gap-up opening and traded in tight band for most part of day’s trade, as traders also took some encouragement with Union Finance Minister Arun Jaitley’s statement that the government’s decision to withdraw Rs 500 and Rs 1000 notes will move the country towards a cashless economy. He also said that deposits of now-defunct old Rs 500 and Rs 1,000 currency notes in bank accounts will not enjoy immunity from tax and law will apply on source of such money. Some support came after Industry body ASSOCHAM has expressed confidence that apprehensions linked to US President elect Donald Trump would certainly prove wrong even as India Inc looks forward to taking bilateral economic engagement to a greater level under the new administration. India Inc can join hands with the Trump Administration in building of the US infrastructure projects.

Despite some profit booking in last leg of trade, local gauges gained around a percent as some support came with report that the Centre’s net tax kitty rose up to Rs 8.51 lakh crore between April and October 2016. Net direct tax collections jumped up 10.66 per cent to Rs 3.77 lakh crore in October, while direct tax mop-up was more robust and increased 26.7 per cent to Rs 4.85 lakh crore.

Firm global cues too aided sentiments with European markets making a firm start, as investors jumped back into riskier assets following President-elect Donald Trump's shocking win. Trump's victory speech given early Wednesday morning in New York was notable for its much softer tone as there was no gloating in his moment of triumph. Asian markets rallied on Thursday with Japanese markets recovering more than what it had lost in last session's biggest daily drop since the Brexit poll.

Back home, broad based buying was witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. On the sectoral front, banking shares extended gains for the second straight day after the Government of India declared that the five hundred and one thousand rupee notes will no longer be legal tender from midnight, November 8, 2016. Shares of metal space remained on buyers’ radar, after Donald Trump got elected as the 45th President of the United States and said in his victory speech that he would embark on a project to rebuild infrastructure in the US. He also plans to double US economic growth. Pharma stocks kept buzzing, as the US is the world’s largest drug market and Drug prices and the worrying cost of healthcare featured prominently in Trump’s campaign.

The NSE’s 50-share broadly followed index Nifty gained over ninety points to end above the psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over two hundred and sixty points to finish above its psychological 27,500 mark. Broader markets too traded with traction and ended the session with a gain of around two percent.

The market breadth remained in favor of advances, as there were 2,007 shares on the gaining side against 857 shares on the losing side while 147 shares remain unchanged. (Provisional)

The BSE Sensex ended at 27517.68, up by 265.15 points or 0.97% after trading in a range of 27457.05 and 27743.46. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index surged 1.65%, while Small cap index was up by 1.75%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 6.04%, PSU up by 4.13%, Bankex up by 3.63%, Power up by 2.69% and Realty up by 1.99%, while IT down by 0.72%, Auto down by 0.71%, Consumer Durables down by 0.07% and TECK down by 0.06% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 9.27%, SBI up by 8.41%, Cipla up by 6.85%, Power Grid up by 4.38% and Coal India up by 4.09%. On the flip side, Asian Paints down by 3.50%, Hero MotoCorp down by 2.82%, Lupin down by 2.34%, HDFC down by 2.28% and Infosys down by 1.80% were the top losers. (Provisional)

Meanwhile, Finance Ministry has said that Indian economy will face biggest challenge in the near term due to weak global demand, whereas in order to increase the credit supply of the state owned bank there is need to resolve the problem of bad loans. It also said that since January last year banks have passed on less than half of the 1.50 percent rate reduction benefit to consumers therefore, the transmission of monetary policy has remained incomplete. It added that exports and imports together constitute 42 percent of the GDP (gross domestic product), even at the reduced levels in 2015-16.

Ministry identified the twin balance sheet problem of stressed financial positions of some large corporates leading to stressed assets of banks which might affect private investment as a critical challenge. The gross non-performing assets (NPAs) of public sector banks (PSBs) increased sharply to 9.8 per cent in March 2016 as compared to 5.4 per cent in March 2015, which is mainly on account of cleaning up of their balance sheets. It also said that the problem of non-performing assets needs to be resolved and bank lending needs to pick up.

According to the Reserve Bank of India (RBI)’s Financial Stability Report, the proportion of leveraged companies declined sharply to 14 percent in March 2016 as compared to 19 percent in March 2015 and their share in the total debt also declined to 20.6 percent from 33.8 percent. The ministry has said that creating quality jobs is the imperative of the time therefore the government has focused its efforts on removing impediments to job creation, including addressing shortage of skills to the workforce. However, it noted that reviving the savings and investment cycle in economy is challenging.

Further, the savings rate that stood at 34.6 per cent in 2011-12, declined to 33 per cent in 2014-15. Investment rate declined to 34.2 per cent in 2014-15 as compared to 39 per cent of GDP in 2011-12 The International Monetary Fund (IMF) has estimated India to grow at 7.6 per cent in 2016-17 and 2017-18, while World Bank has projected India to maintain a robust growth of 7.6 per cent in 2016 and 7.7 per cent in the following two years.

The CNX Nifty ended at 8525.75, up by 93.75 points or 1.11% after trading in a range of 8510.70 and 8598.45. There were 34 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 9.43%, Bank of Baroda up by 9.13%, Hindalco up by 8.42%, SBI up by 8.19% and Cipla up by 7.11%. On the flip side, Asian Paints down by 3.77%, Hero MotoCorp down by 2.80%, Lupin down by 2.34%, Infosys down by 1.97% and HDFC down by 1.94% were the top losers. (Provisional)

European markets were trading in green; France’s CAC increased 43.95 points or 0.97% to 4,587.43, UK’s FTSE 100 gained 44.57 points or 0.64% to 6,956.41 and Germany’s DAX was up by 83.5 points or 0.78% to 10,729.51.

Asian equity markets ended in green on Thursday, with markets in Japan seeing biggest gains in nine months in a turnaround just as dramatic as the previous day's plunge, as markets reassessed the economic implications of Republican Donald Trump's shock US presidential election victory. The yen tumbled against the dollar, helping investors shrug off sluggish core machinery orders data. Core machinery orders fell 3.3 percent in September from the previous month, official data showed, signaling a fragile capital expenditure in the economy. The news overnight that Donald Trump doesn’t want to force Federal Reserve chair Janet Yellen to resign has also cheered the markets. Yellen’s first term expires in 2018, but there has been speculation that she might feel pressure to step down, given the attacks from Trump during the campaign.