Firm global cues lift Indian benchmarks; Nifty reclaims 8,250 mark

After remaining in a consolidation mood for last two trading sessions, Indian benchmark indices showed dramatical up-move on Thursday, as trading sentiments turned bullish after US Fed minutes suggested a less hawkish stance from policymakers. Also underpinning the cautious streak of optimism has been a steady stream of upbeat factory and service sector surveys out of the US, Europe and Asia this week, prompting some banks to raise their global growth forecasts for 2017. On the domestic front, 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. Some support also came 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. Going forward, market would be driven by corporate earnings, with Tata Consultancy Services (TCS) and Infosys scheduled to post their quarterly results on January 12 and January 13, respectively. the country is also gearing up to its annual budget, and investors hope the government would keep spending under control and promote growth after its move to ban higher-value banknotes paralysed large parts of the economy.

On the global front, Asian markets ended the session on firm note on Thursday, buoyed by further gains on Wall Street and an overnight bounce in oil prices that bolstered energy and resource shares. Investors digested minutes from the Federal Reserve's December meeting released overnight, which indicated that the Fed's decision to raise interest rates by a quarter point was partly due to an assumption of more expansionary fiscal policy under President-elect Donald Trump. 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.  However, Japanese shares edged lower, hit by a stronger yen and some profit booking after the previous session's strong rally.

Back home, after getting a gap up start, the local benchmarks extended their gains in late morning session, tracking firm trade in other regional markets. Thereafter, the indices exptended their northward journey and touched the day’s high in final hour of the trade.  Eventually, the NSE’s 50-share broadly followed index Nifty, got buttressed by over a percent to settle above the crucial 8,250 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated around two hundred and fifty points and closed above the psychological 26,850 mark. Moreover, the broader markets too participated in the rally and closed with gains of around a percent. On the sectoral front, except IT and Teck, all the other sectoral indices ended the day in green. Metal counter remained the top gainer, surging around three percent followed by the Auto index which ended with gain of around two percent. Good buying was also observed in Oil & Gas, PSU and Banking counters. However, appreciation in rupee value against the dollar, weighed on IT and Teck counters, which earned large chunk of their revenues in dollar terms.

The market breadth remained optimistic as there were 1963 shares on the gaining side against 886 shares on the losing side, while 130 shares remained unchanged.

Finally, the BSE Sensex rallied 245.11 points or 0.92% to 26878.24, while the CNX Nifty rose 83.30 points or 1.02% to 8,273.80.

The BSE Sensex touched a high and a low of 26917.21 and 26738.42, respectively and there were 26 stocks on gainers side against 4 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher by 1.32%, while Small cap index was up by 0.98%.

The top gaining sectoral indices on the BSE were Metal up by 3.00%, Auto up by 1.84%, Oil & Gas up by 1.79%, PSU up by 1.60% and Bankex up by 1.35%, while IT down by 0.77% and TECK down by 0.33% were the only losing indices on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 4.88%, Tata Steel up by 3.47%, Tata Motors up by 3.18%, ONGC up by 2.73% and Power Grid up by 2.50%. On the flip side, TCS down by 1.85%, HDFC Bank down by 0.22%, Infosys down by 0.19% and NTPC down by 0.03% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has expressed confidence that government will exceed its budget estimate of Rs 16.3 lakh crore for both direct and indirect tax collections this year. In the Budget for 2016-17 fiscal, Jaitley had put gross tax revenue estimate at Rs 16.3 lakh crore, about 11 percent higher than gross tax receipts of Rs 14.5 lakh crore for the previous fiscal. Of total estimate, 12.64 percent growth in direct tax to Rs 8.47 lakh crore and 10.8 percent in indirect tax at Rs 7.79 lakh crore.

Jaitley’s statement came after many states expressed concern about the fall in value-added tax revenues for the last two months on account of demonetisation’s impact on businesses. Responding to statements made by West Bengal finance minister Amit Mitra on the massive impact of demonetisation on tax revenues, Jaitley said that this trend is not reflected in all states. On digital economy, he said that his assessment is that the larger integration of informal economy with the formal economy that will happen in the following quarter which will lead to higher revenues of all and this is the purpose of this exercise.

As per the data, during April 1-December 19, indirect tax collections, which are made up of Central excise, customs and service tax, has shown a 26.2 percent jump to Rs 5.52 lakh crore as compared to the year ago collections. This constituted 71.1 per cent of the Budget estimate. On other hand, direct tax collections, which are made up of individual income tax and corporate tax, jumped to Rs 5.57 lakh crore to meet 65 percent of the Budget estimates.

The CNX Nifty traded in a range of 8,282.65 and 8,223.70. There were 44 stocks in green against 7 stocks in red on the index.

The top gainers on Nifty were Tata Motors - DVR up by 4.09%, Adani Ports & SEZ up by 4%, Yes Bank up by 3.98%, Tata Steel up by 3.35% and Tata Motors up by 3.15%. On the flip side, Tech Mahindra down by 2.63%, TCS down by 1.91%, HCL Tech down by 1.45%, Grasim down by 0.73% and Bharti Infratel down by 0.62% were the top losers.

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 was down by 7.47 points or 0.06% to 11,576.84 and France’s CAC was lower by 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.