Markets surge for the second straight day; Nifty ends above 8400 mark

Indian equity indices sustained their uptrend for the second day of F&O expiry week, as sentiment stayed positive on optimism ahead on Union Budget 2017 to be unveiled next week. 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. Investors are hoping for a budget that delivers some incentives to support an economy, which has been hit by India's shock move to ban higher-value banknotes. Further, 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. 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. Besides, positive trade in Asian markets coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Indian rupee strengthened by 7 paise to 68.14 against the dollar on Tuesday on increased selling of the US currency by exporters and banks. 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.

On the global front, Asian markets ended mostly higher 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. 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 signaling his intention to renegotiate NAFTA 'at the appropriate time. Further, 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.  However, Japanese market ended lower, hit by a firmer yen following better-than-expected Japanese manufacturing PMI print for January.

Back home, the benchmark got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. Thereafter, the frontline indices slowly but steadily started gathering steam and surged by around half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Eventually, the NSE’s 50-share broadly followed index Nifty, convalesced by a percent to settle above the crucial 8,450 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over two fifty points and closed above the psychological 27,350 mark. On the BSE sectoral space, Metal counter remained the top gainer in the space with over one and half a percent gains followed by the high beta- Auto index, which ended with similar gains. However, IT stocks remained under pressure amid worries U.S. President Donald Trump's protectionist stance would adversely impact global exporters. Among individual stocks, Gujarat State Fertilizers declined after the company reported 40.99% fall in its net profit at Rs 61.17 crore for the quarter ended December 31, 2016, as compared to Rs 103.66 crore for the same quarter in the previous year. On the other hand, TVS Motors surged over 5% after the company reported 10.37% rise in its net profit at Rs 132.67 crore in Q3FY17, as compared to Rs 120.21 crore for the same quarter in the previous year.

The market breadth remained in the favour of advances, as there were 1613 shares on the gaining side against 1121 shares on the losing side, while 204 shares remained unchanged.

Finally, the BSE Sensex gained 258.24 points or 0.95% to 27375.58, while the CNX Nifty was up by 84.30 points or 1% to 8,475.80. 

The BSE Sensex touched a high and a low of 27393.35 and 27140.85, respectively and there were 26 stocks on gainers side against 4 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index jumped 0.96%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were Metal up by 1.69%, Auto up by 1.67%, Power up by 1.43%, Oil & Gas up by 1.31% and Capital Goods up by 1.26%, while IT down by 0.18% and TECK down by 0.09% were the only losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 3.42%, Mahindra & Mahindra up by 2.68%, Adani Ports & Special economic zone up by 2.41%, Coal India up by 1.96% and Larsen & Toubro up by 1.88%. On the flip side, Bharti Airtel down by 1.00%, Infosys down by 0.70%, Hindustan Unilever down by 0.27% and ICICI Bank down by 0.14% were the top losers.

Meanwhile, India has rejected an informal proposal made by the European Union (EU) and Canada for a multilateral investment agreement with a provision for an investor-to-state dispute settlement (ISDS) at the World Trade Organization (WTO). The proposal was discussed at an informal meeting of key WTO members, including India, China, Brazil, Japan and Australia.

Commerce & Industry Minister Nirmala Sitharaman has said that they have rejected the informal proposal completely as they want anything to do with investments to be a bilateral thing. And they don’t believe in making investments a subject of multilateral disputes. Sitharaman added that they will have investment treaty in which companies can take the sovereign or even the regional governments to court. She also said that anything with regard to investments, they wanted to be settled by the domestic laws and courts first and only after that, an aggrieved party should appeal outside.

Sitharaman has said that other WTO member countries, including Argentina and Brazil, too did not support the move. So at this stage, to have this template for a multi-lateral approach to investment may be immature. However, the she added that India put its view informally as this was an informal discussion of WTO member countries.

On WTO issues, the minister has said that in December the countries discussed the forthcoming ministerial conference in Argentina. She also said that they reinforce that the Bali and Nairobi issues to be fulfilled and added that WTO DG Roberto Azevedo admitted that although Nairobi meeting was successful, the process was not right. She said that India wants resolution on providing safeguards to poor farmers and permanent solution for public stock holding purposes.

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 Ultratech Cement up by 3.46%, Bajaj Auto up by 3.46%, Idea Cellular up by 3.07%, Tata Power up by 3.03% and Adani Ports and Special Economic Zone up by 3.02%. On the flip side, HCL Tech down by 1.41%, Yes Bank down by 1.38%, Bharti Airtel down by 1.08%, Infosys down by 0.70% and Zee Entertainment down by 0.45% were the top losers.

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.