Benchmarks continue firm trade; Nifty surpasses 8050 mark

Indian equity benchmarks continued their firm trade in late morning session on account of buying in frontline blue chip counters. The benchmarks extended their gains for the second straight day tracking positive trend seen in Asian markets and as Wall Street rose supported by upbeat consumer and housing data. Crude oil prices advanced overnight after Venezuela decided to cut output in New Year. This may impact market sentiment. Back home, the sentiments got a push with NITI Aayog Vice Chairman Arvind Panagariya’s statement that demonetisation was a move towards formal economy. Panagariya complementing the demonetisation process added that it is the government’s drive to promote digital transactions and a less cash economy so as to move from the informal to greater formalization of the economic system. Besides, expressing their support for the November 8 demonetisation of high-value currency that has resulted in a major cash crunch, a group of experts told Prime Minister Narendra Modi that the move help to strengthen the process of formalizing the Indian economy, the major part of which is organized informally. Traders are looking for some clues of Prime Minister’s meeting with economists and experts, to take stock of the economy and get feedback on ways to deal with the problem of cash crunch post demonetisation. Reportedly 4-5 sectoral groups have been set up to discuss new initiatives and Budget proposals. The mandate is to come up with concrete suggestions to neutralise the adverse impact of demonetisation, push growth with a special focus on employment generation and promote farm productivity. Prime Minister Narendra Modi’s 50-day demonetisation drive ends on December 30 and there are expectations of tax sops from the government to boost the economy.

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 TECK, IT and PSU stocks. In scrip specific development, Bharat Financial Inclusion was trading firm after Morgan Stanley Asia (Singapore) & Morgan Stanley Mauritius raised stake by 1.1% through open market in the company. Electrosteel Steels was trading firm on reports that Ajay Piramal-led Piramal Enterprises and the Renaissance Group, an offshoot of the Dalmia Group, will jointly purchase a 51% stake in Electrosteel Steels.

On the global front, Asian shares were trading mostly in green, while the dollar firmed against the yen following the release of upbeat US economic data overnight. Japan’s stock exchange was trading modestly in green as the factory output rose in November and manufacturers expect to ramp up production in coming months, underscoring the central bank’s view that a pick-up in global demand will underpin a steady economic recovery. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,050 and 26,300 levels respectively. The market breadth on BSE was positive in the ratio of 1557:456, while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 26306.80, up by 93.36 points or 0.36% after trading in a range of 26216.54 and 26345.30. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.02%, while Small cap index was up by 1.18%.

The top gaining sectoral indices on the BSE were TECK up by 0.97%, IT up by 0.88%, PSU up by 0.73%, FMCG up by 0.71% and Power up by 0.70%, while there were no losing indices.

The top gainers on the Sensex were Wipro up by 2.16%, Coal India up by 1.37%, Dr. Reddy’s Lab up by 1.36%, Axis Bank up by 1.31% and Mahindra & Mahindra up by 1.30%.

On the flip side, Tata Steel down by 1.26%, Tata Motors down by 0.54%, HDFC down by 0.44%, Larsen & Toubro down by 0.25% and Reliance Industries down by 0.13% were the top losers.

Meanwhile, Prime Minister Narendra Modi as chairman of government think-tank NITI Aayog attended a meeting of economists and experts to take stock of the economy and get feedback on ways to deal with the problem of cash crunch post demonetisation. At the meeting PM discussed a range of subjects including agriculture, job creation and skill development with a group of select economists and experts. Further, 4-5 sectoral groups have been set up to discuss new initiatives and Budget proposals.

Vice chairman of NITI Aayog, Arvind Panagariya said that farm sector experts suggested incentivising states to undertake market reforms, create corpus fund for promoting farm mechanisation and micro irrigation, and provide interest subvention for term loans, among others, to double farm income by 2022. Panagariya further said that another key theme under discussion was job creation and skill development. The economists present at the meeting urged that unorganised labour be brought into the formal economy. They also stressed on the need to make skill development more demand driven and increase the emphasis on apprenticeship.

The meeting assumes significance in view of various multilateral agencies and RBI lowering growth outlook for the current fiscal. RBI has reduced the forecast to 7.1 per cent from 7.6 per cent in its monetary policy review earlier this month. Also, Indian economy expanded by 7.1 per cent and 7.3 per cent in first and second quarters of 2016-17, respectively. The theme of the meeting was ‘Economic Policy Reform, Road Ahead’ and there are about 15 invitees for the conference. Further, the Prime Minister will also took stock of various initiatives of NITI Aayog to promote digital economy like Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana to incentivise digital payments.

The meeting was attended by Finance Minister Arun Jaitley, Niti Aayog Vice Chairman Arvind Panagariya, and senior officers from the Union Government, among others. The economists and experts who were present included Pravin Krishna, Sukhpal Singh, Vijay Paul Sharma, Neelkanth Mishra, Surjit Bhalla, Pulak Ghosh, Govinda Rao, Madhav Chavan, N K Singh, Vivek Dehejia, Pramath Sinha, Sumit Bose and TN Ninan.

The CNX Nifty is currently trading at 8067.25, up by 34.40 points or 0.43% after trading in a range of 8033.25 and 8075.75. There were 44 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.45%, Zee Entertainment up by 2.45%, Wipro up by 2.02%, Idea Cellular up by 1.71% and Dr. Reddy’s Lab up by 1.55%.

On the flip side, Tata Steel down by 1.10%, Tata Motors down by 0.61%, Tata Motors - DVR down by 0.59%, HDFC down by 0.52% and Larsen & Toubro down by 0.43% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 7.43 points or 0.46% to 1,627.11, Hang Seng increased 26.16 points or 0.13% to 21,600.92, Nikkei 225 increased 26.22 points or 0.14% to 19,430.14, Taiwan Weighted increased 89.83 points or 0.99% to 9,199.10 and Jakarta Composite increased 96.39 points or 1.89% to 5,199.34.

On the other hand, KOSPI Index decreased 13.4 points or 0.66% to 2,028.77 and Shanghai Composite decreased 5.73 points or 0.18% to 3,108.93.