Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and closed in green with gain of around three-fourth of a percent. The benchmarks recovered from two days of losses with Nifty closing above 8900 mark as a much stronger-than-expected quarterly economic growth, lifted the sentiments. The market made a positive start in early deals as traders took support from the Nikkei India Manufacturing Purchasing Managers’ Index, or PMI report which rose to 50.7 in February from 50.4 in January. This is the second month in succession in which the health of the sector improved after the demonetization-related downturn at the end of 2016. Some support also came on reports that India’s Gross Domestic Product (GDP) is growing at a rate of 7% in the October-December quarter of the fiscal year 2016-17 after factoring in the demonetization impact. Also, according to the second advance estimates, released by the Central Statistics Office (CSO), the growth in GDP during 2016-17 is estimated at 7.1 percent as compared to the growth rate of 7.6 percent in 2015-16, which is much better than the economic survey and the RBI’s estimates. The other positive factor of the second advance estimates of national income, 2016-17 was India’s per capita net national income expected to rise 10.2 percent to Rs 1,03,818 in the current fiscal.

The sentiments were on upbeat mood after Moody’s Investors Service said that demonetization will be credit positive for India as it is likely to reduce tax avoidance and corruption. Besides, it said, the country remains resilient to economic disruption and the worst of the liquidity crunch has passed, which should support a rebound in consumption and investment. The agency added that if most of the old notes are deposited into the banking system, legitimizing previously undeclared incomes and wealth, the benefits to the government related to higher future tax collection will accrue from measures aimed at leveraging the information obtained when notes were deposited. Separately, in a much-needed shot in the arm, global think-tank OECD pitched for a rating upgrade for India and said global rating agencies had become ‘overtly cautious’ and conservative in not revising India’s rating for last 14 years. The Organisation for Economic Cooperation and Development (OECD) added that India’s rating could be changed to neutral and then positive and with the kind of reform programmes that the country is putting out the agencies can’t fail to notice so this should have.

On the global front, Asian markets closed mostly higher, while Japanese stocks recovered from intraday lows after US President Donald Trump’s speech to Congress offered few details or surprises on tax and spending policies. China’s factory activity expanded for the eighth straight month in February as export orders picked up, a private survey showed, giving authorities more room to tackle financial risks in the economy as debt continues to rise. The European markets were trading in green as investors eyed a batch of euro zone data to be released later in the session and as US President Donald Trump promised a historic tax reform.

Back home, select information technology (IT) stocks closed in green after the US President Donald Trump’s first speech to US congress was seen more restrained than the harsh rhetoric seen during his pre-election speeches. The speech did not have any comment on visa issues that may hit domestic IT firms. Instead, the US President said the US immigration should be based on a merit-based system, rather than relying on lower-skilled immigrants.

The BSE Sensex ended at 28953.23, up by 209.91 points or 0.73% after trading in a range of 28824.17 and 29029.17. There were 20 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.08%, while Small cap index was up by 0.39%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 3.32%, Metal up by 1.97%, FMCG up by 1.14%, Bankex up by 0.89% and Healthcare up by 0.82%, while Oil & Gas down by 0.97%, Energy down by 0.56%, Telecom down by 0.52%, Utilities down by 0.51% and Power down by 0.34% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.68%, Mahindra & Mahindra up by 2.67%, Sun Pharma up by 2.51%, Dr. Reddy’s Lab up by 2.31% and ITC up by 2.27%. (Provisional)

On the flip side, NTPC down by 1.90%, Tata Motors down by 1.78%, GAIL India down by 1.76%, Bharti Airtel down by 0.67% and Reliance Industries down by 0.65% were the top losers. (Provisional)

Meanwhile, India’s manufacturing sector growth expanded for the second consecutive month in February, as a rebound in export demand contributed to a stronger expansion of total new orders. Manufacturers benefited from recovering demand and raised production volumes in response to another expansion in inflows of new work. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 50.7 in February from 50.4 in January.

According to the survey, the upturn in output for last two successive months reflected improved demand from both the domestic and external markets. The total volume of incoming new work increased for the second month in a row, whereas new export orders expanded for the first time since November 2016. Rates of growth for both production and order books picked up since January, but remained marginal. Increased new order intakes contributed to a further rise in outstanding business. Furthermore, the rate of backlog accumulation was the fastest since last October.

The survey also pointed that manufacturing employment declined, though the rate of job losses was marginal overall. Input price inflation quickened in February, with the rate of increase accelerating to the fastest in two and-a-half years.

Noting that the vast majority of survey participants signalled unchanged payroll numbers, the survey stated that confidence among Indian manufacturers was relatively subdued in February. Although sentiment towards the year-ahead outlook for output remained positive, the degree of optimism fell since January and was well below its near five-year historical average.

The CNX Nifty ended at 8941.80, up by 62.20 points or 0.70% after trading in a range of 8898.60 and 8960.80. There were 29 stocks advancing against 21 stocks declining, while 1 stock remained unchanged on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 3.59%, Hindalco up by 3.15%, Kotak Mahindra Bank up by 2.72%, Mahindra & Mahindra up by 2.59% and Sun Pharma up by 2.40%. (Provisional)

On the flip side, Idea Cellular down by 2.72%, Eicher Motors down by 1.87%, NTPC down by 1.75%, Tata Motors down by 1.60% and BPCL down by 1.59% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 52 points or 0.72% to 7,315.44, Germany’s DAX increased 156.33 points or 1.32% to 11,990.74 and France’s CAC increased 67.58 points or 1.39% to 4,926.16.

Asian equity markets ended mostly higher on Wednesday, with Japanese shares leading gains, as exporters received a boost from a relatively weaker yen and the Nikkei survey showed the health of Japan's manufacturing sector improved at a pace not seen in nearly three years during February. Chinese shares ended higher after reports showed activity in China's manufacturing sector expanded faster than expected in February. While the official PMI rose to a three-month high of 51.6 in the month, the non-manufacturing PMI, which is a better indicator of domestic demand, eased slightly to 54.2 from 54.6 in the previous month. The Caixin / Markit manufacturing PMI rose to 51.7 from 51.0, beating forecasts as new export orders accelerated at the strongest pace in over two years. Further, US President Donald Trump struck an optimistic tone in his first major address to a joint session of Congress and promised a ‘renewal of the American spirit’ with his economic goals and priorities. He offered few policy details on his economic plan but said he was open to a broad immigration reform bill that could be passed if both Republicans and Democrats in Congress were willing to compromise. Meanwhile, the South Korean markets were closed for the Independence Day holiday.