Benchmarks trade firm near highest point of the day

Indian equity benchmarks continued their firm trade hovering near the highest point of the day in the late morning on the first day of February derivative series. The budget expectations are also getting reflected in the stock prices. There could be big-ticket announcements in the upcoming Union Budget on February 1, including incentives for employment generation in labour intensive sectors and a plan for setting up coastal employment zones that would directly link tax incentives to job creation etc. Traders took some support with President Pranab Mukherjee’s statement that demonetization may have led to temporary slowdown in economy but it will bring more transparency in the system. Meanwhile, a report indicated that India has marginally improved its ranking in the graft watchdog Transparency International’s corruption perception index for 2016. The Berlin-based anti-graft organization has used World Bank data, the World Economic Forum and other institutions to rank 176 countries by perceived levels of corruption in public sector. India, China and Brazil with a score of 40 each figured in the 10 key economies in the mid-range. India’s score has improved by two points from 38 in 2015. Traders were seen piling position in Oil & Gas, PSU and Capital Goods sector stocks. In scrip specific development, Wipro was trading under pressure on forecasting muted revenue growth for the fourth quarter as customer spending budgets remain under check, headwinds due to restructuring in its India and Middle East business, and uncertainties in the healthcare business in the US due to president Donald Trump’s decision to repeal the Affordable Care Act. Oberoi Realty was trading in red on reporting 60 percent decline in consolidated net profit to Rs 84.92 crore for the December quarter of the current fiscal on a sharp dip in sales against the backdrop of demonetization.

On the global front, Asian shares were mostly trading in red, with several markets shut. Japan reported national core CPI rose 0.2% year-on-year in December, below the expected 0.3% pace. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,650 and 27,900 levels respectively. The market breadth on BSE was positive in the ratio of 1487:730, while 149 scrips remained unchanged.

The BSE Sensex is currently trading at 27955.18, up by 247.04 points or 0.89% after trading in a range of 27759.48 and 27959.38. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.12%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.39%, PSU up by 1.38%, Capital Goods up by 1.28%, Bankex up by 1.27% and Consumer Durables up by 1.20%, while there were no losers.

The top gainers on the Sensex were Axis Bank up by 2.87%, ICICI Bank up by 2.48%, HDFC up by 2.12%, GAIL India up by 2.11% and Maruti Suzuki up by 2.03%.

On the flip side, Wipro down by 1.43%, Lupin down by 0.95%, Hero MotoCorp down by 0.60%, Cipla down by 0.53% and Hindustan Unilever down by 0.39% were the top losers.

Meanwhile, ratings agency, Care Ratings in its latest report has estimated that the country’s overall trade deficit may be in the range of $100-110 billion for the financial year 2016-17. The agency has said that, in the first nine months, trade deficit has improved sharply by almost 25 per cent as compared to last year. It also noted that during the period of April-December 2016-17, trade deficit stood at $76.37 billion as compared to $100.08 billion in the same period last year.

As per the Care Report, during the first 9 months of the fiscal 2016-17, the country’s exports were slightly in the positive terrain whereas imports continue to decline by around 7 per cent. It also said that for the year so far, FPI flows into equity has been positive at $2.5 billion as compared to the outflow of $2.7 billion last year same period and added that since October there have been outflows. In case of debt, report said that the picture was negative with overall outflows being $5.3 billion in these three quarters as compared to a net inflow of $2.1 billion last year. It also noted that outflows in the last three months were as high as $6.8 billion and the major withdrawals were from the government securities market which could be due to the capital gains made from a declining interest rate regime.

Talking about the FDI, Care Ratings said that FDI inflows has increased in the first half of the financial year 2016-17 by $5 billion to $21.3 billion as compared to $16.6 billion in the April-September period last fiscal. It also highlighted that FDI has been doing better than FPI flows in the last couple of years as the factors driving them are policy environment and opportunities and not linked with profit motivation unlike FPI. It also added that improving fiscal situation, inflation rate and exports growth augured well to improve sentiments for the investors.

The report further said that during the April-December period of the fiscal 2016-17, the rupee has witnessed varying trends in the last 9 months- it declined in May and June before strengthening in the next four months. It also said that the rupee declined in November and December which was also the time when the FCNR (B) outflows took place and the dollar simultaneously appreciated rapidly after Donald Trump was elected as President of USA.

The CNX Nifty is currently trading at 8668.50, up by 65.75 points or 0.76% after trading in a range of 8606.90 and 8669.20. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were BHEL up by 3.90%, Bank of Baroda up by 3.03%, Axis Bank up by 2.98%, Eicher Motors up by 2.45% and ICICI Bank up by 2.40%.

On the flip side, Bosch down by 1.39%, Wipro down by 1.38%, Kotak Mahindra Bank down by 1.02%, Lupin down by 0.97% and Cipla down by 0.82% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 13.39 points or 0.06% to 23,360.78, FTSE Bursa Malaysia KLCI decreased 5.86 points or 0.35% to 1,686.36 and Jakarta Composite decreased 5.17 points or 0.1% to 5,312.47.

On the other hand, Nikkei 225 increased 30.04 points or 0.15% to 19,432.43.

South Korean markets are closed for holidays on Friday and Monday. Chinese markets are shut for the Lunar New Year holiday and will resume trade on Friday, February 3. Taiwan is also closed for Lunar New Year and will reopen on Thursday, February 2.