Benchmarks continue firm trade; Nifty holds 8950 mark

Indian equity benchmarks continued their firm trade in late morning session on account of buying in frontline blue chip counters ahead of F&O expiry. The market mood remained buoyant, bolstered by retail as well as domestic institutional investors’ buying coupled with covering-up of short positions by speculators. The rupee opened higher against dollar on account of buying of American currency by banks and importers. Traders took 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 8% and create a single national market for enhancing the efficiency of the movement of goods and services. It however raised concern that the GDP growth is projected to slow to 6.6% in FY17, largely due to a disruption in private consumption from demonetization. It expects growth to rebound to 7.2% in FY18. IMF said that the cost of recapitalizing India’s struggling banks would be affordable even under a negative scenario, urging government steps to strengthen the financial system. It added that recapitalization costs should be manageable at between 1.5 and 2.4% of forecast GDP. Select buying was seen in banking stocks, as the Chief Economic Advisor (CEA) Arvind Subramanian emphasized the need to move full steam to deal with the problem of bad loans facing banking sector. He said that the government is considering setting up a state-owned asset reconstruction company to deal with mounting bad loans.

Traders were seen piling position in Telecom, TECK and IT stocks, while selling was witnessed in Power, Metal and Utilities sector stocks. In scrip specific development, Bharti Airtel was trading firm after the company announced that it has entered into a definite agreement with Telenor South Asia Investments to acquire Telenor (India) Communications. The deal will enable Airtel to further bolster spectrum foot-print in seven circles, with addition of 43.4 MHz spectrum in 1800 MHz band. Venus Remedies was trading in green after the board of directors at its meeting held on Wednesday recommended further issue of equity capital up to an amount of Rs 25 crore to Qualified Institutional Buyers through qualified institutional placement on a price to be computed as per the applicable laws. The market may remain volatile today as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. February 2017 series to next month i.e. March 2017 series. The near month February 2017 derivatives contracts will expire today i.e. February 23, 2017. The market will remain closed tomorrow on Friday i.e. February 24, 2017 on account of ‘Mahashivratri’ holiday.

On the global front, Asian shares were trading mostly in red, while the dollar made an uneven recovery from losses suffered after Federal Reserve minutes indicated a cautious approach to raising US interest rates. South Korean shares were flat after the central bank kept interest rates unchanged for an eighth straight month, opting for stability as it monitors uncertainties ranging from an unpredictable North Korea to global policy challenges and a political scandal at home. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,950 and 28,900 levels respectively. The market breadth on BSE was positive in the ratio of 1201:1009, while 158 scrips remained unchanged.

The BSE Sensex is currently trading at 28948.61, up by 83.90 points or 0.29% after trading in a range of 28904.34 and 28972.79. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Telecom up by 4.03%, TECK up by 1.70%, IT up by 1.32%, Consumer Durables up by 1.21% and Realty up by 0.54%, while Power down by 0.40%, Metal down by 0.38%, Utilities down by 0.34%, Auto down by 0.23% and Basic Materials down by 0.19% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.36%, TCS up by 2.05%, Sun Pharma up by 1.31%, Infosys up by 1.22% and Wipro up by 1.06%.

On the flip side, NTPC down by 0.93%, ICICI Bank down by 0.86%, Tata Steel down by 0.83%, Axis Bank down by 0.68% and Reliance Industries down by 0.57% were the top losers.

Meanwhile, quashing the rumors regarding the re-introduction of new Rs 1000 notes, Economic Affairs Secretary Shaktikanta Das has said that there is no plan to re-introduce the Rs 1,000 note and the focus is on increasing the production and supply of Rs 500 and lower denomination currency. He also said that complaints of cash shortages at ATMs are being addressed and the government has requested people to desist from withdrawing more money than they need.

He assured that enough cash is available and logistics issues of reloading ATMs are being addressed more frequently. Das urged ‘I request everyone to withdraw only the amount that is required, since excessive withdrawal of cash deprives cash for others’. In December 2016, new Rs 500 notes were released for circulation, aiming to ease the situation post demonetisation, the initiative taken by Prime Minister Narendra Modi-led government in order to curb circulation of black money in the economy.

Economic Affairs Secretary’s comments came after the report that the government will soon launch the new series of Rs 1000 denomination notes. The report also stated that the Reserve Bank of India has already started production of the new Rs 1,000 notes and that the initial plan was to introduce the new Rs 1,000 note in January but it has been delayed due to the pressing need to supply Rs 500 notes.

The CNX Nifty is currently trading at 8950.55, up by 23.65 points or 0.26% after trading in a range of 8935.40 and 8957.15. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 5.35%, Idea Cellular up by 5.06%, TCS up by 1.96%, HCL Tech up by 1.48% and Infosys up by 1.47%.

On the flip side, Grasim Industries down by 1.10%, Eicher Motors down by 1.09%, NTPC down by 1.02%, Tata Steel down by 1.00% and Axis Bank down by 0.90% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 89.27 points or 0.37% to 24,112.69, Nikkei 225 decreased 70.23 points or 0.36% to 19,309.64, Taiwan Weighted decreased 14.43 points or 0.15% to 9,764.35, Shanghai Composite decreased 10.93 points or 0.34% to 3,250.29 and FTSE Bursa Malaysia KLCI decreased 0.05 points or 0% to 1,708.03.

On the other hand, KOSPI Index increased 0.09 points to 2,106.70 and Jakarta Composite increased 7.24 points or 0.14% to 5,365.93.