Indian benchmarks extend gains; trade near intra-day high level

Indian benchmark indices extended early gains to continue firm trade in noon session, hovering near intra-day high level, on increased buying by funds and retail investors amid positive cues from other Asian markets. Sentiments remained optimistic 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 per cent 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 per cent against a growth rate of only 8.3 per cent previous year. Investors also got some confidence with Agriculture Minister Radha Mohan Singh’s assurance that the growth in agriculture and allied sectors will be higher during this fiscal as the country is likely to harvest bumper crop buoyed by good rains. The Minister also said that the Centre will procure pulses and other crops if rates fall below the minimum support price (MSP) level. Furthermore, Union government has charted out a roadmap for the early completion of 99 irrigation projects under the Accelerated Irrigation Benefits Programme (AIBP) and Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).  Some support also came 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. Meanwhile, sugar stocks like Shree Renuka Sugars, Bajaj Hindusthan Sugar and Balrampur Chini Mills gained traction on report that the Central government doesn’t have immediate plans to lower import duties on sugar as it did with wheat.

On the global front, Asian markets were trading mostly on an upbeat note on the last day of the year 2016. Trading volumes remain thin in the absence of any market-moving news. 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. Meanwhile, US stocks closed fractionally lower overnight as investors remained reluctant to make big bets in a thinly-traded session ahead of long holiday weekend.

Back home, all BSE sectoral indices were trading in the green. Among them, FMCG index gained the most by 1.74 per cent, followed by Capital Goods 1.05 per cent, IT 1.01 per cent and Banking 0.99 percent. In scrip specific development, GE Power India rallied after the company received contract worth Rs 271 crore from BHEL for supply of components and services for 2 thermal power projects in Tamil Nadu. Moreover, Godrej Properties gained after the company entered into a partnership to develop a residential group housing project in the prime locality of Bavdhan, West Pune.

The market breadth remained optimistic as there were 1679 shares on the gaining side against 540 shares on the losing side, while 122 shares remained unchanged.

The BSE Sensex is currently trading at 26603.82, up by 237.67 points or 0.90% after trading in a range of 26406.53 and 26607.09. 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 1.24%, while Small cap index up by 1.03%.

The top gaining sectoral indices on the BSE were FMCG up by 1.74%, Capital Goods up by 1.05%, IT up by 1.01%, Bankex up by 0.99% and Realty up by 0.92%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were ITC up by 2.46%, ICICI Bank up by 2.33%, Reliance Industries up by 1.42%, SBI up by 1.37% and Sun Pharma up by 1.31%. On the flip side, Tata Motors down by 0.57%, Bharti Airtel down by 0.56%, Bajaj Auto down by 0.39%, Tata Steel down by 0.23% and Dr. Reddys Lab down by 0.16% were the top losers.

Meanwhile, 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 8169.35, up by 65.75 points or 0.81% after trading in a range of 8114.75 and 8171.30. There were 43 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.56%, ICICI Bank up by 2.47%, ITC up by 2.20%, Grasim Industries up by 1.77% and BHEL up by 1.64%. On the flip side, Bharti Airtel down by 0.68%, BPCL down by 0.66%, Tata Motors down by 0.63%, Hindalco down by 0.36% and Indusind Bank down by 0.26% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite rose 0.12%, Nikkei 225 gained 0.08%, Jakarta Composite increased 0.52%, Taiwan Weighted added 1% and Hang Seng was up by 126% t. On the flip side, FTSE Bursa Malaysia KLCI was down by 0.12%.