Post Session: Quick Review

Today’s session marked the energized bull run on the bourses which kicked December series of derivative contracts on a strong note. The firm trade pulled key indices Sensex and Nifty to end with gains of around two percent. The markets made a positive start in early deals on account of buying in front line blue chip counters amid positive global cues as dollar retreated from 14-year high mark. After hitting a record low of 68.86 against the US dollar in intraday trade on Thursday, the rupee opened higher against the greenback on Friday. The selling of American dollars by banks and exporters supported the local currency in opening trade. The slump in the rupee yesterday to an all-time low against the US dollar and chances of further drop in the domestic currency to the 70 level boosted sentiment on the export-oriented IT and Pharma counters, which would be key beneficiaries of the plunge in the rupee. The sentiments got some support with Finance Minister Arun Jaitley’s statement that the government’s demonetisation move is going to have a positive impact on the economy, including GDP. Jaitley said there will be a positive impact because a lot of money that operates in the shadowy economy will now become part of the banking structure and banks will have a lot more money to support the economy. According to the data by the BSE and Centre for Monitoring Indian Economy (CMIE), contrary to popular perception, the overall consumer sentiment rose over 210 bps to 98.75 from 96.65, while the unemployment rate fell by nearly 150 bps to 6.10% during the week demonetisation was announced. This is despite the fact the agency claiming that demonetisation has disrupted consumption which will in turn lead to postponement in investment revival.

Buying emerged after Fitch Ratings stated that while there are many facets to India’s demonetisation measure making it difficult to predict the impact on real Gross Domestic Product (GDP) growth, the growth will still be higher than China’s in the medium term. The report highlighted that in India it expects GDP growth to accelerate in FY2018 on the back of reform implementation, monetary easing of the past year and infrastructure spending, while in China a continued increase in leverage in the broader economy is more and more becoming a burden for growth. Commerce Minister Nirmala Sitharaman has expressed hope that outbound shipments will see a steady growth in coming months and exceed last year’s figures. The minister stated that many sectors were showing revival including petroleum based.

On the global front, Asian markets ended in green, as the Thanksgiving break in the United States helped slow a relentless surge in the dollar that has sucked capital out of most emerging markets. Japan’s core consumer prices marked their eighth straight month of annual declines in October, illustrating the sheer scale of the central bank’s struggle to beat deflation and stagnant growth with diminishing policy options. European markets were trading in green ahead of an update on the UK’s economic health.

The BSE Sensex ended at 26321.27, up by 461.10 points or 1.78% after trading in a range of 25874.45 and 26343.95. There were 27 stocks advancing against 3 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.26%, while Small cap index was up by 1.93%. (Provisional)

The gaining sectoral indices on the BSE were IT up by 4.61%, TECK up by 3.72%, Realty up by 1.49%, Consumer Durables up by 1.48% and Power up by 1.40%. (Provisional)

The top gainers on the Sensex were TCS up by 5.37%, Infosys up by 4.62%, Sun Pharma up by 4.15%, GAIL India up by 3.48% and HDFC up by 3.33%. (Provisional)

On the flip side, Bajaj Auto down by 0.54%, SBI down by 0.34% and Bharti Airtel down by 0.17% were the top losers. (Provisional)

Meanwhile, amid the confusion about the government being able to impose a penalty of up to 200% on the all unaccounted money deposited in bank, as announced earlier after PM Modi's November 8 shock ban on high-denomination currency notes that swept away 86 per cent of the currency in circulation. The union cabinet is believed to have discussed amending laws to levy close to 60 per cent (30 per cent tax plus 30 per cent penalty) income tax on unaccounted deposits in banks above a threshold post demonetisation of high-denomination currency notes.

It is believed that the government is planning to bring an amendment to the Income Tax Act during the current winter session of Parliament to levy a tax that will be higher than 45 per cent tax and penalty charged on black money disclosed in the one- time Income Disclosure Scheme that ended on September 30.

Though, there were no official briefing after the cabinet meeting, but it is believed that the government is keen to root out benami deposits, particularly in Jan Dhan accounts, with banks reporting over Rs. 21,000 crore being deposited in those zero-balance accounts in two weeks after the 500 and 1,000 rupee notes were banned, which authorities apprehend may be laundered black money. The move is also aimed at preventing black money holders from circumventing existing I-T Act provisions.

The CNX Nifty ended at 8110.15, up by 144.65 points or 1.82% after trading in a range of 7976.75 and 8122.25. There were 42 stocks advancing against 9 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 5.83%, TCS up by 5.09%, Infosys up by 4.77%, Sun Pharma up by 4.39% and HCL Tech up by 4.19%. (Provisional)

On the flip side, ACC down by 1.22%, Bharti Infratel down by 1.22%, Bajaj Auto down by 0.79%, Eicher Motors down by 0.52% and SBI down by 0.42% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 0.97 points or 0.01% to 6,830.17, Germany’s DAX increased 4.93 points or 0.05% to 10,694.19 and France’s CAC increased 3.35 points or 0.07% to 4,545.91.

Asian equity markets ended in green on Friday, despite a lack of direction from US markets that were shut on Thursday for the Thanksgiving holiday. While oil prices treaded water in Asian trade ahead of next week's OPEC meeting, the Yuan traded slightly firmer after having touched an eight-year low versus the dollar the previous day on expectations of higher US interest rates going forward. Japanese shares ended higher after the dollar jumped further against the yen, boosting prospects for better corporate earnings. Further, Chinese shares ended higher as investors continued to scoop up blue-chips on signs that the economy is on steadier footing.