Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the session and ended in green ahead of inflation data and FOMC policy outcome. The Fed is widely expected to raise interest rates by a quarter percentage point, its first for this year, when it announces its decision on Wednesday. Such an outcome could hit Indian shares given that markets are already under pressure over worries that demonetization would hurt the economy bigger than expected. The market traded slightly in green in early deals on fresh buying by domestic investors. Markets took some support with Central Board of Direct Taxes (CBDT) clarification that an increase in turnover of a business owing to its accepting digital means of payment will not trigger reopening of cases of past years. Meanwhile, Finance Minister Arun Jaitley said the Centre was in the process of completing the demonetization scheme which was announced on November 8 aimed at flushing out black money and counterfeit currency from the system. Investors will be eyeing the Consumer Price Index (CPI), data which is expected to cool down for the month of November as the data accommodates the impact of the government’s decision to demonetize high value currency notes that month. The all-India general CPI inflation had dropped to 4.2 percent in October from 4.39 percent in the previous month. The firm trade continued despite Asian Development Bank (ADB) report which slightly lowered its 2016 growth forecast for developing Asia, reflecting slower-than-expected expansion in India. The ADB trimmed its 2016 growth estimate for India to 7.0 percent from 7.4 percent due to weak investment, agricultural slowdown and the government’s recent demonetization. But India’s growth forecast for 2017 was kept at 7.8 percent.

On the global front, Asian markets ended mostly in green. China stocks erased early losses to end roughly flat, as better-than expected November retail sales and factory output data encouraged bargain-hunting after the previous session’s slump. The data showed factory output and retail sales grew faster than expected in November, while fixed-asset investment was in-line with forecasts, adding to growing signs of stabilization in the world’s second-biggest economy. European markets were trading in green on reports that European Commission is willing to discuss options for Italian banks and that state support is available within EU rules.

The BSE Sensex ended at 26693.20, up by 177.96 points or 0.67% after trading in a range of 26494.23 and 26724.97. There were 21 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.39%, while Small cap index was down by 0.08%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 0.99%, IT up by 0.93%, Oil & Gas up by 0.79%, TECK up by 0.77% and Bankex up by 0.53%, while Realty down by 1.18%, Metal down by 0.99% and Consumer Durables down by 0.13% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 3.62%, Wipro up by 2.15%, Axis Bank up by 1.97%, Adani Ports & Special Economic Zone up by 1.72% and Infosys up by 1.18%. (Provisional)

On the flip side, GAIL India down by 1.20%, Lupin down by 0.79%, Hindustan Unilever down by 0.65%, Tata Steel down by 0.60% and TCS down by 0.53% were the top losers. (Provisional)

Meanwhile, a committee, headed by former finance secretary Ratan Watal set up to convert government-citizen transactions to digital platform, has suggested a 30-90 days’ timeline for implementing a number of measures that it hopes can cut in half India’s cash usage from 12% of GDP in three years. If the government accepts the proposal of the panel then citizens may possibly be charged for cash usage, however it will also smooth the transactions as people can make the payments easily using mobiles and Aadhaar-based systems.

The committee in its recommendation has said that the situation needs to be reviewed from the perspective of an ordinary Indian - Why Digital? For all its inefficiencies, cash offers instant settlement, 24x7 up-time, familiarity and an illusion of zero transaction cost. The committee has recommended an independent mechanism within the overall central banking structure and amendments in the payments and settlement laws and disincentive for cash usage among host of other measures to help shift towards a less cash society.

Watal committee called for inter-operable payments between bank and non-banks as well as within non-banks and pitched for greater use of Aadhaar and mobile numbers for making digital payments as easy as cash. As the government has been pitching for a less-cash economy after it demonetised old Rs 500 and Rs 1,000 notes on November 8, keeping this in mind the committee has suggested, operations of payment systems like Real Time Gross Settlement (RTGS) and National Electronic Fund Transafer (NEFT) could be outsourced after a cost benefit analysis and these payment systems should be upgraded to 24x7 in due course of time.

The CNX Nifty ended at 8212.80, up by 42.00 points or 0.51% after trading in a range of 8155.80 and 8228.85. There were 34 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 3.75%, Tata Motors up by 3.50%, BPCL up by 2.87%, Wipro up by 2.30% and Adani Ports & Special Economic Zone up by 2.01%. (Provisional)

On the flip side, Ultratech Cement down by 2.98%, Hindalco down by 2.58%, Zee Entertainment down by 2.20%, BHEL down by 1.69% and Grasim Industries down by 1.42% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 18.26 points or 0.27% to 6,908.68, Germany’s DAX increased 79.96 points or 0.71% to 11,270.17 and France’s CAC increased 32.46 points or 0.68% to 4,793.23.

Asian equity markets ended mostly in green on Tuesday, though some investors stayed on the sidelines ahead of the US Federal Reserve's monetary policy announcement on Wednesday. The Fed's two-day meeting is widely expected to bring the first US interest rate hike this year, which could lure more capital away from emerging markets. Japanese shares ended higher, with support coming from likely buying by the Bank of Japan and as investors snapped up cheaper domestic demand-driven stocks. Further, Chinese shares ended marginally higher as better than expected November retail sales and factory output data encouraged bargain-hunting after the previous session's slump.