Indian benchmarks wash-off two days losses, Nifty reclaims 8,250 mark

A session after exhibiting a distressing performance, Indian equity indices have managed to pull through a sparkling performance by gaining over half percent on Tuesday, thanks to the hefty short covering in the beaten-down but fundamentally strong stocks. Sentiments remained up-beat after Finance Minister Arun Jaitley dismiss the slowdown concerns, said that higher tax mop up indicates uptick in economic activity. He further added that demonetised notes had no role to play in the tax collections for December as people were allowed to pay taxes in the spiked currency only in November and the indirect and direct tax collections between April and December this year increased by 25 percent and 12.01 percent respectively compared to the same period last year. Furthermore, describing demonetisation as only a ‘bump’, Cisco Executive Chairman John Chambers said that India is well-positioned to maintain GDP growth rate of over 7 per cent for the next few years and it should be a 'top ally' for the US in the Asia Pacific region. Some support also came after RBI’s newly-appointed Deputy Governor and noted economist Viral Acharya said, India, one of the world’s fastest growing economies, is at an “exciting but challenging time” and has massive potential to become an economic powerhouse. However, some traders remained on the sidelines and refrained from any buying activity ahead of India's Budget scheduled on February 1, and caution ahead of key global events such as Donald Trump's swearing-in as US president later this month. Meanwhile, third-quarter earnings season kicked off today, with fairly upbeat numbers from IndusInd Bank. The Private lender reported a better-than-expected 29 per cent rise in net profit at Rs 750.64 crore for the quarter ended December 31, 2016 against Rs 581.02 crore in the corresponding quarter last year.

On the global front, Asian markets ended mixed on Tuesday, tracking the lackluster cues from Wall Street and the plunge in crude oil prices overnight. Worries about the likelihood of a ‘hard Brexit’ also weighed on investors sentiments.  Japan's Nikkei share average ended lower with a strengthening yen weighing on exporter shares, although hopes that US President-elect Donald Trump would provide hints about stimulus at an upcoming speech helped curb the losses. China's Shanghai Composite index declined as investors booked some profits after recent sharp gains on hopes of reforms in state-owned enterprises. Though, Hong Kong stocks hit a one-month high as Chinese commodity prices rallied, offsetting pressure from profit taking in some SOEs, which rose last week on restructuring hopes. Meanwhile, European stock markets opened broadly lower, with stocks and sterling tumbling over political uncertainty over Britain's future ties with the European Union and the policies of the incoming U.S. president, Donald Trump.

Back home, the benchmark got off to an optimistic opening, shrugging the sluggish sentiments prevailing in Asian markets post weak closing of US markets overnight. The frontline indices soon gathered momentum and traded with around half a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Eventually, the NSE’s 50-share broadly followed index Nifty, got buttressed by over half a percent to settle above the crucial 8,250 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated around one hundred and fifty points and closed just below the psychological 26,900 mark. Moreover, broader markets managed a touch better than the larger peers today as the BSE’s midcap and smallcap indices settled with gains of 0.80% and 0.70% respectively. 

The market breadth remained optimistic as there were 1664 shares on the gaining side against 1150 shares on the losing side, while 128 shares remained unchanged.

Finally, the BSE Sensex rallied 173.01 points or 0.65% to 26899.56, while the CNX Nifty rose 52.55 points or 0.64% to 8,288.60.

The BSE Sensex touched a high and a low of 26914.95 and 26804.17, respectively and there were 22 stocks on gainers side against 8 stocks on the losers side on the index.

The broader indices made a positive closing; the BSE Mid cap index ended higher 0.80%, while Small cap index was up by 0.70%.

The top gaining sectoral indices on the BSE were Metal up by 1.31%, Auto up by 1.26%, Capital Goods up by 1.02%, Consumer Durables up by 1.01% and Power up by 0.83%, while Realty down by 0.42% was the sole losing index on BSE.

The top gainers on the Sensex were Adani Ports & SEZ up by 3.25%, Tata Motors up by 2.99%, Tata Steel up by 2.10%, Asian Paints up by 1.54% and HDFC Bank up by 1.46%. On the flip side, Axis Bank down by 1.17%, Dr. Reddys Lab down by 0.58%, HDFC down by 0.47%, NTPC down by 0.37% and Lupin down by 0.21% were the top losers.

Meanwhile, dismissing economic slowdown concerns due to demonetisation, Finance Minister Arun Jaitley has said that higher tax mop up shows uptick in economic activity including manufacturing during the April-December period. He said that during April-December 2016, direct tax collection was up by 12.01 per cent at Rs 5.53 lakh crore, as compared to revenue in the year-ago period, while indirect tax receipts soared 25 per cent to Rs 6.30 lakh crore. 

Jaitley said that during the 9-month period the direct tax collections have moved up and the indirect tax collections have also significantly increased. He also said that since there has been a considerable debate as to the impact of the currency squeeze in November and December, the revenue data becomes relevant. He added that VAT collections in most states too have shown an increase and they also received taxes in the old currency in November.

The Minister highlighted that in December, payment of taxes in old notes was not allowed and over 99 per cent central taxes were paid digitally. He also said that the demonetised notes had no role to play in the tax collections for December as people were allowed to pay taxes in the spiked currency only in November.

The CNX Nifty traded in a range of 8,293.80 and 8,261.00. There were 36 stocks in green against 15 stocks in red on the index.

The top gainers on Nifty were Hindalco up by 4.46%, Tata Motors up by 3.55%, Adani Ports & SEZ up by 3.23%, Tata Motors - DVR up by 2.93% and Tata Steel up by 2.35%. On the flip side, Axis Bank down by 1.09%, Grasim Industries down by 0.95%, ACC down by 0.79%, Dr. Reddys Lab down by 0.59% and Cipla down by 0.52% were the top losers.

The European markets were trading mostly in red; Germany’s DAX decreased 9.36 points or 0.08% to 11,554.63, France’s CAC decreased 3.73 points or 0.08% to 4,883.84, while UK’s FTSE 100 increased 11.88 points or 0.16% to 7,249.65.

Asian equity markets ended on a mixed note on Tuesday as oil prices steadied following steep overnight losses and the dollar remained broadly weaker despite worries over the likelihood of a ‘hard Brexit’ and the prospect of more rate hikes in the US this year. Japan's Nikkei share average ended lower with a strengthening yen weighing on exporter shares, although hopes that US President-elect Donald Trump would provide hints about stimulus at an upcoming speech helped curb the losses. China's Shanghai Composite index declined as investors booked some profits after recent sharp gains on hopes of reforms in state-owned enterprises. Mixed inflation data also dented investor sentiment. China's consumer inflation rose an annual 2.1 percent in December, the National Bureau of Statistics said, falling below expectations for 2.2 percent and down from 2.3 percent in November. Producer prices jumped 5.5 percent from a year earlier versus expectations for a 4.6 percent gain. Though, Hong Kong stocks hit a one-month high as Chinese commodity prices rallied, offsetting pressure from profit taking in some state-owned enterprises (SOEs) which rose last week on restructuring hopes.