Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade hovering near the highest point of the day in late morning session on account of buying in frontline blue chip counters. The rupee opened higher against the US dollar on account of fresh selling of American currency by banks and exporters in view of weakness in greenback overseas amid mixed global cues. The sentiments were on upbeat note with Finance Minister Arun Jaitley’s statement that the impact of demonetisation is clearly visible with tax collection figures seeing double-digit growth. He had said that there has been a 26.2 percent increase in central indirect tax collection till November 30, while till December 19, direct tax collection increase has been to the extent of 14.4 percent against a growth rate of only 8.3 percent previous year. Traders also took some encouragement with the Reserve Bank of India (RBI) easing norms for working capital lending to micro and small enterprises (MSEs) on difficulties faced by them, as a result of the sudden withdrawal of legal tender status of high-value currency notes. Traders were seen piling position in FMCG, Power and Realty sector stocks. In scrip specific development, Jagran Prakashan was trading in green after the company said the meeting of the board of directors is scheduled to be held on January 5, to consider the proposal for buyback of shares.

On the global front, Asian shares were trading mostly in green, while profit-taking weighed on the dollar and the euro held near a two-week high after spiking early in the day. China’s stock exchange was trading in green taking cues from a survey by the People’s Bank of China which showed that business confidence among entrepreneurs in China rose for the third straight quarter in October-December. The entrepreneurs’ confidence index rose to 54.2 percent in the fourth quarter, 3 percentage points higher than in the third quarter. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,150 and 26,500 levels respectively. The market breadth on BSE was positive in the ratio of 1625:453, while 101 scrips remained unchanged.

The BSE Sensex is currently trading at 26576.94, up by 210.79 points or 0.80% after trading in a range of 26406.53 and 26587.66. 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 1.20%, while Small cap index was up by 1.02%.

The top gaining sectoral indices on the BSE were FMCG up by 1.40%, Power up by 1.12%, Realty up by 1.08%, Capital Goods up by 1.03% and Bankex up by 0.95%, while there were no losing indices.

The top gainers on the Sensex were ITC up by 1.78%, ICICI Bank up by 1.73%, SBI up by 1.56%, Sun Pharma up by 1.32% and Axis Bank up by 1.32%.

On the flip side, Bharti Airtel down by 0.54%, Tata Motors down by 0.34%, Dr. Reddy’s Lab down by 0.16%, Tata Steel down by 0.11% and Coal India down by 0.08% were the top losers.

Meanwhile, the Government set-up panel to review the working of the Fiscal Responsibility and Budget Management (FRBM) Act has sought the views of the Reserve Bank of India (RBI) on the path to fiscal consolidation. The FRBM Panel is likely to submit its report by January 13, 2017, after factoring in the inputs of the RBI.

FRBM is likely to suggest a fiscal roadmap in its report and might also suggest deviating from the current 3 percent fiscal deficit target in 2017-18 and suggest a specific target for fiscal deficit instead of range. Among other things, the panel has been examining the need and feasibility of having a ‘fiscal deficit range’ as the target in place of the existing fixed numbers (percentage of GDP) as the goal. However, the panel report is unlikely to be made public until Budget.

The Committee was originally slated to submit its report by October 31, but exceeded the time table after the government expanded their scope of work to include examination of the recommendations of 14th Finance Commission as also of the Expenditure Management Commission (EMC). The five member committee, under former revenue secretary N K Singh, was set up to review the working of the FRBM Act over the last 12 years and suggest the way forward ‘keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy’. The other members of the committee, which was announced by Finance Minister Arun Jaitley in his Budget speech, include former finance secretary Sumit Bose, Chief Economic Advisor Arvind Subramanian, the then RBI deputy governor Urjit Patel and NIPFP Director Rathin Roy.

The CNX Nifty is currently trading at 8162.80, up by 59.20 points or 0.73% after trading in a range of 8114.75 and 8168.95. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.52%, BHEL up by 2.15%, ICICI Bank up by 1.81%, Tata Power up by 1.80% and Grasim Industries up by 1.77%.

On the flip side, BPCL down by 0.95%, Bharti Airtel down by 0.61%, Bharti Infratel down by 0.47%, Tata Motors down by 0.37% and Coal India down by 0.23% were the top losers.

The Asian markets were trading mostly in green; Shanghai Composite increased 3.03 points or 0.1% to 3,099.13, Nikkei 225 increased 6.03 points or 0.03% to 19,151.17, Jakarta Composite increased 27.77 points or 0.52% to 5,330.34, Taiwan Weighted increased 94.79 points or 1.04% to 9,247.88 and Hang Seng increased 255.43 points or 1.17% to 22,046.34.

On the other hand, FTSE Bursa Malaysia KLCI decreased 2.02 points or 0.12% to 1,635.91. South Korea Stock Exchange was closed on account of ‘New Year’s Eve’ holiday.