Post Session: Quick Review

Indian equity benchmarks traded on a choppy note and ended the session with modest gains. The market had picked up pace on hope of a positive budget, but fears of populist measures as well as drastic changes in tax structures are giving sleepless nights to investors. Investors also remained anxious ahead of Trump’s inauguration on Friday and waited for more clarity in an uncertain global scenario. The markets made a cautious but positive start in early deals taking support from Minister for Road Transport and Shipping Nitin Gadkari’s statement that it is the appropriate time to invest in India and added that the country is also working on ways to improve purchasing power of common men as that will present further opportunities. Investors also took comfort from private report that India’s growth numbers are likely to slide in the next two quarters, but a sharp rebound is expected in the second half of 2017 as the demonetization impact will be transitory and not long lasting. The factors responsible for a V-shaped recovery in the second half of this year include release of pent-up demand, minimal wealth destruction post demonetization and fiscal gains for the government that are likely to accrue in 2017-18. Separately, global rating agency Standard and Poor’s (S&P) enlightened that to overcome uncertainties from global geopolitical changes and domestic policy-making, strong domestic demand and cost competitiveness in exports will help Indian companies. It also said that faster economic growth as well as reforms will make India a good macroeconomic story and this coupled with the stable credit profile of companies, bodes well for foreign currency bonds by Indian issuers.

On the global front, Asian markets closed mixed, after Federal Reserve Chair Janet Yellen signaled that the US central bank is poised to pursue a path of steady interest rate hikes. China stocks fell with energy and infrastructure companies weaker after a price correction this week and as investors remained cautious ahead of the Lunar New Year. Japan’s Nikkei share average rebounded from a six-week low. European stocks were trading under pressure with investors eyeing the European Central Bank’s interest rate decision due later in the day.

The BSE Sensex ended at 27308.60, up by 50.96 points or 0.19% after trading in a range of 27219.89 and 27348.19. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.41%, while Small cap index was up by 0.33%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.03%, PSU up by 1.00%, Consumer Durables up by 0.89%, Power up by 0.81% and Auto up by 0.52%, while Bankex down by 0.19% and Realty down by 0.11% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 5.61%, Power Grid up by 2.12%, ONGC up by 1.59%, Tata Motors up by 1.30% and ITC up by 1.24%. (Provisional)

On the flip side, Lupin down by 1.52%, Axis Bank down by 1.51%, Sun Pharma down by 1.36%, Wipro down by 0.82% and HDFC down by 0.71% were the top losers. (Provisional)

Meanwhile, the Union Cabinet has approved amendments in the Modified Special Incentive Package Scheme (M-SIPS) to further incentivize investments in electronics manufacturing in the country and moving towards the goal of ‘Net Zero imports’ in electronics by 2020. Now, proposals under M-SIPS will be accepted till December 2018 and incentives of Rs 10,000 crore have been allowed. If investment is more than $1 billion, then a high-powered committee headed by the Cabinet secretary will approve it.

For new approvals, the incentive under the scheme will be available from the date of approval of a project and not from the date of receipt of application. The time frame for the incentives has also been fixed as five years (down from ten years) which means that incentives will be available for investments made within five years from the date of approval. Approvals will normally be accorded to eligible applications within 120 days of submission of the complete application. A unit receiving incentives under the scheme has to provide an undertaking to remain in commercial production for a period of at least three years. So far, 243 applications have been received under the scheme, out of which 75 applications have been approved involving investment proposals of Rs 17,997 crore.

The Cabinet chaired by Prime Minister Narendra Modi approved the amendments in M-SIPS expediting investments into the Electronics System Design and Manufacturing (ESDM) sector in India. The amendments are also expected to create employment opportunities and reduce dependence on imports. The statement said that the projects already received under the scheme have the potential to generate employment to the extent of up-to one million persons (direct and indirect).

The appraisal committee recommending approval of project will be chaired by Secretary, Ministry of Electronics and IT. A separate committee headed by Cabinet Secretary and comprising of CEO, NITI Aayog, Secretary Expenditure and Secretary, MeitY will be set up in respect of mega projects, envisaging more than Rs 6,850 crore (approximately $1 billion) in investments.

The CNX Nifty ended at 8431.20, up by 14.20 points or 0.17% after trading in a range of 8404.05 and 8445.15. There were 24 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 5.80%, Idea Cellular up by 2.89%, BPCL up by 2.83%, Tata Motors - DVR up by 2.77% and Eicher Motors up by 2.76%. (Provisional)

On the flip side, Axis Bank down by 1.60%, Aurobindo Pharma down by 1.50%, Lupin down by 1.45%, Sun Pharma down by 1.25% and Zee Entertainment down by 1.23% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 45.97 points or 0.63% to 7,201.64, Germany’s DAX decreased 10.89 points or 0.09% to 11,588.50 and France’s CAC decreased 15.42 points or 0.32% to 4,837.98.

Asian equity markets ended on a mixed note on Thursday following the lackluster cues overnight from Wall Street, due to uncertainty about President-elect Donald Trump's policies ahead of his inauguration on Friday. Federal Chair Yellen delivered hawkish comments on Wednesday, adding that the economy is approaching the Fed's dual mandate of inflation and employment. She further mentioned that the US is near full employment and with inflation figures stabilizing, there is a need for gradual Fed tightening, although she did not mention the exact timing of an interest rate hike. Chinese markets ended lower, with energy and infrastructure companies turning lower after a price correction this week and as investors remained cautious ahead of the Lunar New Year. Meanwhile, Japanese shares ended higher, lifted by the yen’s weakness, which is a boon to export manufacturers.