Benchmarks trade near neutral line in late morning session

Indian equity benchmarks erased gains and started hovering around neutral line in late morning session on account of falling dollar, rising oil prices and tracking mixed cues from Asian markets. The rupee extended its winning run for the third consecutive day and opened higher against dollar on sustained dollar unwinding from banks and exporters. Investors will be keeping an eye on the report by the Central Statistical Organization which will give an advance estimate of FY17 GDP without including the demonetization impact. The sentiments were on cautious note after President Pranab Mukherjee issued a note of caution that the Narendra Modi government’s demonetization decision could likely lead to a temporary slowdown in the economy and hurt the poor. The President called for policymaking that would reduce the suffering of the poor, and seemed to question the focus shift in the government’s poverty alleviation programmes and policies from an entitlement-based approach to an entrepreneurial one. The downside was capped with the report of Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley that India appears to be much better placed with improved macro-economic fundamentals, as measures to eliminate shadow economy and tax evasion are expected to have positive impact on GDP. India expects to grow at around 7 percent in the first half of the next financial year. Traders were seen piling position in Bankex, PSU and Oil & Gas stocks, while selling was witnessed in IT, TECK and Realty sector stocks. IT stocks were trading under pressure after two US Congressmen have reintroduced a bill to curb the use of H-1B visas, on which the Indian IT sector is particularly dependent, the first salvo in the battle against outsourcing that is expected under the watch of President-elect Donald Trump. The new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently. In scrip specific development, GM Breweries was trading under pressure after the company reported 36.42% fall in net profit at Rs 9.90 crore for the quarter ended December 30, 2016. It had posted a net profit of Rs 15.57 crore in the corresponding quarter last year.

On the global front, Asian shares were trading mostly in green, as a surge in the dollar and its borrowing costs sparked by Donald Trump’s election eased, with the US 10-year yield slipping to one-month lows. In contrast, Japan’s Nikkei, one of the best performers since Republican Trump won the November 8 election, dropped as the yen gained versus the dollar. China raised the exchange rate for the yuan against the US dollar by 0.92 percent from the previous day, the biggest one-day increase in more than 11 years. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,250 and 26,800 levels respectively. The market breadth on BSE was positive in the ratio of 1131:1047, while 143 scrips remained unchanged.

The BSE Sensex is currently trading at 26887.19, up by 8.95 points or 0.03% after trading in a range of 26883.78 and 27009.61. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.24%, while Small cap index was down by 0.05%.

The top gaining sectoral indices on the BSE were Bankex up by 0.74%, PSU up by 0.52%, Oil & Gas up by 0.42%, FMCG up by 0.25% and Power up by 0.21%, while IT down by 2.85%, TECK down by 2.30%, Realty down by 0.51% and Metal down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.48%, Dr. Reddy’s Lab up by 1.19%, GAIL India up by 1.15%, HDFC up by 1.03% and HDFC Bank up by 0.94%.

On the flip side, TCS down by 3.29%, Infosys down by 2.62%, Wipro down by 1.94%, Maruti Suzuki down by 0.51% and Tata Steel down by 0.43% were the top losers.

Meanwhile, after different reports suggested different amount of scrapped Rs 500 and Rs 1,000 notes that had been deposited back to the banks by the December 30 deadline, the Reserve Bank of India (RBI) has said that the total quantum of scrapped Rs 500 and Rs 1000 currency notes deposited in banks and post offices by the December 30, deadline is being reconciled and the final tally will be released soon. It also said that it is taking all steps to complete the process expeditiously so as to release firm figures of specified bank notes (SBNs) received at an early date. Referring to various estimates on scraped notes, the RBI said, such estimate may not indicate the actual numbers.

The RBI further said that its earlier figures were based on aggregation of accounting entries done at the large number of currency chests all over the country. It said that now the scheme has come to an end on December 30, these figures would need to be reconciled with the physical cash balances to eliminate accounting errors/possible double counts etc. Till this is completed, any estimate may not indicate the actual numbers of the SBNs that have been returned. As per RBI’s last declared data, as of December 10, withdrawn banknotes amounting to Rs 12.44 lakh crore had been returned to the RBI and currency chests.

Prime Minister Narendra Modi, on November 8, announced that Rs 1,000 and Rs 500 currency notes were no longer a legal tender, saying the move was aimed at eliminating black money, counterfeit currency and terror financing. Citizens were given up to December 30 to deposit the old currency in banks. About Rs 15.4 lakh crore was to be taken out of the system by way of demonetisation.

The CNX Nifty is currently trading at 8270.30, down by 3.50 points or 0.04% after trading in a range of 8270.30 and 8306.85. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.55%, Yes Bank up by 2.36%, Bank of Baroda up by 1.69%, IndusInd Bank up by 1.66% and GAIL India up by 1.19%.

On the flip side, HCL Tech down by 4.37%, Tech Mahindra down by 4.13%, TCS down by 3.21%, Infosys down by 2.57% and Wipro down by 2.06% were the top losers.

The Asian markets were trading mostly in green; Taiwan Weighted increased 4.91 points or 0.05% to 9,363.05, KOSPI Index increased 7.25 points or 0.36% to 2,049.20, FTSE Bursa Malaysia KLCI increased 8.58 points or 0.52% to 1,668.40, Jakarta Composite increased 13.77 points or 0.26% to 5,339.28 and Hang Seng increased 63.78 points or 0.28% to 22,520.47.

On the other hand, Nikkei 225 decreased 77.07 points or 0.39% to 19,443.62 and Shanghai Composite decreased 6.2 points or 0.2% to 3,159.21.