Benchmarks add strength; Nifty holds 8100 mark

Indian equity benchmarks added strength, hovering near the highest point of the day in late morning session on account of buying in front line blue chip counters. Investors continue to consolidate beaten down stocks on account of value buying amid low volumes. US dollar rose to its highest level in 14 years as the outlook about US economy improved with Federal Reserve intent on adopting higher pace of rate hikes in 2017. The sentiments remained up-beat with Finance Minister Arun Jaitley statement that the government would offer tax incentives to small businesses engaged in cashless transactions, as part of the government's fight against the cash economy. He said the move would enable businesses with annual turnover of Rs 2 crore to save up to 30 per cent in tax payments. Investors took note of CRISIL report that the government’s demonetising Rs 500 and Rs 1,000 notes may yield lasting economic benefits but its immediate impact has been stunningly disruptive, with cash shortages roiling business plans. The report highlighted that the long-term aim of India’s demonetisation policy is to improve economic and public administrative conditions by forcing black markets and cash-based sectors of the economy to operate in the formal economy.

Buying in banking counters too aided sentiments as the Reserve Bank of India has urged the Finance Minister Arun Jaitley to allow banks to get full tax deduction on the provisions made towards bad debts. Railways stocks remained in focus, as the Finance Minister indicated that the Railways must shift its focus from populism to performance and called for a transparent accounting system for Railways and outsourcing some of its non-core functions such as hospitality services. Select micro finance stocks were under pressure on reports that the Maharashtra government will form a special investigation team to look into complaints of irregularities and violations of RBI guidelines by microfinance companies. Traders were seen piling up position in Realty, Metal and PSU stocks, while selling was witnessed in Consumer Durables and FMCG sector stocks. In scrip specific development, Sasken Communication was trading firm after the company informed that a meeting of the buyback committee of the board of directors of the company will be held on December 23, to finalize the price at which the shares will be bought back and to fix the record date to ascertain the shareholders who are eligible to participate in the buyback.

On the global front, Asian shares were trading mostly in red. Japan’s government upgraded its overall assessment of the economy, echoing the Bank of Japan’s more upbeat view, in a sign the economy may be steadying. The government also upgraded its view of household spending, exports and business sentiment, saying consumers’ mindsets are improving and exports to Asia are recovering. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,100 and 26,300 levels respectively. The market breadth on BSE was positive in the ratio of 1218:765, while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 26374.27, up by 66.29 points or 0.25% after trading in a range of 26296.26 and 26394.14. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.37%, while Small cap index was up by 0.44%.

The top gaining sectoral indices on the BSE were Realty up by 1.29%, Metal up by 0.76%, PSU up by 0.61%, Power up by 0.56% and Auto up by 0.52%, while Consumer Durables down by 0.15% and FMCG down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.71%, Mahindra & Mahindra up by 1.28%, ICICI Bank up by 1.17%, SBI up by 1.02% and HDFC up by 1.01%.

On the flip side, Tata Motors down by 0.80%, TCS down by 0.74%, GAIL India down by 0.62%, Sun Pharma down by 0.54% and ITC down by 0.52% were the top losers.

Meanwhile, ahead of the combined general and railway budget, Finance Minister Arun Jaitley has indicated that the Railways must shift its focus from populism to performance and said that passengers must pay for the service they receive and gave emphasis to outsourcing of non-core functions in railways.

While hinting that there could be hike in passengers fare and rejecting the idea of several subsidies populist announcements regarding trains, he made a strong case for outsourcing of non-core functions like hospitality services of Indian Railways, he said that unless the railways strengthen its performance and internal management system, they will lose out to competition from other sectors like highways and airlines in both passenger and cargo transportation. The core competence of railways is really to drive trains, to provide those services. Hospitality may not be the core competence of the railways and therefore, what is not within its core competence, the principle of outsourcing-which is accepted world over-can be a logical addition to those activities of railways.

Highlighting a transport accounting system,  Arun Jaitely said that Accounting System should be revealing and not concealing and railways plan to shift towards accrual system of accounting from cash system will better reflect its performance.

The CNX Nifty is currently trading at 8102.15, up by 19.75 points or 0.24% after trading in a range of 8075.85 and 8112.55. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 1.94%, Bajaj Auto up by 1.66%, Mahindra & Mahindra up by 1.48%, Eicher Motors up by 1.41% and HDFC up by 1.21%.

On the flip side, Zee Entertainment down by 1.11%, Bharti Infratel down by 0.94%, Tata Motors down by 0.92%, GAIL India down by 0.90% and TCS down by 0.83% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 79.08 points or 0.43% to 19,415.45, Taiwan Weighted decreased 10.76 points or 0.12% to 9,231.65, FTSE Bursa Malaysia KLCI decreased 0.59 points or 0.04% to 1,633.93 and KOSPI Index decreased 0.43 points or 0.02% to 2,041.51.

On the other hand, Jakarta Composite increased 5.6 points or 0.11% to 5,168.07, Shanghai Composite increased 30.2 points or 0.97% to 3,133.07 and Hang Seng increased 135.07 points or 0.62% to 21,864.13.