Benchmarks pare gains to end marginally in green

Erasing most of their initial gains, Indian equity benchmarks ended the Wednesday’s trade with marginal gains. Local bourses made a jubilant start with an UN report claiming that India was still the fastest growing large developing economy and that the country would grow by 7.7 percent in the financial year 2017. The United Nations World Economic Situation and Prospects (WESP) 2017 report has said that India's economy is projected to grow by 7.7 percent in fiscal year 2017 benefiting from strong private consumption and gradual introduction of significant domestic reforms. Some support also came with report that Income Tax (I-T) Department soothed foreign investors’ nerves by putting in abeyance its December 21 circular that amplified their concerns over a potential rise in tax liability.

However, markets pared most of their gains in second half of the session as traders opted to book profit at higher levels ahead of a crucial meeting of Parliament’s standing committee on finance over the demonetisation issue with Reserve Bank of India Governor Urjit Patel. Traders also remained on sidelines ahead of the Union Budget 2017 as they hope for incentives to support an economy hit by cash shortages after a ban on higher-value banknotes. Market participants also remained cautious after private poll report showed that India’s economy lost momentum in the final three months of 2016 after Prime Minister Narendra Modi’s ban on high-value notes hurt consumption and businesses but it is set to pick up this quarter. Having posted growth of above 7 percent for six consecutive quarters, India’s gross domestic product is expected to have expanded just 6.5 per cent in the October-December quarter - the weakest in nearly three years.

On the global front, European markets opened mostly in green helped by a slew of well-received company results from ASML, Novozymes and Burberry, though shares in Pearson slumped after its update. Asian markets ended mostly in green as investors scooped up exporter shares after US President-elect Donald Trump expressed concerns over a stronger dollar.

Back home, stocks related to renewable power companies remained in focus, as the minister of state with independent charge for power, coal, new and renewable energy and mines, Piyush Goyal has said that India is committed to meet its renewable energy goals and is not bothered about US president-elect Donald Trump's skepticism on policies related to climate change. Realty stocks continue to trade with traction for yet another day on a private report that the real estate sector attracted Rs 38,000 crore as private equity investments in 2016, up 62% over the previous calendar year.

The NSE’s 50-share broadly followed index Nifty gained around twenty points to end above the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex too surged by around twenty points to finish above its psychological 27,250 mark. Broader markets outperformed benchmarks to end with a gain of around half a percent. The market breadth remained in the favour off advances, as there were 1,506 shares on the gaining side against 1,245 shares on the losing side, while 174 shares remain unchanged.

Finally, the BSE Sensex gained 21.98 points or 0.08% to 27,257.64, while the CNX Nifty was up by 19.00 points or 0.23% to 8,417.00. 

The BSE Sensex touched a high and a low of 27,422.67 and 27,217.65, respectively and there were 15 stocks on gainers side against 14 stocks on the losers side on the index, while one stock remained unchanged.

The broader indices ended in green; the BSE Mid cap index jumped 0.45%, while Small cap index was up by 0.61%.

The top gaining sectoral indices on the BSE were Metal up by 2.27%, Basic Materials up by 1.88%, Consumer Durables up by 0.71%, Capital Goods up by 0.63% and Bankex was up by 0.53%, while Telecom down by 0.92%, Oil & Gas down by 0.21%, Energy down by 0.17%, Utilities down by 0.07% and TECK was down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.95%, Hindustan Unilever up by 2.86%, ONGC up by 1.51%, Mahindra & Mahindra up by 0.87% and TCS was up by 0.76%. On the flip side, NTPC down by 1.65%, GAIL India down by 1.37%, Hero MotoCorp down by 1.37%, Bharti Airtel down by 1.21% and Bajaj Auto was down by 0.94% were the top losers.

Meanwhile, the United Nations World Economic Situation and Prospects (WESP) 2017 report has forecasted that India’s economy can grow at about 7.7 per cent in the financial year 2017 and 7.6 per cent in 2018. Report also said that the country was still the fastest growing large developing economy, on the back of robust private consumption and significant domestic reforms gradually being implemented by the government.  However, it cautioned that low capacity utilisation and stressed balance sheets of banks and businesses will prevent a strong investment revival in the short term. 

On the other hand, report has said that China's economy growth is likely to remain stable at 6.5 percent in the financial year 2017 and 2018, buoyed by favourable domestic demand and accommodative fiscal measures, including off-budget fiscal support through policy banks and public-private partnerships. However, it also said that the implications of China's ongoing economic rebalancing will inevitably be felt by the region in the medium and long-run through trade (including commodity prices) and financial channels, albeit to a varied extent across countries.

The report further said that in India, investment demand is likely to marginally pick up, helped by monetary easing, government efforts towards infrastructure investments and public-private partnerships and the implementation of domestic reforms such as the introduction of the Goods and Services Tax (GST) Bill. It also noted that this reform should promote investment in the medium term through lower transaction and logistic costs and efficiency gains. Its effective implementation requires adequate capacity building of the tax administration. It added that the GST reform constitutes a major change by establishing a new uniform tax rate.

Meanwhile, the report of the United Nations comes a day after the International Monetary Fund (IMF) has cut India’s economic growth estimate for 2016-17 to 6.6% from its earlier projection of 7.6%, due to the impact of the government's move of demonetization of high value currency notes in early November. The World Bank too cut India’s Gross Domestic Product (GDP) growth to 7 percent from its earlier estimate of 7.6 percent on note ban woes. However, report did not take into consideration the impact of the demonization policy on the country's economic growth.

The CNX Nifty traded in a range of 8,460.30 and 8,397.40. There were 32 stocks in green against 19 stocks in red on the index.

The top gainers on Nifty were Ultratech Cement up by 3.59%, BHEL up by 3.48%, Hindalco up by 3.48%, Tata Steel up by 3.10% and Hindustan Unilever was up by 2.89%. On the flip side, Idea Cellular down by 2.60%, NTPC down by 1.68%, Hero MotoCorp down by 1.49%, Bosch down by 1.47% and Bharti Airtel was down by 1.44% were the top losers.

European markets trading mostly in green; Germany’s DAX increased 10.12 points or 0.09% to 11,550.12 and UK’s FTSE 100 was up by 10.5 points or 0.15% to 7,230.88, while France’s CAC was down by 20.79 points or 0.43% to 4,838.90.

Asian equity markets ended mostly in green on Wednesday, led by a surge in energy companies after oil climbed above $52 per barrel. Japanese stocks ended up, with export-oriented shares receiving a boost from a weaker yen. Meanwhile, investors remained cautious in the wake of President-elect Donald Trump's charge that a strong dollar is hurting the economy. Trump's remarks sparked a selloff in the US currency, adding to earlier weakness after British Prime Minister Theresa May confirmed a ‘hard’ exit from the European Union.