Markets pare some gains but continue to trade in fine fettle

Indian equity benchmarks pared some gains but continued to trade in fine fettle in late afternoon session amid weak opening in European counterparts. Sentiments remained optimistic with Reserve Bank of India governor Urjit Patel’s statement that the demonetisation drive has achieved its objectives and has also led to several collateral benefits. He further said that India was at a ‘good place’ in terms of financial stability and the central bank will manage any sharp volatility in the markets arising out of global developments including concerns over U.S. President Donald Trump's protectionist policies. Some support also came with Minister of State for Finance Arjun Ram Meghwal’s statement that demonetisation of old high value currency and government’s digital push will boost country’s gross domestic product (GDP) and also help to prevent tax evasion.

On global front, European markets were trading in red, as investors eyed economic data and more earnings reports. Investors also remained cautious with the ECB policy meeting minutes published on Thursday, which showed that the central bank is in no rush to alter its current ultra-dovish monetary policy stance until the end of the year. Asian markets were trading in red as the yen strengthened, oil prices wavered between gains and losses on signs of rising U.S. crude output. Back home, in scrip specific development, Virinchi was trading in green after the company signed up a multi-year contract for its flagship product ‘Qfund on Cloud’ with one of the leading lenders of alternative financing industry in USA. The company’s Cloud solution will replace the entire present IT Infrastructure of the lender.

The BSE Sensex is currently trading at 28487.50, up by 186.23 points or 0.66% after trading in a range of 28410.91 and 28726.26. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.60%, while Small cap index was  up by 0.46%.

The gaining sectoral indices on the BSE were Bankex up by 1.24%, Oil & Gas up by 1.16%, Capital Goods up by 0.45%, FMCG up by 0.41% and Power up by 0.40%, while TECK down by 0.69%, IT down by 0.66% and Metal down by 0.40% were the losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 3.63%, Sun Pharma up by 2.83%, Cipla up by 1.82%, Lupin up by 1.40% and Tata Motors up by 1.26%. On the flip side, TCS down by 1.34%, Hero MotoCorp down by 0.73%, Coal India down by 0.63%, Bharti Airtel down by 0.61% and Infosys down by 0.61% were the top losers.

Meanwhile, supporting the government’s demonetization move, Minister of State for Finance Arjun Ram Meghwal has said that demonetisation of old high value currency and government’s digital push will boost country’s gross domestic product (GDP) and also help to prevent tax evasion.

Further, noting that about 23.2 per cent of the economic activity is shadow economy, Meghwal said that these steps would address the shadow economy and will widen the tax bracket. He added that the demonetisation was in accordance with the general will of the citizens of India towards a corruption free society.

Expressing his concern over the country’s cash to GDP ratio, which is high in comparison to developed countries, as in advance countries, the cash to GDP ratio is in range of 4, while in India it is estimated at 12. He said that the demonetisation and digitisation of payments will also help to narrow this gap.

The CNX Nifty is currently trading at 8823.00, up by 45.00 points or 0.51% after trading in a range of 8804.25 and 8896.45. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were HDFC Bank up by 3.42%, Sun Pharma up by 2.93%, Tata Power up by 1.92%, Cipla up by 1.75% and BPCL up by 1.70%. On the flip side, Bharti Infratel down by 3.19%, Idea Cellular down by 2.27%, Hindalco down by 1.70%, Eicher Motors down by 1.43% and TCS down by 1.37% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 112.91 points or 0.58% to 19,234.62, Hang Seng decreased 73.96 points or 0.31% to 24,033.74, Jakarta Composite decreased 30.85 points or 0.57% to 5,347.15, Shanghai Composite decreased 27.54 points or 0.85% to 3,202.08, Taiwan Weighted decreased 11.49 points or 0.12% to 9,759.76 and KOSPI Index decreased 1.26 points or 0.06% to 2,080.58. On the flip side, FTSE Bursa Malaysia KLCI increased 2.47 points or 0.14% to 1,710.06.

All European markets were trading in red; UK’s FTSE 100 decreased 6.17 points or 0.08% to 7,271.75, France’s CAC decreased 5.23 points or 0.11% to 4,894.23 and Germany’s DAX decreased 0.62 points or 0.01% to 11,756.62.