Indian benchmarks settle with tepid gains; Nifty ends above 8800 mark

Indian benchmark indices ended the range bound day of trade on a flat note with positive bias as investors remained on the sidelines and refrained from any buying activity ahead of the key consumer price inflation (CPI) data due later in the evening. The CPI-based inflation is likely to come down in January to the lowest in the new series due to subdued demand post-demonetization and base effect before spiking up again in the next two months. Sentiments got some support with a report that the government’s revenue collection during April-January, 2016-17 has shown healthy growth, indirect tax collection jumped 23.9 percent to Rs 7.03 lakh crore on the back of robust central excise mop-up, while direct tax collection rose by 10.79 percent to Rs 5.82 lakh crore. The total direct and indirect tax collections at the end of January stood at Rs 12.85 lakh crore, more than half the Rs 16.26 lakh crore target for 2016-17. Some support also came in from reports that after four months of intense selling, overseas investors turned net buyers in February and have so far pumped in over Rs 5,800 crore in the capital market. The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (October-January). However, gains remained capped with the report that Industrial production contracted in December 2016 due to a sharp decline in production of consumer goods, confirming a demonetisation led contraction in demand. Index of Industrial Production (IIP) was 0.4% lower in December 2016 from the same period a year ago. The number was well below the 5.7% growth in November and consensus expectation of around 1% growth in December. Adding anxiety among investors, the Nomura’s report indicated that India's economic growth is likely to remain muted in the first quarter of this calendar year with the GDP likely to grow at 5.7 per cent in the January-March period amid subdued activity.

On the global front, Asian markets ended higher on Monday amid renewed optimism over U.S. President Donald Trump's corporate tax reform plans as well as higher crude oil prices. Japanese market edged higher, after the country reported a preliminary GDP growth of 1% for the December quarter. News about a smooth meeting between Donald Trump and Japanese Prime Minister Shinzo Abe during the weekend also lifted investors’ sentiments, though market participants brushed aside news about a ballistic missile launch by North Korea on Sunday. Chinese market rose for the fourth straight session, as a rally in metals prices lifted material stocks. Reports that Trump spoke by phone with Chinese President Xi Jinping and agreed to honor the 'One China' policy also eased concerns about tensions between the two countries. Meanwhile, European shares rose for a fifth consecutive session, with mining stocks touching their highest in 2-1/2-years on stronger copper prices.

Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. However, the indices dropped into the red terrain sooner than later, lacking any significant upside cues. The indices moved only sideways thereafter but touched intraday lows in the noon session. However, the frontline gauges managed to pare the losses and bounced into the positive terrain by the end of trade. Finally, the NSE’s 50-share broadly followed index Nifty, added modest gains of 11 points to settle above the crucial 8,800 support level, while Bombay Stock Exchange’s Sensitive Index or Sensex gained around seventeen points and ended above the psychological 28,350 mark. However, the broader markets succumbed to the selling pressure and went home with cuts of around half a percent. On the BSE sectoral space, the IT counter remained the top gainer in the space with around a percent gains followed by the Technology pocket, which surged over half percent. On the flipside, Realty counter languished at the bottom of the table with cuts of over a percent, while Consumer Durables, PSU and Capital Goodssectors settled with moderate cuts of over half a percent. The market breadth remained pessimistic, as there were 1081 shares on the gaining side against 1787 shares on the losing side, while 183 shares remained unchanged.

Finally, the BSE Sensex gained 17.37 points or 0.06% to 28351.62, while the CNX Nifty was up by 11.50 points or 0.13% to 8,805.05. 

The BSE Sensex touched a high and a low of 28458.80 and 28197.38, respectively and there were 15 stocks on gainers side as against 15 stocks on the losers side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.37%, while Small cap index was down by 0.57%.

The top gaining sectoral indices on the BSE were IT up by 0.86%, TECK up by 0.67%, Power up by 0.37%, Metal up by 0.31% and Bankex up by 0.14%, while Realty down by 1.13%, Consumer Durables down by 1.03%, PSU down by 0.92%, Capital Goods down by 0.51% and FMCG down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.80%, Power Grid up by 1.60%, Infosys up by 1.60%, Hindustan Unilever up by 1.31% and Wipro up by 1.21%. On the flip side, SBI down by 1.76%, Maruti Suzuki down by 1.44%, Coal India down by 1.23%, Hero MotoCorp down by 1.23% and Lupin down by 1.17% were the top losers.

Meanwhile, after announcing  introduction of electoral bonds in his Budget speech to ensure greater transparency in political funding, Finance Minister Arun Jaitley has said that government will introduce framework on electoral bonds scheme after detailed discussions with the Reserve Bank of India (RBI) and other stakeholder and minor details about scheme will also come out after discussion. Finance Minister further said that Issuance of electoral bonds would ensure that only legitimate, tax paid, accounted money comes into the political system.

After proposing amendment to the RBI Act in Union Budget 2017-18 to enable issuance of electoral bonds, the government will also amend the Representation of People Act to ensure secrecy of the electoral bond buyers and guidelines for the same will come out by March. Jaitley said that the government will discuss with RBI to finalise the issues such as the duration of the Electoral Bonds, and the bank branches that will be involved for the scheme.

Electoral Bond is a financial instrument for making donations to political parties which will resemble a promissory note and not an interest-paying debt instrument, will be sold by authorised banks and can be deposited in notified accounts of political parties within the duration of their validity. So, every political party recognised by the Election Commission will have to notify one account in advance to the Election Commission and bonds can be encashed and redeemed in that one account.

The CNX Nifty traded in a range of 8,826.90 and 8,754.20. There were 25 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were Eicher Motors up by 3.28%, Yes Bank up by 3.12%, Tata Power up by 2.14%, Kotak Mahindra Bank up by 1.68% and M&M up by 1.67%. On the flip side, Bank of Baroda down by 10.56%, Idea Cellular down by 2.99%, Aurobindo Pharma down by 2.74%, BHEL down by 1.99% and SBI down by 1.76% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 5.21 points or 0.07% to 7,263.96, Germany’s DAX increased 72.72 points or 0.62% to 11,739.69 and France’s CAC increased 29.98 points or 0.62% to 4,858.30.

The Asian markets maintained their momentum through the day and ended all in green on Monday, with some indices registering gains of over half a percent. Chinese market rose for the fourth straight session, as a rally in metals prices lifted material stocks. Seoul shares too edged higher in cautious trade on reports that South Korean prosecutors plan to question Lee Jae-yong, Samsung Group's de facto leader again over bribery allegations this week. The yen weakened Monday after the S&P 500 Index climbed to a record high on Friday lifting the stocks higher. Japanese stocks also gained after Shinzo Abe and US President Donald Trump refrained from arguing about currency levels during the Japanese prime minister’s two-day US visit. Meanwhile, data showed Japan’s economy continued on a moderate growth path during the final quarter of 2016, driven by rising exports and business investment.