Indian benchmarks settle with modest gain; Sensex ends above 26,600 mark

Tuesday’s trading session was clearly of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained in tight range for most part of the day. Investors got some comfort after Finance Minister Arun Jaitley expressed hope that Goods and Services Tax (GST) will be implemented in 2017 and a digitised economy will be future of India. He also said that the last year was a very successful year for India as the country continued to remain the fastest economy in the world. He further added that Indian economy will continue to be one of the fastest growing economies in 2017 as well. Some support also came with the report that Core sector output rose 4.9% in November on the back of a strong expansion in steel production and electricity generation, though the pace is down from 6.6% in October 2016, due to decline in production of crude oil and natural gas. However, the upside remained capped with report that global private equity players pulled out a record $10.3 billion of their investments in 2016 from domestic markets. While demonetisation still dominates most of the headlines, rising crude prices could prove to be the next policy headache. India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore ($1.36 billion) more every year for one dollar per barrel increase in crude oil. Oil prices rose in the first trading day of 2017, buoyed by hopes that a deal between OPEC and non-OPEC members to cut production, which kicked in on Sunday, will be effective in draining a global supply glut. International Brent crude oil prices rose to $56.98 a barrel on Tuesday - close to last year's high of $57.89 per barrel, hit on December 12, 2016. Meanwhile, select IT companies like Infosys and Wipro were trading under pressure after Wipro Chairman Azim Premji and Infosys CEO Vishal Sikka have sent out letters to their respective employees cautioning them about serious dangers facing the world and the IT industry. Globalised industries like IT services are at risk due to the recent political and social developments pose huge risks. On the other hand, sugar stocks gained traction on report from domestic rating agency ICRA that Sugar prices are expected to remain firm in the near term due to tight stock position following 9% decline in production and steady growth in consumption. Shares of logistics companies edged higher ahead of the GST Council meet today.

On the global front, Asian equity markets ended higher on Tuesday, with economic sentiment upbeat after better-than-expected manufacturing data from China. The Caixin manufacturing PMI for December came in at 51.9, well above the expected 50.7 and a jump from 50.9 in November. While overnight gains in European markets and higher oil prices supported underlying sentiment, trading volumes remained thin amid the New Year holidays in Tokyo and New Zealand. Investors remained cautious over Geopolitical tension, which was stoked by a tweet from US President-elect Donald Trump warning North Korea on testing an intercontinental ballistic missile. Meanwhile, European markets edge higher, heading for a fresh one-year high after upbeat Chinese data calmed fears of a slowdown in the world’s second largest economy.

Back home, the local benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as traders remain cautious ahead of the GST Council meet today. But the frontline indices slowly but steadily started gathering steam and surged by around quarter percent by late morning trades. Thereafter, the key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines in the absence of any fresh triggers. Finally, the NSE’s 50-share broadly followed index Nifty, ended higher by around two tenth of a percent to settle below the crucial 8,200 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated forty seven  points and above near the psychological 26,600 mark. However, the broader markets succeed to outperform their larger peers as the BSE’s midcap gained 0.61% and smallcap index jumped 1.03%. On the BSE sectoral space, Consumer Durables counter remained the top gainer in the space with over three percent gains followed by the Oil & Gas index which ended with gain of around two percent. Good buying was also observed in PSU, Power and Capital Goods counters. On the flipside, TECK counter languished at the bottom of the table with cut of over quarter percent, while the Auto and Capital IT sectors too settled with moderate cuts. The market breadth remained optimistic as there were 1843 shares on the gaining side against 910 shares on the losing side, while 129 shares remained unchanged.

Finally, the BSE Sensex gained 47.79 points or 0.18% to 26643.24, while the CNX Nifty added 12.75 points or 0.16% to 8,192.25. 

The BSE Sensex touched a high and a low of 26724.40 and 26488.37, respectively and there were 19 stocks on gainers side against 11 stocks on the losers side on the index.

The broader indices made a positive closing; the BSE Mid cap index ended higher 0.61%, while Small cap index was up by 1.03%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.01%, Oil & Gas up by 1.97%, PSU up by 1.58%, Power up by 1.04% and Capital Goods up by 0.78%, while TECK down by 0.26%, Auto down by 0.19% and IT down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.48%, Axis Bank up by 1.90%, Coal India up by 1.53%, Cipla up by 1.46% and GAIL India up by 1.10%. On the flip side, Bharti Airtel down by 2.36%, Hero MotoCorp down by 1.44%, Tata Motors down by 1.23%, Wipro down by 0.86% and Infosys down by 0.69% were the top losers.

Meanwhile, in order to assess the implementation hurdles under the new tax regime, the GST Council is all set to begin its 2-day meeting on January 3, with the officials from six key sectors, including IT, telecom, banking and insurance. During the meeting, it is likely to finalise the draft of the model Integrated GST (IGST) Bill, the draft compensation Bill and also reach a solution on the thorny issue of cross-empowerment.

Software association Nasscom, which is also scheduled to meet the GST Council, would express its worries over issues such as tax treatment of software and also make a case for single registration under the new GST regime. Nasscom’s worries pertain to areas like classification of software, import of services from related parties and taxation rules based on location of receiving services and it is also of the view that the legislation should clearly provide for centralised registration of central taxes of IGST (Integrated-GST) and CGST (central GST), which is within the Central Government power itself. R Chandrashekar, President of Nasscom had said that Software association support’s GST bill but it should not complicate the business operations of IT companies.

This will be the eighth meeting of the Council, chaired by Union Finance Minister Arun Jaitley and having state ministers as members.  Seven meetings were held so far which cleared as many as 20 chapters of the model GST law. However, Finance Minister has been unable to break the deadlock on the most crucial issue- the Interstate GST or (IGST) law- that concerns who will have a bigger say on goods and services that are sold between two or more states.

The CNX Nifty traded in a range of 8,219.10 and 8,148.60. There were 28 stocks in green against 23 stocks in red on the index.

The top gainers on Nifty were Power Grid up by 2.53%, Coal India up by 2.32%, BHEL up by 2.04%, Yes Bank up by 1.87% and Axis Bank up by 1.61%. On the flip side, Bharti Airtel down by 3.23%, Idea Cellular down by 2.40%, Hero MotoCorp down by 1.34%, Tata Motors down by 1.34% and Ultratech Cement down by 1.23% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 29.73 points or 0.42% to 7,172.56, France’s CAC increased 20.78 points or 0.43% to 4,903.16, while Germany’s DAX decreased 12.56 points or 0.11% to 11,585.77.

Asian equity markets ended higher on Tuesday as most markets resumed trading after a long holiday weekend. While overnight gains in European markets, higher oil prices and upbeat factory activity data out of China supported underlying sentiment, though trading volumes remained thin amid the New Year holidays in Tokyo and New Zealand. The dollar pulled back slightly in Asian deals after seeing its biggest single-day gain in more than two weeks on Monday. Chinese shares ended higher after a private survey showed factory activity in mainland China picked up in December, a sign of improving health for the world’s second-largest economy. The China Caixin manufacturing Purchasing Managers' Index (PMI) climbed to 51.9 in December, marking its fastest rate of improvement in three years, up from November's 50.9. Markets in Japan were closed for the final day of an extended New Year holiday.