Indian benchmarks stage a remarkable rally; Nifty ends above 8000 mark

A session after displaying a stressful performance, Indian equity indices pulled through a sparkling performance by confidently rallying over one and half percent on Tuesday, thanks to the hefty buying in some blue-chip counters, which were heavily over-sold in last few trading sessions and covering-up of pending short positions by speculators ahead of the December futures and options expiry on Thursday. The relentless across the board value picking ensured that the frontline indices settle over the psychological 8,000 (Nifty) and 26,200 (Sensex) levels. Local bourses remained firm despite report that the yearly State Bank of India (SBI) Composite Index, an indicator for tracking India’s manufacturing activity, has crashed to an all-time low in December 2016 of 45.5 (moderate decline), compared to last month’s revised index of 50 (low growth). The report said factory output, measured by the index of industrial production, may continue to remain in negative territory in December 2016. The sharp up-move was mostly seen as a technical bounce following the brutal mayhem that had pulled stocks in oversold territory. Sentiments got support with FM Arun Jaitley’s hint of a lower tax regime; he said that India has been guided by the principle that a lower level of taxation is the key to building a globally competitive economy in the past two and a half decades since liberalization. Some support also came with Union Minister Nitin Gadkari’s statement that demonetisation will help to increase government revenue and enable it to allocate more funds to welfare scheme for the people. He further said that India is moving towards a less cash economy like many other countries of the world. Therefore, if something big has to be achieved, then one has to face some difficulties in the beginning.

On the global front, Asian markets ended mostly higher on Tuesday amid low-volume trading in the absence of fresh cues as the US markets were closed overnight for Christmas holidays. Japanese markets end higher, buoyed by a weaker yen, even after the release of sluggish economic reports. Japan's core consumer prices marked the ninth straight month of annual declines in November and household spending fell an annual 1.5 percent in the month while the jobless rate climbed to 3.1 percent from 3.0 percent in the previous month. However, China’s stock market edged lower despite the positive economic data and a rally of infrastructure-related sectors after Chinese regulators announced policies to encourage the financing of public private partnership (PPP) projects. 

Back home, the local benchmark got off to an optimistic opening, shrugging the sluggish sentiments prevailing in Asian markets. The frontline indices soon gathered momentum and traded with around half a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs.  Finally, the NSE’s 50-share broadly followed index Nifty, accumulated over hundred points to settle above the crucial 8,000 support level, while Bombay Stock Exchange’s Sensitive Index or Sensex garnered a massive over four hundred points and ended above the psychological 26,200 mark. Moreover, the broader markets too participated in the rally and closed with gains of over one and half a percent. On the BSE sectoral space, the FMCG counter garnered maximum traction and surged by over two and half percent on the back of solid gains in bellwethers like ITC, Dabur India and Godrej Consumer Productswhich rallied 4.02%, 3.88% and 1.99% respectively. The Metal pocket too witnessed huge buying interests as it gained well around two and half a percent while sensitive’s like Consumer Durables, Oil & Gas and Automobile too remained among prominent gainers.

The market breadth remained optimistic as there were 1708 shares on the gaining side against 860 shares on the losing side, while 173 shares remained unchanged.

Finally, the BSE Sensex gained 406.34 points or 1.57% to 26213.44, while the CNX Nifty rose 124.60 points or 1.58% to 8,032.85. 

The BSE Sensex touched a high and a low of 26249.03 and 25803.19, respectively and there were 29 stocks on gainers side against 1 stock on the losers side on the index.

The broader indices made a positive closing; the BSE Mid cap index ended higher 1.71%, while Small cap index was up by 1.49%.

The top gaining sectoral indices on the BSE were FMCG up by 2.55%, Metal up by 2.46%, Consumer Durables up by 2.05%, Oil & Gas up by 1.69% and Auto up by 1.54%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were ITC up by 4.02%, Tata Steel up by 3.23%, Adani Ports &Special up by 2.87%, Lupin up by 2.70% and ICICI Bank up by 1.97%. On the flip side, GAIL India down by 1.48% was the sole loser.

Meanwhile, giving a major relief to the farmers facing cash crunch after the demonetisation of the Rs 500 and the Rs 1000 notes, the Reserve Bank of India (RBI) has decided to provide additional 60 days grace period for repayment of crop loans for prompt repayment incentive of 3 percent to those farmers whose crop loan dues are falling due between 1 November and 31 December.

In order to encourage timely payment, as per the interest subvention scheme for the year 2016-17 besides subvention of 2 per cent per annum, an additional interest subvention of 3 per cent is provided to prompt payee farmers from the date of disbursement of the crop loan. Under the interest subvention scheme, farmers get short-term crop loan of up to Rs 3 lakh for one year at an interest rate of 7 per cent and those repaying on time get the loan at 4 per cent.

The central bank said that if the farmers, whose crop loan repayment date falls between 1 November and 31 December, repay the crop loan within 60 days from their loan repayment date, the additional three percent interest rebate will continue to apply but this benefit would not accrue to those farmers who repay after one year of availing such loans. 

The CNX Nifty traded in a range of 8,044.65 and 7,903.70. There were 47 stocks in green against 4 stocks in red on the index.

The top gainers on Nifty were Bosch up by 4.56%, ITC up by 4.22%, Tata Steel up by 3.31%, Aurobindo Pharma up by 3.18% and Hindalco up by 3.17%. On the flip side, GAIL India down by 0.96%, Grasim Industries down by 0.56%, Kotak Mahindra Bank down by 0.08% and IndusInd Bank down by 0.08% were the only losers.

The European markets were trading in green; Germany’s DAX increased 17.25 points or 0.15% to 11,467.18 and France’s CAC increased 6.94 points or 0.14% to 4,846.62. London Stock Exchange was closed on account of Christmas holiday.

Asian equity markets ended mostly in green on Tuesday. Japanese shares were modestly higher, buoyed by a weaker yen, even after the release of sluggish economic reports. Japan's core consumer prices marked the ninth straight month of annual declines in November and household spending fell an annual 1.5 percent in the month while the jobless rate climbed to 3.1 percent from 3.0 percent in the previous month. Meanwhile, Chinese shares ended lower in light trading, despite official data showing that China's industrial profits grew at a faster pace in November from a year ago. Industrial profits surged 14.5 percent year-over-year to CNY 774.6 billion, well above the 9.8 percent climb in October. During the January to November period, total industrial profits rose 9.4 percent compared with the same period last year. Markets in Hong Kong remained closed for public holidays.