Benchmarks extends gain for sixth consecutive session

Indian equity indices continued their northward journey for sixth consecutive day and ended the last trading session of the week with marginal gains. Sentiments got some support with International Monetary Fund (IMF) assessment report that the adoption of the GST could help raise India's medium-term GDP growth to over eight per cent and create a single national market for enhancing the efficiency of the movement of goods and services. Noting that India's tax revenue-to-GDP ratio (at around 17 and a half per cent) remains considerably below than its emerging market peers, the IMF said the implementation of a robust GST should be a key priority given its growth-enhancing effects. Adding optimism among inventors, RBI Governor Urjit Patel said faster remonetisation and return of discretionary consumer demand will push economic activity in the latter part the fiscal. Patel, during the two-day Monetary Policy Committee meeting on February 7-8, also said that shifting monetary policy stance from accommodative to neutral will provide sufficient flexibility to move the policy rate in either direction. However, upside remained capped with the SBI’s report that the growth estimate in the country’s economic output or gross domestic product (GDP) may be scaled down to less than 6% for the FY’17 as the impact of demonetisation hurt consumption and output. CSO is going to release Q3 F17 GDP estimate on February 28, 2017. The Q3 estimates will be very critical as they cover the two-month period of demonetisation and might give the glimpses of what happened in the economy during those two months. Furthermore, investors remained cautious with report that India’s corporate debt repayment rate is abysmally low- around, only 25.7 cents to a dollar loaned (or Rs 17 on Rs 67 lent) ever returns to the lender after years of protracted recovery proceedings. Indian banks are staring at a bad-debt accumulation of Rs 6.68 lakh crore. Moreover, the existing legal and reparation infrastructure - such as debt recovery tribunals (DRTs) and SARFAESI Act - is inadequate for handling the volume of recovery cases.

On the global front,  Asian markets made a mixed closing on Thursday, following their US counterparts after the Federal Open Market Committee released the minutes of its two-day meeting ended Feb. 1, where members believed it might be appropriate to lift U.S. interest-rates “fairly soon.”  Chinese stocks slipped, with realty and construction-related stocks leading declines, after reports emerged that China's financial regulators are working on new rules to rein in asset management risks. Meanwhile, European stocks ping-ponged between small gains and losses, as investors sifted through earnings reports and assessed the mixed tone on U.S. interest rates from the Federal Reserve.

Back home, after getting positive start, the key gauges capitalize on the momentum further and spurt to session’s highest levels in afternoon session. However, the optimism started showing signs of easing in late hours of trade and profit booking in few sectors and drifting European markets weighed down the local bourses by the end of session. Eventually, the NSE's 50-share broadly followed index Nifty, got buttressed by around two tens of a percent to settle below the crucial 8,950 support level, while Bombay Stock Exchange's Sensitive Index-Sensex accumulated around thirty points and closed below the psychological 28,900 mark. On the BSE sectoral space, the Telecom counter remained the top gainer in the space with around two percent gains followed by the IT pocket, which surged over one and half percent. On the flipside, Energy counter languished at the bottom of the table with large cuts of around a percent while the Power and Utilities sectors settled with cuts of over half a percent. The market breadth remained pessimistic, as there were 1232 shares on the gaining side against 1529 shares on the losing side, while 203 shares remained unchanged.

Finally, the BSE Sensex surged 28.26 points or 0.10% to 28892.97, while the CNX Nifty was up by 12.60 points or 0.14% to 8,939.50.

The BSE Sensex touched a high and a low of 29065.31 and 28860.46, 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 green; the BSE Mid cap index gained 0.19%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were Telecom up by 1.82%, IT up by 1.70%, TECK up by 1.65%, Realty up by 0.78% and Consumer Durables up by 0.47%, while Energy down by 0.80%, Power down by 0.68%, Utilities down by 0.65%, Oil & Gas down by 0.26% and PSU down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.99%, Wipro up by 2.53%, Infosys up by 1.73%, Bharti Airtel up by 1.36% and ITC up by 0.83%. On the flip side, Reliance Industries down by 2.07%, Asian Paints down by 1.10%, Power Grid down by 1.09%, Adani Ports & Special economic zone down by 0.87% and NTPC down by 0.78% were the top losers.

Meanwhile, the Cabinet Committee on Economic Affairs, headed by the Prime Minister Narendra Modi, has given approval for enhancement of solar power generation capacity from 20,000 MW to 40,000 MW under the scheme for development of Solar Parks and Ultra Mega Solar Power Projects (UMSPP). The scheme which will lead to setting up of 50 solar parks each with a capacity of at least 500 MW and above in various parts of the country. The capacity of the solar park scheme has been enhanced after considering the demand for additional solar parks from the States. 

The Solar Parks and UMSPPs will be set up by 2019-20 with Central Government financial support of Rs 8100 crore. The total capacity when operational will generate 64 billion units of electricity per year which will lead to abatement of around 55 million tonnes of CO2 per year over its life cycle. Further, smaller parks in Himalayan and other hilly States where contiguous land may be difficult to acquire in view of the difficult terrain, will also be considered under the scheme.

Meanwhile, the solar parks will contribute to long term energy security of the country and promote ecologically sustainable growth by reduction in carbon emissions and carbon footprint, as well as generate large direct & indirect employment opportunities in solar and allied industries like glass, metals, heavy industrial equipment etc. It will also provide productive use of abundant uncultivable lands which in turn facilitate development of the surrounding areas.

The CNX Nifty traded in a range of 8,982.15 and 8,927.55. There were 23 stocks in green as against 28 stocks in red on the index.

The top gainers on Nifty were Idea Cellular up by 6.39%, TCS up by 2.80%, Wipro up by 2.42%, Kotak Mahindra Bank up by 1.72% and Infosys up by 1.66%. On the flip side, Grasim Industries down by 2.24%, Reliance Industries down by 1.71%, Aurobindo Pharma down by 1.58%, Bharti Infratel down by 1.26% and Eicher Motors down by 1.25% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 2.11 points or 0.03% to 7,304.36, Germany’s DAX increased 7.43 points or 0.06% to 12,006.02 and France’s CAC increased 11.63 points or 0.24% to 4,907.51.

Asian markets made a mixed closing on Thursday, following their US counterparts after the Federal Open Market Committee released the minutes of its two-day meeting ended Feb. 1, where members believed it might be appropriate to lift U.S. interest-rates “fairly soon.” The Korean benchmark Kospi index ended flat as the country’s central bank kept interest rates unchanged, as expected for an eighth straight month, awaiting clarity on global policy changes. The Japanese market ended in red as the yen was higher against dollar, pressuring exporters’ bottom lines by making it more expensive for them to ship their goods around the globe. Chinese stocks too fell, with realty and construction-related stocks leading declines, after reports emerged that China's financial regulators are working on new rules to rein in asset management risks.