Indian benchmarks manage to end higher; Sensex slams century

Indian benchmark indices carried forward their northbound journey for yet another session on Tuesday on sustained buying by funds and retail investors ahead of February series F&O expiry on Thursday. Sentiments got a boost with report that yearly SBI Composite Index (year-on-year) for February 2017 improving to 49.5 compared to last month’s index of 47.0, indicating some improvement in sentiments. The monthly Index though declined marginally to 49.2 in February 2017 from 50.9 in January 2017, which means IIP growth may continue to contract in January and February 2017. Some support also came with the report that the government hopes to overshoot the Rs 45,500 crore disinvestment target for the current fiscal amid strengthening of equity markets. However, gains remained capped with the rating agency ICRA’s  report indicating that the economy based on the gross value added (GVA) is set to slip to 6.2% in the December quarter from 6.9% a year ago and GDP growth will decline to 6.5% from 7.2%. The slippages will be driven by the slowdown in growth of the industry and services, offsetting the healthy agricultural expansion during the period. Furthermore, a private report indicated India's growth momentum witnessed a recovery in January but it is not broad-based and overall economic activity remains below pre-demonetization levels. The slowdown that started in the October-December quarter of 2016, post demonetization is spilling over into the first quarter of 2017 (January-March). Meanwhile, some steel stocks gained traction as the government has extended anti-dumping duty on import of certain steel products from China for five years with an aim to protect domestic players from the cheap shipments. The levy has been imposed in the range of $961.33 - 1,610.67. Furthermore, Telecom stocks slipped as Reliance Jio's free data offer has hit rivals, raising concerns about competition and margins in the sector. Jio has launched the new Jio Prime subscription plan that offers the same free data and other services, customers have received as part of the Happy New Year plan for another 12 months at Rs 303 per month.

On the global front, Asian equity markets ended mixed on Tuesday as investors looked ahead of key US Federal Reserve events, including minutes of the last policy meeting and speeches by five heads of Fed regional banks. Japanese stocks edged higher as the yen eased back against the dollar, although trading volumes were low as a holiday in the United States left investors short of the usual leads, while Chinese stocks rose as domestic funds piled into financial counters on expectations the world's second biggest economy may have turned a corner. Meanwhile, European markets edged up in early trade as poor results from HSBC weighed on sentiment in London, but positive euro zone data supported equities on the Old Continent. IHS Markit’s February PMI gauge of eurozone manufacturing activity came in at 56.0, compared with a 54.3 estimate from FactSet.

Back home, Indian markets got off to a soft start as the indices showed signs of consolidation in early trade, lacking any significant trigger at domestic front. However, the indices drifted into the negative zone in mid morning trades and slipped to intraday lows in early noon session.  Thereafter, the frontline indices slowly but steadily started gathering steam and surged by over quarter percent by the end of trade. Eventually, the NSE’s 50-share broadly followed index Nifty, got buttressed by over quarter percent to settle above the crucial 8,900 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated around hundred points and closed above the psychological 28,700 mark.  Moreover, the broader markets managed to outperform the larger peers as the BSE’s midcap and smallcap indices settled with moderate gains of around half a percent each. The market breadth remained optimistic, as there were 1551 shares on the gaining side against 1269 shares on the losing side, while 187 shares remained unchanged.

Finally, the BSE Sensex surged 100.01 points or 0.35% to 28761.59, while the CNX Nifty was up by 28.65 points or 0.32% to 8,907.85.

The BSE Sensex touched a high and a low of 28801.00 and 28597.33, respectively and there were 20 stocks on gainers side as against 10 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index surged 0.52%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.44%, Bankex up by 0.97%, Energy up by 0.88%, Oil & Gas up by 0.82% and PSU up by 0.67%, while Telecom down by 2.35%, TECK down by 0.51% and IT down by 0.17% were the only losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 4.99%, Asian Paints up by 1.61%, Reliance Industries up by 1.36%, HDFC up by 1.27% and Adani Ports & Special economic zone up by 1.18%. On the flip side, Bharti Airtel down by 3.38%, TCS down by 1.68%, ITC down by 0.94%, Sun Pharma down by 0.93% and Maruti Suzuki down by 0.48% were the top losers.

Meanwhile, in an attempt to verify large cash deposits made during the demonetisation period, the income tax (I-T) department is expected to launch the second phase of ‘Operation Clean Money’ next month to close in on unaccounted money making its way into banks but may ignore deposits below Rs 5 lakh on a standalone basis for the time being. The initiative will also try to link individuals with multiple accounts or PAN numbers who have deposited large sums of money.

Under Operation Clean Money initiative, government will appoint two data analytics firms in next 10 days. These firms will tally the post demonetisation deposit data with the Income Tax Returns (ITRs) and previous deposits to detect any anomaly and possible tax evasion. Deposits of above Rs 2 lakh totalling Rs 10 lakh crore were made post-demonetisation. Out of this, Rs 4.5 lakh crore is under verification and the remaining deposits were made by government agencies and departments like PSUs, or by such people whose deposits matched with the income and the pattern of deposits made earlier and so these are not under scrutiny.

At present, the I-T Department has begun analysing accounts which show a pattern of deposits or have some common linkage like common address, PAN, telephone number, email address or name and in the first phase of this initiative, the department sent SMS/emails to 18 lakh people who made suspicious deposits over Rs 5 lakh during the 50-day demonetisation period and over 7 lakh people replied in e-filing portal acknowledging that they have made such deposits.

The CNX Nifty traded in a range of 8,920.80 and 8,860.95. There were 31 stocks in green as against 20 stocks in red on the index.

The top gainers on Nifty were Axis Bank up by 5.34%, Aurobindo Pharma up by 2.24%, Tech Mahindra up by 1.67%, Asian Paints up by 1.58% and HDFC up by 1.41%. On the flip side, Bharti Infratel down by 4.26%, Bharti Airtel down by 3.86%, Tata Power down by 1.64%, TCS down by 1.63% and ITC down by 1.18% were the top losers.

European markets were trading mostly in green; France’s CAC increased 4.51 points or 0.09% to 4,869.50 and Germany’s DAX was up by 48.72 points or 0.41% to 11,876.34. On the flip side, UK’s FTSE 100 was down by 20.01 points or 0.27% to 7,279.85.

Asian equity markets ended mixed on Tuesday in the absence of cues from US stock markets, which were closed overnight for a holiday. While a weaker yen, higher oil prices and some progress on Greek bailout deal lent support, gains were capped by lingering concerns about the looming French election and uncertainties over US fiscal and monetary policies. Japanese shares ended higher as comments from a Federal Reserve official that a rate increase next month is not ‘off the table at this point’ bolstered the dollar. Also, preliminary data from IHS Markit showed Japan's manufacturing activity expanded at the quickest pace in nearly three years in February, with output, new orders, employment all increasing at faster rates in the month. Chinese shares ended higher, the highest level in nearly three months, in the wake of reports that the first wave of pension funds are ready to be released into China's capital markets.