Benchmarks extend gains; trade near intra-day high level

Indian equity benchmarks extended early gains and hovering near intra-day high level in late afternoon session on back of healthy buying in Metal, Banking and PSU counters. Traders took some encouragement with World Bank’s statement that demonetisation may help lower lending rates and lift economic activity over the medium term. Further, Prime Minister Narendra Modi's statement that India is on threshold of becoming most digitised economy in the world also supported underlying sentiment. 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, European markets were trading in red as market participants waiting for clues on U.S. President-elect Donald Trump's tax policies and spending plans in the first news conference since winning office, to be held later today. Asian markets were trading mostly in green. Back home, in scrip specific development, IPCA Laboratories edged higher on the buzz of completing redemption of 2 formulation plants and SpiceJet gained after company clocked the highest industry OTP (On-time performance) at Delhi airport for December 2016.

The BSE Sensex is currently trading at 27126.90, up by 227.34 points or 0.85% after trading in a range of 26978.44 and 27152.91. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.09%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Metal up by 4.44%, Bankex up by 2.43%, PSU up by 1.52%, Capital Goods up by 1.04% and Consumer Durables up by 0.85%, while IT down by 0.20% and TECK down by 0.06% were the few losing indices on BSE.

The top gainers on the Sensex were Coal India up by 4.81%, Tata Steel up by 3.95%, Lupin up by 2.36%, ICICI Bank up by 1.81% and Axis Bank up by 1.73%. On the flip side, Bajaj Auto down by 0.84%, Infosys down by 0.47%, Bharti Airtel down by 0.34%, TCS down by 0.28% and Reliance Industries down by 0.19% were the top losers.

Meanwhile, the global credit rating agency, Fitch in its latest report has said that benefits of demonetisation are highly uncertain and the potential positives are unlikely to be strong or last long enough to make a significant difference to government finances or medium-term growth prospects. Due to temporary disruptions to economy post demonetisation, it also revised down the GDP growth forecast for the current fiscal to 6.9 per cent from earlier 7.4 per cent.

Describing demonetisation as a one-off event, Fitch said that people who operate in the informal sector will still be able to use the new high-denomination bills and other options like gold to store their wealth. It further notified that the informal sector could soon go back to business as usual in the absence of new incentives to avoid cash transactions.

According to Fitch, demonetisation could boost government revenues to the extent that it aids the shift of economic activity to the formal sector from the informal sector as more earnings get declared. Further agency added that it is possible that this positive effect would soon outweigh the drag on revenue collection from lower short-term economic activity.

The CNX Nifty is currently trading at 8371.95, up by 83.35 points or 1.01% after trading in a range of 8322.25 and 8376.30. There were 39 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 6.48%, Indusind Bank up by 5.62%, Coal India up by 4.81%, Yes Bank up by 3.99% and Bank of Baroda up by 3.92%. On the flip side, Bajaj Auto down by 0.90%, Infosys down by 0.48%, Bharti Airtel down by 0.34%, Reliance Industries down by 0.33% and HCL Tech. down by 0.33% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite increased 5.01 points or 0.09% to 5,314.94, KOSPI Index increased 30.05 points or 1.47% to 2,075.17, Nikkei 225 increased 63.23 points or 0.33% to 19,364.67 and Hang Seng increased 190.5 points or 0.84% to 22,935.35. On the flip side, Shanghai Composite decreased 24.92 points or 0.79% to 3,136.75, Taiwan Weighted decreased 3.9 points or 0.04% to 9,345.74 and FTSE Bursa Malaysia KLCI decreased 0.07 points to 1,671.98.

European markets were trading mostly in red; UK’s FTSE 100 decreased 1.75 points or 0.02% to 7,273.72 and France’s CAC decreased 0.37 points or 0.01% to 4,887.86, while Germany’s DAX increased 0.4 points or 0% to 11,583.70.