Post Session: Quick Review

Wednesday's session turned out to be a fabulous day of trade for Indian equity benchmarks, gaining near 2% with frontline gauges surpassing their crucial 28,000 (Sensex) and 8,700 (Nifty) levels, as Union finance minister Arun Jaitley’s budget speech lifted overall market sentiments. The broader indices rallied as the government left the Long-term tax rate (LTCG) and Short-term Tax rate (STCG) unchanged and stayed on path of fiscal prudence. The markets made a cautious start and traded in red in early deals as investors were reluctant to build positions ahead of the Union budget. The FM started the budget by giving an outlook for the economy saying India’s macros have stabilized, governance has improved, corruption has been eliminated, while the poor are being given due focus. The FM added that the world economy faces a challenging time, protectionism is building up and growth is slowing down and amid this, India stands out as a shining spot. Jaitley said that sluggish growth has replaced with high growth and demonetization will lead to a higher GDP. He added that India's Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in first half of 2016-17. He also reiterated three big challenges for the current year oil prices, Fed policy, global protectionism. The minister also enlightened that promotion of digital economy will clean up the system, weed out corruption and black money and the government will soon launch an Aadhaar-based payment system to promote digital transactions for people living in hinterlands. Some support also came with report following growth in eight core sectors - coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity, which comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), expanded at a faster pace of 5.6% in December 2016, against the 4.9% growth recorded in November 2016, supported by double-digit expansion in the steel sector. Manufacturing activity in India rose more-than-expected in the last quarter. The HSBC Markit Manufacturing PMI rose to a seasonally adjusted annual rate of 50.4, from 49.6 in the preceding quarter.

On the global front, Asian markets ended mostly in green, taking cues from Chinese manufacturing data and as investors awaited the latest views from the Federal Reserve on monetary policy in its first review of the year. China’s official manufacturing Purchasing Managers' Index (PMI) continued in expansion in January, as the mainland economy shows signs of stabilizing, reaching 51.3, down slightly from 51.4 in December. European stocks were higher helped by positive earnings reports and as investors awaited the Federal Reserve’s policy decision due later in the day.

The BSE Sensex ended at 28127.63, up by 471.67 points or 1.71% after trading in a range of 27590.10 and 28159.54. There were 20 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.66%, while Small cap index was up by 1.66%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 4.77%, Auto up by 3.45%, FMCG up by 2.83%, Bankex up by 2.78% and Capital Goods up by 2.11%, while IT down by 1.19% and TECK down by 0.87% were the only losers on BSE sectoral front. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 5.01%, ITC up by 4.51%, ICICI Bank up by 4.37%, SBI up by 4.27% and Mahindra & Mahindra up by 4.22%. (Provisional)

On the flip side, TCS down by 2.60%, Infosys down by 1.43%, Sun Pharma down by 1.03%, NTPC down by 0.96% and ONGC down by 0.89% were the top losers. (Provisional)

Meanwhile, the Economic Survey 2016-17 released on January 31, has recommended an Universal Basic Income (UBI) concept as an alternative to the various social welfare schemes to eliminate poverty. The survey stated that the UBI is a powerful idea and now there is need of serious discussion on it even though time is not ripe for its implementation.

The survey further stated that the concept of UBI reduces poverty to 0.5 per cent and would cost 4-5 per cent of GDP, based on an assumption that those in the top 25 percent income bracket do not participate. Further it noted that the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 per cent of GDP.

The survey has said that the UBI, based on the principles of universality, unconditionality and agency, is a conceptually appealing idea, though it also pointed that a number of implementation challenges lie ahead of it. Further, based on a survey on misallocation of resources for the six largest central sector and centrally sponsored sub-schemes (except PDS and fertilizer subsidy) across districts, the economic survey has said that the districts with most requirements are precisely the ones where state capacity is the weakest and this suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI.

The CNX Nifty ended at 8715.50, up by 154.20 points or 1.80% after trading in a range of 8537.50 and 8722.40. There were 36 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Maruti Suzuki up by 5.10%, Bosch up by 5.06%, Bank of Baroda up by 4.87%, Eicher Motors up by 4.85% and ICICI Bank up by 4.61%. (Provisional)

On the flip side, TCS down by 2.91%, Aurobindo Pharma down by 2.34%, Idea Cellular down by 2.18%, Infosys down by 1.32% and ONGC down by 1.14% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 65.94 points or 0.93% to 7,165.09, Germany’s DAX increased 107.37 points or 0.93% to 11,642.68 and France’s CAC increased 50.76 points or 1.07% to 4,799.66.

Asian equity markets ended mostly higher on Wednesday, with Japanese shares rising after the yen stopped its ascent following Abe's remarks and the latest survey from Nikkei showing Japan's manufacturing sector picked up steam in January, with a PMI score of 52.7, up from 52.4 in December. Japan’s Prime Minister Shinzo Abe told parliament that the central bank's ultra-loose monetary policy was not aimed at devaluing the yen. Further, Chinese manufacturing as well as services sector data suggested that China's recent recovery remains largely intact at the start of the New Year. China's official manufacturing Purchasing Managers Index (PMI) for January came in at 51.3, higher than a forecast of 51.2, while the services sector PMI edged up to 54.6 from 54.5 in December. Though, comments from the Trump administration that the US will combat currency manipulation to support American companies coupled with caution ahead of the US Federal Reserve's latest monetary policy decision due later in the day limited overall gains across the region to some extent. Markets in China, Malaysia and Taiwan were closed for public holidays.