Post Session: Quick Review

Indian equity benchmarks traded on a volatile note but managed a green closing, as investors awaited Union Budget that will be announced on February 1. Investors are anticipating that the forthcoming Union Budget 2017-18 will likely spell out measures to boost demand, with key spending themes likely to be rural spending and greater capital spending. Though, benchmarks pared entire gains in midsession but buying in Metal, PSU and Oil & Gas counters helped benchmarks to recover and close higher. The markets traded in green in early deals as investors digested US President Donald Trump’s inauguration speech where his rallying cry ‘Buy American-Hire American’ has put the $150- billion Indian IT industry on edge. Traders took some encouragement with the BRICS nation’s National Development Bank chief K V Kamath’s statement that India will continue to grow on the back of its consumption-driven economy. He also said that the demonetisation move in India would have only a short-term blip after which India should be back on a clear growth path. Some support also crept in following a written response to the Parliament’s Public Accounts Committee (PAC) by the Revenue Department, which said that due to the withdrawal of old high-value notes, the idle or hidden cash has come into the formal system which will be utilized for productive purposes. Regarding other implications, it said that increasing use of non-cash modes of transactions will promote transparency and have a lasting positive impact on tax collections, both direct and indirect.  The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. January 2017 series to next month. The near month January 2017 derivatives contracts will expire on Wednesday i.e. January 25, 2017. Traders were seen piling position in Metals, PSU and Oil & Gas sector stocks.

On the global front, Asian markets closed mostly in green, as investors continued to digest what Donald Trump means to their holdings. Japan’s Nikkei share average dropped as exporters fell on a stronger yen, while sentiment was subdued on concern over US President Donald Trump’s protectionist trade views. Top officials from Japan’s finance ministry, central bank and financial regulator met to exchange views on global financial markets. The meeting comes amid uncertainty about how financial markets will respond to US President Donald Trump, who was sworn into office on Friday. European markets were trading under pressure ahead of release of euro zone consumer confidence for January. Optimism about the business environment for Britain’s financial services firms fell for a fourth consecutive quarter, the longest decline since the global financial crisis.

The BSE Sensex ended at 27130.35, up by 95.85 points or 0.35% after trading in a range of 26963.58 and 27167.79. There were 19 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.47%, while Small cap index ended higher by 0.46%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.70%, PSU up by 1.30%, Oil & Gas up by 1.18%, FMCG up by 1.02% and Auto up by 0.75%, while Capital Goods down by 0.45% was the sole losing index on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 2.34%, Tata Motors up by 1.94%, HDFC up by 1.79%, Tata Steel up by 1.55% and Hero MotoCorp up by 1.55%. (Provisional)

On the flip side, ICICI Bank down by 2.05%, Larsen & Toubro down by 1.31%, Axis Bank down by 1.15%, Sun Pharma down by 0.90% and Reliance Industries down by 0.76% were the top losers. (Provisional)

Meanwhile, the credit rating agency Crisil has described the official data on index of industrial production (IIP) for November 2016, during which demonetisation was announced, as a false positive. India’s factory output that had fallen by 1.8 per cent in October; suddenly rose by 5.7 per cent in November it. The rating agency has said that November figures do not reflect the true condition of the Indian manufacturing sector. 

Crisil further stated that a term false positive implies that the growth rate indicated is too high. However, it was expected to be in the negative zone as November was the first month to have captured the impact of demonetisation. It also pointed that the IIP base year has not been updated and the index of industrial production grew by 5.7 per cent on-year in November, on account of a weak base.

The rating agency said that such month-to-month the data is too volatile, it cannot be used to make long-term projections. It added that going by the production trend in some sectors such as auto, next month’s (December) IIP growth data may be more indicative of the impact of demonetisation.

The CNX Nifty ended at 8397.25, up by 47.90 points or 0.57% after trading in a range of 8327.20 and 8404.15. There were 35 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 5.91%, Zee Entertainment up by 3.69%, Idea Cellular up by 2.87%, Grasim Industries up by 2.43% and HCL Tech up by 2.38%. (Provisional)

On the flip side, ICICI Bank down by 2.18%, Bharti Infratel down by 1.67%, Axis Bank down by 1.28%, Sun Pharma down by 1.19% and Larsen & Toubro down by 1.12% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 40.43 points or 0.56% to 7,158.01, Germany’s DAX decreased 40.54 points or 0.35% to 11,589.59 and France’s CAC decreased 17.8 points or 0.37% to 4,832.87.

Asian equity markets ended mostly in green on Monday, though the Japanese shares declined as exporters fell on a stronger yen and after Donald Trump took office as the US president and promised ‘American first’ policies, adding to concerns about the threat of protectionism. Meanwhile, Chinese shares ended at a two-week high, but pared some of its earlier gains in thin turnover as investors were reluctant to stake out fresh positions ahead of the country's biggest holiday.