Markets start F&O expiry week on an optimistic note

In a volatile trading session, Indian benchmark indices managed a green close on Monday as investors' sentiments remained buoyed by rupee appreciation, coupled with hopes of positive incentives in the upcoming Union Budget and broadly positive Asian indices. Some support also came 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. Furthermore, in a written response to the Parliament's Public Accounts Committee (PAC), the Revenue Department 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 utilised 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.  However, the upside remained capped by the report that foreign investors have pulled out over Rs 5,100 crore from the Indian capital market so far this month over concerns regarding 'lower prospects' of economic growth as compared to other emerging markets. The latest FPI outflow followed withdrawal of close to Rs 77,000 crore on net basis from equity and debts together in last three months (October-December). Meanwhile, describing the official data on the index of industrial production (IIP) for November 2016, during which demonetisation was announced, as a ‘false positive’, Crisil Research has said that the latest IIP figures do not reflect the true condition of the Indian manufacturing sector. Belying popular expectations, India's factory output, as measured by the IIP released earlier this month, has rose 5.7% in November, the first month of the government's demonetisation drive.

On the global front,  Asian markets ended mostly higher 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. Demand for safe haven assets rose while the U.S. dollar slumped after Bank of Japan Governor Haruhiko Kuroda said that the greenback could strengthen in the Trump presidency. Oil prices traded above the $53 per barrel mark along with gold, which continued its gaining streak. Meanwhile, European stocks dropped in early trade, as equity investors got their first chance to react to U.S. President Donald Trump’s inauguration speech, seen as taking a protectionist tone.

Back home, after getting a cautious start, the local benchmarks soon capitalized on the momentum and touched intraday highs in late morning session, but the indices failed to hold onto the highs and slipped into lower levels in noon trades post weak European market opening. Yet, final hour buying ensured that the key indices do not shut shops way below the intraday highs. Eventually, the NSE’s 50-share broadly followed index Nifty, convalesced by half a percent to settle below the crucial 8,400 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over eighty points and closed above the psychological 27,100 mark. On the BSE sectoral space, buying was evident across the board and investors piled up hefty positions in the high beta Metal counter, which rocketed by over two percent, while the PSU, Oil & Gas and FMCG  pockets too gained by about a percent each. However, Capital Goods index settled with moderate losses of over half a percent.

The market breadth remained in the favour of advances, as there were 1611 shares on the gaining side against 1103 shares on the losing side, while 201 shares remained unchanged.

Finally, the BSE Sensex gained 82.84 points or 0.31% to 27117.34, while the CNX Nifty was up by 42.15 points or 0.50% to 8,391.50. 

The BSE Sensex touched a high and a low of 27167.79 and 26963.58, respectively and there were 19 stocks on gainers side against 11 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index jumped 0.48%, while Small cap index was up by 0.47%.

The top gaining sectoral indices on the BSE were Metal up by 2.61%, PSU up by 1.26%, Oil & Gas up by 1.15%, FMCG up by 0.99% and Auto up by 0.69%, while Capital Goods down by 0.56% was the only losing index on BSE.

The top gainers on the Sensex were GAIL India up by 2.41%, HDFC up by 1.77%, Tata Motors up by 1.72%, Tata Steel up by 1.55% and Hero MotoCorp up by 1.55%. On the flip side, ICICI Bank down by 2.26%, Larsen & Toubro down by 1.49%, Axis Bank down by 1.20%, Sun Pharma Inds. down by 1.00% and Reliance Industries down by 0.95% were the top losers.

Meanwhile, BRICS nation's National Development Bank chief K V Kamath has expressed his confidence that India will continue to grow on the back of its consumption-driven economy. He also said that global economic uncertainty may not have much impact on India. However, he also cautioned against excessive populism and said that the country should do what is right and what is required and the first focus should be on driving economic growth, and then it can be ensured that fruits of it reach others to deliver inclusiveness of the growth story.

Talking about the demonitisation at the World Economic Forum Annual Meeting, Kamath has stated that the move would have only a short-term blip after which country should be back on a clear growth path. He also said ‘I would think that within the timeframe that the government announced the move, I can see most of the things coming back to normal already. Probably the government wants the rest of the things to be digital because if we can leapfrog to a digital world, a whole lot of ills of the past can be addressed’.

On inclusive growth and country being ranked very low, including in a WEF report, Kamath has said that the whole issue of inclusion needs to be looked at in a context that where should one start. He also said that at times, the people tend to say that instead of investing in roads and linkages, put the money somewhere else. The point is the roads and hard infrastructure gives the economic momentum and only from that economy momentum you will get the fruits of growth which reach many.

The CNX Nifty traded in a range of 8,404.15 and 8,327.20. There were 34 stocks in green against 16 stocks in red on the index, while one stock remained unchanged.

The top gainers on Nifty were Hindalco up by 6.06%, Zee Entertainment up by 3.61%, Idea Cellular up by 2.80%, Grasim Industries up by 2.41% and HCL Tech up by 2.38%. On the flip side, ICICI Bank down by 2.32%, Bharti Infratel down by 1.57%, Larsen & Toubro down by 1.54%, Axis Bank down by 1.28% and Sun Pharma down by 1.18% were the top losers.

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.