Markets extend last day's jubilation with a strong start

The Indian markets have extended their jubilation and are trading near 52 week high on Thursday morning, with both the benchmarks adding another half percent after the last session’s rally, on supportive global cues. While the US markets rallied overnight, the Asian markets too have made a strong start. Local traders were getting some support with Moody's Investors Service’s latest report stating that demonetisation will be credit positive for India as it is likely to reduce tax avoidance and corruption. Meanwhile, Finance Minister Arun Jaitley has said that the Q3 GDP data was substantially impacted by demonetization, adding that Indian economic growth is likely to pick up further in coming quarters and that GDP number belies exaggerated claim by many that rural sector was in distress. Back on street, auto sector stocks have gained speed on reporting good monthly sales numbers, while metal and industrial stocks too picked up pace on good data from China.
In scrip specific action Wockhardt was down by around 5 percent after the drug major on Wednesday said the US health regulator had issued a warning letter to its step down subsidiary Morton Grove Pharmaceuticals Inc.

The BSE Sensex is currently trading at 29096.54, up by 112.05 points or 0.39% after trading in a range of 29062.07 and 29133.44. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices too were trading in green; the BSE Mid cap index was up by 0.50%, while Small cap index gained 0.55%.

The top gaining sectoral indices on the BSE were Auto up by 1.27%, Metal up by 1.21%, Industrials up by 1.05%, Basic Materials up by 0.99% and Consumer Durables up by 0.90%, while Realty down by 0.67%, Healthcare down by 0.12% and FMCG down by 0.06% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.01%, Reliance Industries up by 1.20%, Bajaj Auto up by 1.16%, ICICI Bank up by 1.04% and Hero MotoCorp up by 1.01%. On the flip side, Dr. Reddy’s Lab down by 1.13%, Sun Pharma down by 0.91%, Power Grid down by 0.70%, ITC down by 0.69% and Infosys down by 0.26% were the top losers.

Meanwhile, terming demonetization as a credit positive for India in the medium term, global ratings agency Moody's Investors Service in its report, on Indian credit, has said that it will strengthen countries institutional framework by reducing tax avoidance and corruption. The report added that it should also result in efficiency gains through greater formalization of economic and financial activity, which would help broaden the tax base and expand usage of the financial system. However, Moody’s estimates growth to slow down to 6.4% in the January-March quarter, from 7% in the previous three months.

The rating agency, in its report ‘Economic Slowdown from Demonetization Wanes; Credit Implications Unfolding’, has said that 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. It also said that if most of the old notes are deposited into the banking system, legitimising 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. It added that looking ahead it expects remonetisation to continue at a similar pace.

For the banking sector, the report stated that demonetisation has hit bank's asset quality and demand for credit. It said that this trend is likely to continue over the next few months and expect asset quality to deteriorate in the current quarter. But it has said that Indian banks have sufficient buffers to withstand the impact. It added that more positively, banks have experienced significant deposit inflows as a result of demonetization. They also expect bank deposits to increase by only around 1-2 percent, compared to before demonetization, with cash remaining the dominant means of retail transactions.

The CNX Nifty is currently trading at 8984.25, up by 38.45 points or 0.43% after trading in a range of 8969.80 and 8992.50. There were 42 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 3.03%, Ultratech Cement up by 2.65%, Tata Motors - DVR up by 2.59%, Hindalco up by 2.19% and Ambuja Cement up by 1.57%. On the flip side, Dr. Reddy’s Lab down by 1.11%, Sun Pharma down by 0.99%, Power Grid down by 0.80%, BPCL down by 0.64% and ITC down by 0.61% were the top losers.

Asian markets were trading higher barring the Taiwan Weighted which declined by 23.28 points or 0.24% to 9,651.50.

On the other hand, Shanghai Composite was up by 1.09 points or 0.03% to 3,248.02, KOSPI Index gained 10.79 points or 0.52% to 2,102.43, FTSE Bursa Malaysia KLCI was higher by 14.42 points or 0.85% to 1,712.11, Jakarta Composite increased by 59.33 points or 1.11% to 5,422.39, Hang Seng moved up by 85.82 points or 0.36% to 23,862.31 and Nikkei 225 surged by 176.77 points or 0.91% to 19,570.31.