Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued their firm trade in late morning session on account of buying in beaten down frontline blue chip counters. The covering-up of pending short positions by speculators ahead of the December futures and options expiry too provided some support. The sentiments got support with FM Arun Jaitley’s hint of a lower tax regime; he said that India now needs to move to a lower level of taxation to provide services more competitive in nature, as competition is not domestic, it is global. Jaitley highlighted that the authorities need to be fair in interpreting the tax laws as the country needs to move to a tax-friendly environment. The market-men will also be eyeing the meeting of Prime Minister Narendra Modi with economists and senior government officials at NITI Aayog. The theme of the meeting is ‘Economic Policy Reform, Road Ahead’ and it will be the first such meeting after the central government’s announcement of demonetization on November 8. There is an imminent fear in the market on the back of a slowdown in corporate earnings and economic growth on account of demonetization. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. December 2016 series to next month i.e. January 2017 series. The near month December 2016 derivatives contracts will expire on Thursday i.e. December 29, 2016. Traders were seen piling position in Consumer Durables, IT and TECK stocks, while selling was witnessed in Realty sector stocks. In scrip specific development, Capital First was trading in green after the company informed that the meeting of the Debenture Committee of the board of directors will be held on December 29, to consider and approve the private placement of rated, listed, secured/ unsecured/ perpetual, redeemable, non-convertible securities in the nature of debentures to be listed on the debt market segment of the National Stock Exchange of India.

On the global front, Asian shares were trading mostly in green, in thin trade and with little to guide them as most major markets were closed on Monday for Christmas holidays. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,900 and 25,900 levels respectively. The market breadth on BSE was positive in the ratio of 1266:753, while 129 scrips remained unchanged.

The BSE Sensex is currently trading at 25901.15, up by 94.05 points or 0.36% after trading in a range of 25803.19 and 25925.76. 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 0.71%, while Small cap index was up by 0.62%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.22%, IT up by 1.04%, TECK up by 0.84%, Oil & Gas up by 0.68% and Metal up by 0.47%, while Realty down by 0.96% was the sole losing index on BSE.

The top gainers on the Sensex were Cipla up by 1.90%, Lupin up by 1.70%, Adani Ports & Special Economic Zone up by 1.29%, TCS up by 1.23% and Sun Pharma up by 1.19%.

On the flip side, GAIL India down by 0.95%, Bharti Airtel down by 0.86%, Hero MotoCorp down by 0.73%, HDFC down by 0.50% and Coal India down by 0.47% were the top losers.

Meanwhile, Prime Minister Narendra Modi will be meeting economists and senior government officials at NITI Aayog on December 27, to review the economy and there will also likely be discussion on issues related to cash crunch post-demonetisation, though it’s not on the agenda. The theme of a high-level meeting is 'Economic Policy Reform, Road Ahead' and it will be the first such meeting after government's surprise move to demonetise high value currency notes on November 8.

Besides, Modi will also look into various initiatives of NITI Aayog to promote digital economy like Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana to incentivise digital payments. He is also expected to seek views from economists on the Union Budget for 2017-18. The projected expenditure on the first phase of the schemes up to April 14, 2017 is expected to be Rs 340 crore.

The meeting assumes significance in view of various multilateral agencies and RBI lowering growth forecast for the current fiscal. Earlier this month, RBI had reduced the economic growth forecast to 7.1 per cent from 7.6 per cent in its monetary policy review. The Asian Development Bank (ADB) too projected a reduction in economic growth at 7 per cent for this fiscal year due to the impact of demonetisation.

The CNX Nifty is currently trading at 7938.65, up by 30.40 points or 0.38% after trading in a range of 7903.70 and 7944.40. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 1.92%, Lupin up by 1.92%, Cipla up by 1.78%, HCL Tech up by 1.78% and Tata Motors - DVR up by 1.55%.

On the flip side, Idea Cellular down by 1.15%, Bharti Airtel down by 0.86%, Hero MotoCorp down by 0.76%, IndusInd Bank down by 0.72% and Grasim Industries down by 0.50% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite increased 0.46 points or 0.01% to 3,123.02, FTSE Bursa Malaysia KLCI increased 1.11 points or 0.07% to 1,618.26, KOSPI Index increased 3.5 points or 0.17% to 2,041.52 and Jakarta Composite increased 51.27 points or 1.02% to 5,078.97.

On the other hand, Nikkei 225 decreased 0.76 points to 19,395.88 and Taiwan Weighted decreased 0.72 points or 0.01% to 9,109.82.

Hong Kong stock exchange was closed on account of Christmas holiday.