Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and ended in green. The street rallied and overlooked an inconclusive Goods and Services Tax (GST) meeting which ended yesterday. The Council, comprising the Union finance minister, Union minister of state for revenue and representatives of states, would now meet on January 16, to resolve these tricky issues ahead of the Budget session, to start from January 31. The market would ultimately be driven by corporate earnings, with Tata Consultancy Services and Infosys scheduled to post their quarterly results on 12 January and 13 January, respectively. India is also gearing up to its annual budget, and investors hope Prime Minister Narendra Modi’s government would keep spending under control and promote growth after its move to ban higher-value banknotes paralyzed large parts of the economy. The markets made a gap-up opening in early deals with Finance Minister Arun Jaitley expressing confidence that direct and indirect tax mop-up will surpass Budget estimate of Rs 16.3 lakh crore by March-end. Jaitley had in his Budget for 2016-17 fiscal put gross tax revenue estimates at Rs 16.3 lakh crore, about 11 percent higher than gross tax receipts of Rs 14.5 lakh crore for the previous fiscal. Indirect tax collections till November had shown a 26.2 percent jump to Rs 5.52 lakh crore when compared with a year ago collections. Sentiments remained optimistic with the private report indicating that the government is expected to meet the fiscal deficit target of 3.5% of GDP in the current financial year, despite recent demonetisation move and potential delay in roll out of the Goods and Services Tax (GST). Fiscal deficit has been pegged at Rs 5.33 lakh crore, or 3.5% of GDP, in 2016-17. Besides, appreciation in rupee value against the dollar added to the optimistic sentiments.

The momentum got a push after corporate leaders, bankers and experts at a discussion organized by Times Network, which has launched a nationwide initiative to ‘Remonetise India’ stated that Indian economy is steadily getting back on its feet and poised for good growth in the quarters ahead after a tumultuous period post abrupt demonetization of high-value currency notes in November. Digital payments are clearly the way forward for the economy, but India’s banking system needs to seize the opportunity to expand its operations among the weaker sections. According to the Department of Industrial Policy and Promotion (DIPP), Foreign Direct Investment (FDI) into the country grew by over 27 percent to $27.82 billion during April-October of this financial year. FDI stood at $21.87 billion in April-October 2015-2016.

On the global front, Asian markets closed mostly higher, as an overnight bounce in oil prices bolstered energy and resource shares. The mainland China and Hong Kong gained on a solid services PMI reading, while Japan ended lower as the dollar weakened overnight and into Asia from 14-year highs against a basket of currencies as investors began to cast doubt the Fed would raise rates three times this year. The Caixin services PMI for China rose to 53.4, a tick above 53.3 expected and that followed solid manufacturing figures from China as well as Japan regionally this week. European shares headed lower for a second straight session on Thursday after recent strong gains, with insurers leading the market lower after JP Morgan cut its rating for several companies in the sector.

The BSE Sensex ended at 26870.52, up by 237.39 points or 0.89% after trading in a range of 26738.42 and 26917.21. There were 26 stocks advancing against 4 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.29%, while Small cap index was up by 0.96%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.97%, Auto up by 1.93%, Oil & Gas up by 1.73%, PSU up by 1.51% and Bankex up by 1.26%, while IT down by 0.77% and TECK down by 0.29% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 4.43%, Tata Steel up by 3.31%, Tata Motors up by 3.23%, ONGC up by 2.60% and Power Grid up by 2.42%. (Provisional)

On the flip side, TCS down by 1.79%, Infosys down by 0.13%, HDFC Bank down by 0.11% and NTPC down by 0.03% were the top losers. (Provisional)

Meanwhile, listed private sector companies have shown a robust growth in net profit and in their sales in the second quarter. According to the Reserve Bank of India’s (RBI) report, net profit of these companies improved to 16 per cent from 11.2 per cent in the second quarter of the fiscal compared to the previous quarter. Among the sectors, manufacturing continued to record high net profit growth, whereas services (Non-IT) sector witnessed contraction in net profits but at a much lower rate.

The RBI report said that the listed non-government non-financial (NGNF) companies’ aggregate sales growth (Year-on-Year) increased by 1.9 per cent in Quarter two of 2016-17, after near stagnation seen in the first quarter of the current financial year. However, raw material expenses increased in the current quarter in line with the general pause in falling global commodity prices. This resulted in a deceleration of operating profit growth at the aggregate level.

The data based on abridged financial results of 2,702 listed non-government non-financial companies for second quarter of 2016-17, further said that interest expenses remained unchanged in the second quarter which helped in a robust growth of 16 per cent in net profits at the aggregate level. Sales growth improved significantly (3.7 per cent) for the manufacturing sector after contraction in the previous quarter. On the other hand, sales of the services (Non-IT) sector continued to contract and IT sector witnessed deceleration of sales growth.

Though, the report also said that growth in operating profits in July-September quarter moderated across all sectors. Pricing power measured by net profit margin increased significantly in Q2:2016-17 as compared with the previous quarter at the aggregate level. It improved across all sectors, but for the IT sector, the net profit margin of which was lower than what was recorded in Q2:2015-16.

The CNX Nifty ended at 8270.50, up by 80.00 points or 0.98% after trading in a range of 8223.70 and 8282.65. There were 45 stocks advancing against 6 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 4.03%, Adani Ports & Special Economic Zone up by 3.93%, Tata Motors - DVR up by 3.79%, Zee Entertainment up by 3.30% and Tata Steel up by 3.24%. (Provisional)

On the flip side, Tech Mahindra down by 2.44%, TCS down by 1.91%, HCL Tech down by 1.48%, Grasim Industries down by 0.67% and Bharti Infratel down by 0.48% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 1.6 points or 0.02% to 7,188.14, Germany’s DAX decreased 7.47 points or 0.06% to 11,576.84 and France’s CAC decreased 4.34 points or 0.09% to 4,895.06.

Asian equity markets ended mostly in green on Thursday as the dollar retreated from 14-year highs and investors viewed the minutes of the Federal Reserve's December meeting as less hawkish than expected. The FOMC minutes noted upside risks to forecasts for economic growth as a result of prospects for more expansionary fiscal policies in coming years under President-elect Donald Trump. The minutes also revealed that Fed officials believe they might have to raise interest rates faster than the ‘gradual’ pace to halt a buildup in inflation that may arise if the unemployment rate undershoots the longer-run normal rate. Chinese shares ended higher after a private survey showed growth in China's services sector accelerated to a 17-month high in December, adding to recent signs of stability in the world's second-largest economy. Meanwhile, Japanese shares ended a tad weaker, hit by a stronger yen and some profit booking after the previous session's strong rally. Investors ignored the latest survey from Nikkei showing that activity in Japan's services sector expanded in December at the fastest pace in 11 months.