Equity benchmarks trade modestly in green

Indian equity benchmarks continued their trade in green in late morning session on account of buying in front line blue chip counters. The rupee opened higher against dollar on account of fresh bout of selling in American currency by banks and exporters. Investors remained on sidelines ahead of December IIP data due to be announced later in the day. Traders were taking some support with a US think tank report stating that India will be the world’s fastest growing economy during the next five years as China’s economy cools and growth elsewhere sputters, but internal tensions over inequality and religion will complicate its expansion. According to NIC, India probably has the greatest potential to boost global growth because of its size and the success of its technology sector, but it would have to improve its energy, transportation and manufacturing infrastructure to sustain high rates of growth. Some support also came with a private report highlighting that even with cash shortage hurting businesses in some sectors, the impact of demonetization on the credit profile of large corporates is neutral, with no major rating changes expected due to the note-ban move. The report noted that the immediate impact of note-ban on revenues of large firms in third quarter of 2016-17 ranges from nil for the export-oriented sectors like IT/ITeS, to a significant impact on auto, real estate, gems and jewellery, with a gradual recovery expected as cash availability improves in the fourth quarter (January-March). Traders were seen piling position in Consumer Durables, Bankex and IT stocks, while selling was witnessed in Oil & Gas, Metal and Auto sector stocks. In scrip specific development, Hotel Leela Venture was trading in red on reports that the Airports Authority of India (AAI) has started the eviction process against the company, which runs a five-star hotel on the plots of land leased to them near the Mumbai international airport. Besides, the national airports operator has started the proceedings to recover the dues. Tata Teleservices (Maharashtra) was trading in red on reporting its widening losses for the three months ended December 31, 2016 at Rs 414.74 crore against Rs 77.14 crore in the same period of the previous year.

On the global front, Asian shares were trading in green, as President Donald Trump told his Chinese counterpart Xi Jinping that the US would stick with the ‘One China’ policy, easing tension between the world’s two largest economies and China trade data eased growth concerns. Japan’s Nikkei share were trading in green following Wall Street’s lead after US President Donald Trump said he would make a major tax announcement in a few weeks. China reported better-than-expected trade data for January as demand picked up both at home and abroad, an encouraging start to 2017 for the world’s largest trading nation. January exports rose 7.9 percent from a year earlier as global demand perked up, while imports expanded 16.7 percent on improved domestic appetite for coal, crude oil and iron ore. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,750 and 28,300 levels respectively. The market breadth on BSE was positive in the ratio of 1317:971, while 148 scrips remained unchanged.

The BSE Sensex is currently trading at 28345.69, up by 15.99 points or 0.06% after trading in a range of 28319.47 and 28456.18. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.09%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.95%, Bankex up by 0.60%, IT up by 0.46%, Capital Goods up by 0.40% and TECK up by 0.31%, while Oil & Gas down by 0.60%, Metal down by 0.39%, Auto down by 0.34%, FMCG down by 0.24% and Realty down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 2.48%, SBI up by 1.52%, NTPC up by 0.98%, Axis Bank up by 0.86% and Tata Steel up by 0.84%.

On the flip side, Tata Motors down by 1.13%, ITC down by 0.90%, Lupin down by 0.78%, GAIL India down by 0.52% and Cipla down by 0.47% were the top losers.

Meanwhile, expressing concern over developed countries turning towards protectionism, Finance Minister Arun Jaitley has said that economies will become more inefficient and GDP will diminish if such trend were to impact trade and movement of goods and people. He also said that globally, the world is moving in an unpredictable and slow pace and a continued slowdown can pose big problems. He also noted that oil prices have increased marginally, threatening inflation and fiscal maths of importing countries like India.

Talking about demonetization, Jaitley said that the move has forced extraordinary large amount of cash, inherently anonymous, into the banking system which will not just increase ability of banks to lend at more reasonable rates, but also help in integration of informal economy into formal economy. He also emphasized that the move will eventually lead to larger transactions through banking system, more money into banking, more ability to lend at more reasonable rates and more taxes mean more reasonable rates of taxes.

The finance minister further said that post demonetisation; generating cash will be difficult, spending that cash will be difficult as transaction will be captured. He also said that the government wants to attract people to join the taxation base. Besides, Jaitley made it clear that India requires people to pay taxes. He also made the point that the nation needs to get rid of discretions and arbitrariness as such decisions in allocation of resources including coal and telecom spectrum had an impact on the country's image.

The CNX Nifty is currently trading at 8789.65, up by 11.25 points or 0.13% after trading in a range of 8781.35 and 8822.10. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 3.04%, Adani Ports & Special Economic Zone up by 2.38%, Tech Mahindra up by 2.31%, Bank of Baroda up by 1.87% and Kotak Mahindra Bank up by 1.77%.

On the flip side, Aurobindo Pharma down by 2.69%, Zee Entertainment down by 1.40%, Tata Motors - DVR down by 1.33%, BPCL down by 1.25% and Tata Motors down by 1.09% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 11.74 points or 0.57% to 2,077.62, FTSE Bursa Malaysia KLCI increased 11.78 points or 0.7% to 1,700.28, Shanghai Composite increased 13.9 points or 0.44% to 3,197.07, Jakarta Composite increased 20.69 points or 0.39% to 5,392.77, Taiwan Weighted increased 62.84 points or 0.66% to 9,653.02, Hang Seng increased 133.41 points or 0.57% to 23,658.55 and Nikkei 225 increased 445.8 points or 2.36% to 19,353.47.