Post Session: Quick Review

Indian equity benchmarks traded on a firm note and closed in green for second consecutive day ahead of expiry of January Futures & Options contracts. The broad based buying helped the benchmark indices -- Sensex and Nifty to close with gain of around one percent led by Metal, Auto and Power sector stocks. The sentiments got a boost with the annual budget to be unveiled next week. 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. The markets traded in green in early deals taking support from SBI’s research report ‘Ecowrap’, which 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. 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. 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, even as US President Donald Trump formally withdrew from the Trans-Pacific Partnership (TPP) trade deal. The move was not a surprise as it was one of the promises made by Trump during his campaign. Japan stocks closed lower, as losses in the Transportation Equipment, Manufacturing and Insurance sectors led shares lower. European markets were trading higher, as investors wait for fresh economic data and earnings reports.

The BSE Sensex ended at 27384.55, up by 267.21 points or 0.99% after trading in a range of 27140.85 and 27393.35. There were 25 stocks advancing against 5 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.05%, while Small cap index was up by 0.94%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.70%, Auto up by 1.69%, Power up by 1.33%, Consumer Durables up by 1.32% and Oil & Gas up by 1.29%, while IT down by 0.15% and TECK down by 0.06% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 3.68%, Adani Ports & Special Economic Zone up by 2.95%, Mahindra & Mahindra up by 2.76%, HDFC Bank up by 2.03% and Coal India up by 1.93%. (Provisional)

On the flip side, Bharti Airtel down by 1.22%, Infosys down by 0.64%, Hindustan Unilever down by 0.21%, Wipro down by 0.10% and ICICI Bank down by 0.02% were the top losers. (Provisional)

Meanwhile, the credit rating agency, CARE in its latest report has said that the union budget which will be presented on February 1, 2017 is expected to come up with some major changes to the tax framework for individuals and corporates following the demonetisation measure. The agency added that upcoming budget would be addressing issues with respect to additional revenue garnered on account of the income disclosure scheme as part of the demonetisation drive and expenditure allocations based on the assessment of the economy as there appears to be a slowdown in growth post demonetisation.

In its report, CARE expects that corporate tax will be reduced besides, the tax exemption slab for individuals could be raised from Rs 2.5 lakh to Rs 3 lakh and indirect tax structure will be largely on lines with the agreed principles of GST (Goods and Services Tax), which looks likely to be implemented from July 1, 2017. Moreover, report estimates that the government might levy tax between 12 per cent and 18 per cent on services, depending on its classification based on essential and non-essential services as a move towards the final GST rate.

On capital gains, the report has said that the tax rate for short-term capital gains could be increased to 17.5 per cent from 15 per cent after Prime Minister Narendra Modi’s recent statement with respect to gains from financial markets to be used for nation building. The report noted that Long term capital gains on equity are also on the cards to be bought on par with debt with a three year lock in period.

The CNX Nifty ended at 8476.75, up by 85.25 points or 1.02% after trading in a range of 8398.15 and 8480.95. There were 44 stocks advancing against 7 stocks declining on the index. (Provisional)

The top gainers on Nifty were Ultratech Cement up by 3.46%, Bajaj Auto up by 3.46%, Tata Power up by 3.03%, Adani Ports & Special Economic Zone up by 3.02% and Idea Cellular up by 3.00%. (Provisional)

On the flip side, HCL Technologies down by 1.41%, Yes Bank down by 1.38%, Bharti Airtel down by 1.14%, Infosys down by 0.60% and Zee Entertainment down by 0.45% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 19.08 points or 0.27% to 7,170.26, Germany’s DAX increased 18.94 points or 0.16% to 11,564.69 and France’s CAC increased 6.04 points or 0.13% to 4,827.45.

Asian equity markets ended mostly in green on Tuesday as higher commodity prices on a weaker dollar helped investors shrug off renewed concerns about protectionist policies under new US President Donald Trump. Though, the US dollar remained under selling pressure in Asian trading on mounting uncertainty over future US fiscal policy, as Trump vowed to impose a major border tax on companies that move overseas while abandoning the Trans-Pacific Partnership free-trade deal and announcing plans to renegotiate the terms of NAFTA at the appropriate time. Statements from the US Treasury Secretary-designate on currency strength also raised some suspicion that the Trump administration's protectionist stance will include seeking a weaker currency. Chinese shares ended higher, but pared some of the earlier gains as investors were reluctant to stake out fresh positions ahead of the country's biggest holiday starting this week. Sentiment was also affected by renewed debt worries after Beijing reported a significantly larger fiscal deficit in 2016. Meanwhile, Japanese shares ended lower, hit by a firmer yen following better-than-expected Japanese manufacturing PMI print for January.