Indian benchmarks snap two days losing streak, Sensex up by 118 pts

Indian equity markets started the fresh week on a sluggish note but managed to post decent gains by the end of trade as the benchmarks clawed back into the positive terrain in the last leg of trade on getting some supportive leads from the European markets. Though, European bourses opened on a bearish note, the risk sentiment soon recovered and the European equities turned positive and staged a solid rebound, calming unnerved markets, with the officials from the Euro area economies hitting the wires and posting optimistic remarks on the Italian banks sector and overall economy. Also, markets cheered an unexpected rebound seen in the UK’s services sector activity alongside solid services PMI reports published from the Euroland as well. On the domestic front, market participants remained optimistic on raising expectation that the Reserve Bank of India will cut its repo rate by 25 basis points to 6 per cent in the bi-monthly monetary policy review on December 7, 2016, amid downside risks to growth following the notes ban and subdued inflation. Adding optimism among investors, Prime Minister Narendra Modi said India's economy is expected to witness a five-fold growth by 2040 owing to increase in investments. Modi said while global economy is going through uncertainty, India has shown tremendous resilience. Indian economy is more stable than others with investment in India at the highest levels. The country's current account deficit has improved steadily, while he expects growth in manufacturing, transport and civil aviation among other sectors. However, investors remained cautious with the report that Indian services activity dived into contraction in November after Prime Minister Narendra Modi’s surprise move to withdraw high denomination bank notes led to a sharp decline in demand. The Nikkei/Markit Services Purchasing Managers’ Index sank to 46.7 in November from October’s 54.5, the first time since June 2015 that the index has gone below the 50 mark that separates growth from contraction. It was the biggest one-month drop since November 2008, just after the collapse of Lehman Brothers triggered the global financial crisis. The latest data, coupled with another last week that showed factory activity slumped as well, offers the first glimpse of the massive hit the economy is likely to take from the demonetisation drive.

On the global front, Asian markets ended mostly lower on Monday, with Japanese shares getting hurt by concerns about political and economic uncertainty in Europe. Worries related to Italy's banking sector deepened after Italian voters rejected constitutional reform in a referendum Sunday, triggering the resignation of Prime Minister Matteo Renzi who had staked his political career on the result. Chinese markets edged lower after China's top securities regulator sharply criticized the practice of using borrowed funds to build stakes in companies. However, European stocks recovered from early losses, as investors shrugged off Italian voters’ rejection of a constitutional referendum.

Back home, the local benchmark got off to a sedate opening tracking the dismal leads prevailing in Asian markets after Italian Prime Minister Matteo Renzi resigned following a heavy defeat in a referendum over his plan to reform the constitution. Thereafter, the frontline indices kept trading near neutral line for most part of the session and drifted to the lowest point in the session in late afternoon trades. However, the key gauges managed to gain some momentum and bounced into the positive terrain in the last leg of trade. Finally the NSE’s 50-share broadly followed index Nifty, convalesced by over half a percent to settle above the crucial 8,100 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over hundred and closed above the psychological 26,300 mark. On the BSE sectoral space, Auto counter remained the top gainer in the space with around two percent gains followed by the high beta- Metal index which ended with gain of over one and half percent. Good buying was also observed in FMCG, Consumer Durables and Banking counters. On the flipside, IT counter languished at the bottom of the table with cut of over half a percent, while the Oil & Gas and Capital Goods sectors too settled with moderate cuts. The market breadth remained optimistic as there were 1534 shares on the gaining side against 1098 shares on the losing side, while 148 shares remained unchanged.

Finally, the BSE Sensex gained 118.44 points or 0.45% to 26349.10, while the CNX Nifty rose 41.95 points or 0.52% to 8,128.75. 

The BSE Sensex touched a high and a low of 26390.80 and 26125.35, respectively and there were 20 stocks on gainers side against 10 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.66%, while Small cap index was up by 0.26%.

The top gaining sectoral indices on the BSE were Auto up by 1.92%, Metal up by 1.52%, FMCG up by 1.36%, Consumer Durables up by 1.12% and Bankex up by 0.81%, while IT down by 0.74%, TECK down by 0.36%, Oil & Gas down by 0.18% and Capital Goods down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 3.58%, Mahindra & Mahindra up by 3.29%, Lupin up by 3.22%, Bharti Airtel up by 2.73% and Maruti Suzuki up by 2.68%. On the flip side, HDFC down by 1.73%, TCS down by 1.68%, GAIL India down by 1.09%, Sun Pharma down by 0.89% and Wipro down by 0.79% were the top losers.

Meanwhile, the Modi government's quest towards less use of cash in transactions post-demonetisation has got the Niti Aayog’s push, which is providing financial support to incentivise the district administration to reach out to the general public and small traders in villages and talukas, and encourage them to shift to cashless payments.

As per the government think tank’s plan, an incentive of Rs 10 will be given to the district administration for every individual who has shifted to digital payment mode and has made at least two digital transactions for day-to-day activities, like selling and buying goods or services through any of the five methods, unified payment interface (UPI), Unstructured Supplementary Service Data (USSD), Aadhaar Enabled Payments, e-wallets and Rupay debit/credit/prepaid cards.

It has also asked district magistrates to ensure that financial transactions in the district and subordinate organisations are cashless and on e-platforms. The Aayog has already given up to Rs 5 lakh to every district to kick-start the process, right from the panchayat level. An incentive of Rs 100 will be provided to common services centre operators for every merchant transacting digitally and Rs 5 for every citizen shifting to digital payments.

The first 50 panchayats to go cashless will be given the 'digital payment award of honour' by Niti Aayog. Also, the top 10 best performing districts will be given the 'digital payment champions award' by the Niti Aayog.

The CNX Nifty traded in a range of 8,141.90 and 8,056.85. There were 36 stocks in green against 15 stocks in red on the index.

The top gainers on Nifty were Asian Paints up by 3.80%, Hindalco up by 3.73%, Mahindra & Mahindra up by 3.30%, Lupin up by 3.15% and Yes Bank up by 3.12%. On the flip side, Tech Mahindra down by 2.46%, TCS down by 1.50%, HDFC down by 1.44%, Idea Cellular down by 1.09% and GAIL India down by 0.92% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 53.1 points or 0.79% to 6,783.82, Germany’s DAX increased 179.27 points or 1.71% to 10,692.62 and France’s CAC increased 63.48 points or 1.4% to 4,592.30.

Most of the Asian markets made a negative closing on Monday, with Japanese shares hurt by concerns about political and economic uncertainty in Europe. Worries related to Italy's banking sector deepened after Italian voters rejected constitutional reform in a referendum Sunday, triggering the resignation of Prime Minister Matteo Renzi who had staked his political career on the result. Chinese shares too ended lower after China's top securities regulator sharply criticized the practice of using borrowed funds to build stakes in companies. Investors ignored the latest survey from Caixin which showed growth in China's services sector accelerated to a 16-month high in November, while the latest survey from Nikkei revealed that the services sector in Japan continued to expand in November, and at a faster pace, with a PMI score of 51.8.