Benchmarks continue firm trade in noon session

Indian equity benchmarks are trading on a strong note on the second day of F&O contract expiry week, as investors and domestic institutions widened their bets amid mixed global cues. Further, the benchmark indices continue to trade above important psychological 8,400 and 27,200 levels and are holding on to half a percent gain in noon session. Sentiments remained optimistic with the report that the government is likely to set fiscal deficit target in the range of 3.3-3.4 percent of GDP for the financial year 2017-18 in the upcoming Budget or will target a fiscal deficit of 3.5 percent of GDP -- same as that of 2016-17. Furthermore, a high-level committee the government had set up to review fiscal responsibility rules has recommended a framework to allow greater fiscal space for the government to spend more on development. Some support also came from SBI’s research report Ecowrap, which has said that the Government is likely to make sweeping recast of direct taxes in the ensuing Budget to give a boost to the economy following demonetization. Meanwhile, the Supreme Court paved the way for presentation of the Union Budget on February 1 as it dismissed a plea seeking its postponement in view of Assembly elections in five states.

On the global front, Asian markets were trading mostly higher on Tuesday, though the undertone remained cautious tailing the slight weakness in US markets overnight after the speech of new U.S. President Donald Trump renewing concerns about protectionist policies. The US President Trump promised a “very major” border tax and signed an executive order formally withdrawing the United States from the Trans-Pacific Partnership free-trade deal, and signalling his intention to renegotiate NAFTA 'at the appropriate time. Financial stocks in Japan also fell as investors flocked to buy sovereign bonds to counter volatility, sending prices of such instruments higher with yields trending lower. Further, Oil prices lagged as signs of a strong recovery in U.S. drilling largely overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals.

Back home, stocks from Power, Capital Goods and PSU counters were supporting the markets’ uptrend, while those from IT, Teck and FMCG counters were adding to the underlying cautious undertone. In scrip specific development, Karnataka Bank declined after the bank reported 29.30% fall in its net profit at Rs 68.52 crore for third quarter ended December 31, 2016 as compared to Rs 96.91 crore for the same quarter in the previous year. On the other hand, Chennai Petroleum Corporation surged after the company reported 16-fold jump its net profit at Rs 291.09 crore for the quarter ended December 31, 2016, as compared to Rs 18.33 crore for the same quarter in the previous year.

The market breadth remained optimistic, as there were 1440 shares on the gaining side against 857 shares on the losing side, while 154 shares remained unchanged.
The BSE Sensex is currently trading at 27229.61, up by 112.27 points or 0.41% after trading in a range of 27140.85 and 27268.74. 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 0.52%, while Small cap index up by 0.51%.

The top gaining sectoral indices on the BSE were Power up by 1.13%, Capital Goods up by 1.00%, PSU up by 0.89%, Auto up by 0.75% and Oil & Gas up by 0.74%, while IT down by 0.52%, TECK down by 0.43% and FMCG down by 0.09% were the few losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.93%, NTPC up by 1.88%, Adani Ports &Special up by 1.54%, Larsen & Toubro up by 1.50% and Power Grid up by 1.37%. On the flip side, Hindustan Unilever down by 1.44%, Bharti Airtel down by 1.22%, Infosys down by 0.92%, Wipro down by 0.58% and Tata Steel down by 0.47% were the top losers.

Meanwhile,  the global credit rating agency, Fitch in its latest report ‘2017 Outlook: Asia-Pacific Corporates’ has said that residential property sales in India are expected to witness at least 20-30 per cent dip in 2017 due to demonetisation impact, as one goal of demonetisation is to curtail undeclared wealth, which will take its toll on home demand. Agency has revised the outlook for Indian housing sector in 2017 to negative from stable. For china, Fitch expects housing sales to decline 15 per cent in 2017.

In its report, Fitch expects residential property sales of most Indian homebuilders to weaken by at least 20-30 per cent this year. It’s not only for India but the agency has kept a negative outlook to almost one-third of Asia-Pacific (APAC) corporate sectors for 2017. It said that growth across Asia remains high by global standards, but has slowed in recent years, particularly in China. Furthermore, external factors, such as the strong US dollar, weak global trade, and political uncertainty in the US and Europe, are presenting challenges.

The rating agency has termed unfavourable policy changes, overcapacity and rising competition among other difficulties posing challenges the countries in APAC. Citing example of steel sector, the report said that Indian government eased import pressure on Indian steelmakers by imposing minimum import prices last year, but capacity utilisation remains low and rising production costs are adding to strains. Further agency has noted that new entrants into telecoms markets in India, Malaysia, and Singapore will put added pressure on incumbents which are already grappling with rising capex needs.

The CNX Nifty is currently trading at 8429.70, up by 38.20 points or 0.46% after trading in a range of 8398.15 and 8442.15. There were 40 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 2.93%, Tata Power up by 2.26%, BHEL up by 2.14%, NTPC up by 2.12% and Coal India up by 1.99%. On the flip side, Hindustan Unilever down by 1.38%, HCL Tech down by 1.34%, Bharti Airtel down by 1.28%, Infosys down by 1.07% and Wipro down by 0.57% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite rose 0.21%, FTSE Bursa Malaysia KLCI increased 0.39%, Taiwan Weighted gained 0.25%, Jakarta Composite jumped 0.56% and Hang Seng was up by 0.18%. On the flip side, Nikkei 225 decreased 0.21% and KOSPI Index was down by 0.17%.