Post Session: Quick Review

Indian equity markets traded in green territory for most part of the day and ended with gains of around half percent. The market breadth was neutral with one stock advancing against each declining one. The gains was due to the certainty that the ruling BJP was set to retain power in Gujarat, which is considered a prestige battle for Prime Minister Narendra Modi in his home state and a litmus test for new Congress president Rahul Gandhi. The benchmark indices Sensex and Nifty took a heavy beating in early morning as vote count on Gujarat poll suggested ruling BJP was trailing in the PM Modi’s home turf, sending shivers down investors’ spine.  However, markets stage smart recovery as BJP inched towards victory mark. Sentiments also remained up-beat with data from the commerce department, which showed that India’s exports rose at a faster clip in November, reversing the contraction in the previous month. Exports grew 30.6 percent in November from a year ago, while imports rose 19.6 percent.  Separately, the street took note of report that India can achieve an eight percent growth rate for the next two decades by promoting investment and improving the living conditions of its people. The UN economic official said that one of this is the growth of private consumption and sound macroeconomic policies. The monetary policy, which has been able to control inflation, also has a role to play.

Some support also came with Reserve Bank of India (RBI) Governor Urjit Patel statement that with growth picking up in the second quarter of the current financial year, the economic slowdown may have bottomed out. He said that “our recent growth numbers may have disappointed some in the first quarter of this fiscal year, but the second quarter has recorded an uptick and the slowdown may well be bottoming out”. Investors took note that foreign investors are flocking to the Indian capital markets in a big way with a net inflow of over $30 billion (more than Rs 2 lakh crore) of so-called hot money in 2017, with equities alone getting over $8 billion -- an amount bigger than the cumulative investment of the previous two years. Public sector bank were buzzing on report that the first round of capital infusion for state-run banks that was announced recently is likely to take place soon. The government is likely to raise around Rs 70,000 crore by February 2018 as part of the total Rs 1.35 lakh crore to be met through recapitalization bonds. Finance Minister Arun Jaitley today said the government has decided to recapitalize public sector banks (PSBs) to enhance credit growth and job creation.

On the global front, Asian markets closed mostly in green. Japanese exports accelerated sharply in November, yet again pointing to growing momentum in the world’s third-biggest economy. The combination of steady growth and benign consumer prices mean the Bank of Japan will lag other major central banks in exiting crisis-era monetary stimulus, with street widely expecting BOJ Governor Haruhiko Kuroda to keep the liquidity tap wide open at a meeting later this week. The European markets were trading in green boosted by hopes a major US tax reform bill will be passed before the end of the year. Euro zone inflation rose in November but still came in below the European Central Bank’s target rate. The European Union’s statistics office said the reading showed that the consumer price index rose at an annual rate of 1.5% in November, up from 1.4% in October.

Back home, stocks from footwear industry exhibited mixed trend after the Union Cabinet chaired by Prime Minister Narendra Modi on Friday approved special package for employment generation in leather and footwear sector. The package involves implementation of central scheme ‘Indian Footwear, Leather & Accessories Development Programme’ with an approved expenditure of Rs 2,600 crore over the three financial years from 2017-18 to 2019-20. Select fertiliser stocks were buzzing in today’s trade after the Finance Ministry sought Parliament’s approval for the net additional spending of Rs 33,380 crore ($5.21 billion) for 2017-18. This includes Rs 20,532 crore for the fertiliser sector. 

The BSE Sensex ended at 33598.91, up by 135.94 points or 0.41% after trading in a range of 32595.63 and 33801.90. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.75%, while Small cap index was up by 0.45%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.86%, Consumer Disc up by 1.13%, Auto up by 1.13%, Telecom up by 0.88% and Consumer Durables up by 0.85%, while Realty down by 0.27% and Energy down by 0.14% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 2.45%, Sun Pharma up by 1.95%, SBI up by 1.84%, Wipro up by 1.76% and Asian Paints up by 1.73%. (Provisional)

On the flip side, Yes Bank down by 1.36%, Coal India down by 1.33%, Infosys down by 0.83%, ITC down by 0.70% and Kotak Mahindra Bank down by 0.52% were the top losers. (Provisional)

Meanwhile, after United Nations (UN) in its latest report, projected India's GDP growth rate of 7.2% in 2018 and 7.4% in 2019, an UN economic official has said that Indian economy can achieve 8% growth rate for next two decades, if it focus more on promoting investment and improving the living conditions of its people. He also noted that the country has largely positive and growth favorable economic conditions but it needs to come out with the next series of reforms to achieve its potential.

Sebastian Vergara, an Economic Affairs Officer at the United Nations listed down various factors which have led to positive economic conditions in India, which includes growth of private consumption, sound macroeconomic policies, and government’s emphasis on public investment and infrastructure projects. He further added that county’s fiscal policy has also provided support for the economic activity.

On the demonetizational front, UN expert said that the note ban had resulted in temporary liquidity crunch, but it has resulted beneficial for the banking sector and to increase the tax base. He also noted that in the current year, the government has been focusing particularly on the banking sector, with other reform measures and these reforms are helping the Indian economy to improve its efficiency and increase the medium-term prospects of its economy.

The CNX Nifty ended at 10390.15, up by 56.90 points or 0.55% after trading in a range of 10074.80 and 10443.55. There were 36 stocks advancing against 14 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 3.76%, Hindalco up by 3.32%, Cipla up by 2.81%, Mahindra & Mahindra up by 2.59% and Wipro up by 2.17%. (Provisional)

On the flip side, Yes Bank down by 1.50%, Coal India down by 1.46%, Tech Mahindra down by 1.37%, UPL down by 1.08% and HPCL down by 0.97% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 22.25 points or 0.3% to 7,512.82, Germany’s DAX increased 158.35 points or 1.21% to 13,261.91 and France’s CAC increased 64.43 points or 1.2% to 5,413.73.

Asian equity markets ended mostly in green on Monday after data showed Japan's export growth accelerated in November. Japanese shares ended higher as the yen weakened on optimism about Republican lawmakers passing tax reform legislation in the US and the legislation will reduce corporate as well as individual tax rates and is intended to boost growth in the world's largest economy. Further, chinese shares finished marginally higher. House prices in majority of the Chinese cities increased in November, figures from the National Bureau of Statistics showed today. On a monthly basis, house prices climbed in 50 cities out of 70 surveyed by the government.