Benchmarks make gap-up opening on Wednesday; Sensex regains 27,000 mark

Extending yesterday’s rally, Indian equity benchmarks have made a gap-up start and are trading with traction in early deals on Wednesday, with frontline gauges recapturing their crucial 27,000 (Sensex) and 8,300 (Nifty) levels. Traders took some support with Prime Minister Narendra Modi’s statement that India is on threshold of becoming most digitised economy in the world. While he also declared his ambition to bring about a paradigm shift through a series of historic changes, reiterating the government's commitment to reforms and projecting India as a bright spot amid global gloom after having emerged as the world's fastest-growing economy.

On the global front, Asian markets were trading mostly in green at this point of time led by a surge in mining companies, after evidence of quickening price growth in China boosted metals and other commodities. The US markets ended mixed for the second consecutive session, with the tech heavy Nasdaq managing to extend gains, while the Dow ending at opposite sides of the neutral line.

Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. The market breadth remained in favor of advances, as there were 1,427 shares on the gaining side against 531 shares on the losing side while 79 shares remain unchanged. On the sectoral front, auto stocks were trading higher despite data from Society of Indian Automobile Manufacturers (SIAM) showed that automobile sales for December fell the most for a month in 16 years pointing to a possible impact of demonetisation prompting consumers to delay their purchases of cars, motorcycles and trucks.

The BSE Sensex is currently trading at 27052.10, up by 152.54 points or 0.57% after trading in a range of 26978.44 and 27078.69. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.76%, while Small cap index was up by 0.60%.

The top gaining sectoral indices on the BSE were Metal up by 3.02%, Bankex up by 1.17%, Capital Goods up by 0.91%, PSU up by 0.86% and FMCG was up by 0.51%, while IT was down by 0.07% was the lone losing index on BSE sectoral front.

The top gainers on the Sensex were Tata Steel up by 3.57%, Coal India up by 2.16%, Lupin up by 1.51%, Larsen & Toubro up by 1.38% and ICICI Bank was up by 1.09%. On the flip side, TCS down by 0.48%, Dr. Reddys Lab down by 0.46%, Bajaj Auto down by 0.45%, Hero MotoCorp down by 0.32% and Infosys was down by 0.12% were the top losers.

Meanwhile, the World Bank in latest report titled ‘Global Economic Prospects’ has cut India’s Gross Domestic Product (GDP) growth to 7 percent from its earlier estimate of 7.6 percent on the back of demonetisation of high value currency notes. It also declared that the country would regain its momentum, with growth rising to 7.6 percent in Fiscal Year (FY) 2018 and strengthening to 7.8 percent in FY 2019-20, as various reform initiatives are expected to unlock domestic supply bottlenecks and raise productivity. It has said that the immediate withdrawal of a large volume of currency in circulation and subsequent replacement with new notes announced by the government in November contributed to slowing growth in 2016.

According to the report, which pointed out that 80% of transactions were in cash, thus in the short-term, demonetisation could continue to disrupt business and household economic activities, weighing on growth. But the report also noted that in the medium-term, a benefit of demonetisation may be liquidity expansion in the banking system, helping to lower lending rates and lift economic activity. The World Bank said that the challenges encountered in phasing out large currency notes and replacing them with new ones may pose risks to the pace of other economic reforms like Goods and Services Tax, labour and land reforms.

The report added that infrastructure spending should improve the business climate and attract investment in the near-term. The World Bank said that the 'Make in India' campaign may support India's manufacturing sector, backed by domestic demand and further regulatory reforms. Moderate inflation and a civil service pay hike should support real incomes and consumption, assisted by bumper harvests after favourable monsoon rains.

The CNX Nifty is currently trading at 8340.95, up by 52.35 points or 0.63% after trading in a range of 8322.25 and 8345.45. There were 43 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.14%, Tata Steel up by 3.17%, Hindalco up by 2.83%, Ambuja Cement up by 2.39% and Coal India was up by 2.26%. On the flip side, Hero MotoCorp down by 0.46%, Bajaj Auto down by 0.42%, TCS down by 0.33%, HCL Tech down by 0.27% and Infosys was down by 0.21% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI rose 0.21 points or 0.01% to 1,672.26, Taiwan Weighted increased 1.69 points or 0.02% to 9,351.33, Jakarta Composite increased 7.34 points or 0.14% to 5,317.26, KOSPI Index surged 30.31 points or 1.48% to 2,075.43, Nikkei 225 added 74.71 points or 0.39% to 19,376.15 and Hang Seng was up by 154.7 points or 0.68% to 22,899.55. On the flip side, Shanghai Composite was down by 16.68 points or 0.53% to 3,144.99.