Benchmarks trade in fine fettle in early deals; Nifty reclaims 8,150 mark

Indian equity benchmarks have made a positive start and are trading in fine fettle in early deals on Tuesday, with frontline gauges recapturing their crucial 26,400 (Sensex) and 8,150 (Nifty) levels. Sentiments remained optimistic ahead of Monetary Policy Committee (MPC) meeting starting today amid expectations of at least 0.25 percent policy rate cut in order to tackle the impact of demonetisation move by the central government. Some support also came with report that domestic institutional investors bought equities worth Rs 163.64 crore on Monday, however foreign institutional investors were net sellers with net equity sell value of Rs 317.85 crore. Market participants ignored private report stating that India's economic growth rate is likely to fall to 6.5 percent in the ongoing quarter and remain subdued at around 7 percent in the January-March period as cash shortage is expected to last at least until next month.

Global cues too remained supportive with Asian markets rallying at this point of time tracking the gains in US Markets overnight. The US markets moved higher in last session with Dow touching new record highs after the Institute for Supply Management released a report showing a significant acceleration in the pace of growth in the service sector. Back home, the market breadth indicating the overall health of the market was strong, with 1,366 shares gaining and 462 shares declining, while a total of 88 shares were unchanged. On the sectoral front, shares of public sector oil marketing companies (OMCs) edged higher, with break in global crude price rally.

The BSE Sensex is currently trading at 26476.63, up by 127.53 points or 0.48% after trading in a range of 26393.99 and 26481.78. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 0.98%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Realty up by 1.50%, Utilities up by 1.47%, Oil & Gas up by 1.30%, Power up by 1.18% and PSU up by 0.93%, while FMCG down by 0.49% and Consumer Durables down by 0.13% were the only losing indices on BSE.

The top gainers on the Sensex were HDFC up by 1.92%, GAIL India up by 1.83%, Adani Ports &Special up by 1.39%, NTPC up by 1.39% and Wipro up by 1.28%. On the flip side, Hindustan Unilever down by 0.92%, ITC down by 0.77%, Axis Bank down by 0.38% and HDFC Bank down by 0.16% were the top losers.

Meanwhile, with the Organisation of the Petroleum Exporting Countries' (OPEC) agreeing to curb production to no more than 32.5 million barrels a day beginning January 1, it is going to hurt countries like India, which is largely dependent on imported crude. In view of this Oil Minister Dharmendra Pradhan has said that OPEC cutting production for the first time since 2008 leading to a surge in oil prices will risk the India’s growth trajectory and had pitched for striking a balance between interests of producers and consumers.

Pradhan said that India is already the third largest energy consumer in the world behind the US and China. At 4.3 million barrels per day, although India has less than 5 percent share in the world consumption, countries annual consumption growth is far more significant. At 300,000 barrels per day growth, India’s contribution was about 30 percent of global growth in demand last year. He added in the modern world, access to energy should be a fundamental right of each human being. This is particularly true for India with a rapidly growing economy and huge aspirational population.

India has used the slump in oil prices since 2014-15 to not just cut petrol and diesel rates to cool inflation but also as an opportunity to shore up revenues by raising duties. The country's basket of crude oil imports had averaged $105.52 per barrel in 2013-14 which dipped to $84.16 in the following year, and to $46.17 a barrel in 2015-16. This fiscal, it has averaged $44.81 per barrel so far.

In India, hydrocarbon is likely to remain an important source of energy while the share of renewables will rise. Recently, after the OPEC countries pledged to reduce their production by 1.2 million barrels a day, non-OPEC countries also agreed to a production cut to the tune of 0.6 million barrel per day, that led to sharp spike in international crude prices.

The CNX Nifty is currently trading at 8167.95, up by 39.20 points or 0.48% after trading in a range of 8148.50 and 8174.05. There were 43 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 3.14%, HDFC up by 2.11%, Zee Entertainment up by 2.00%, Idea Cellular up by 2.00% and GAIL India up by 1.63%.

On the flip side, ITC down by 0.92%, Hindustan Unilever down by 0.76%, Indusind Bank down by 0.72%, Axis Bank down by 0.37% and Ultratech Cement down by 0.31% were the top losers.

All the Asian markets were trading in green; Shanghai Composite gained 2.66 points or 0.08% to 3,207.37, FTSE Bursa Malaysia KLCI rose 2.95 points or 0.18% to 1,627.92, Jakarta Composite increased 6.36 points or 0.12% to 5,274.67, KOSPI Index surged 27.48 points or 1.4% to 1,990.84, Nikkei 225 jumped 93.6 points or 0.51% to 18,368.59, Taiwan Weighted soared 96.37 points or 1.05% to 9,257.03 and Hang Seng was up by 185.65 points or 0.82% to 22,691.20.