Post Session: Quick Review

Indian equity markets maintained their upward journey throughout the day and ended with gain of more than half a percent. Markets gain in last hour of trade to end near highest point of the day with Nifty surpassing 10,500 mark. The market breadth was in favour of advances with two stocks advancing against every declining one. The equity benchmarks made a positive start and traded in green in early deals. Investors are in some kind of a wait and watch mode now with earnings and Union Budget announcements being the next set of triggers for the markets. The sentiments remained up-beat on report that the Nikkei India services Purchasing Managers’ Index, or PMI, returned to modest growth in December amid signs of recovery from the effects of new goods and service taxes, or GST. The seasonally adjusted business activity index stood at 50.9 in December, up from 48.5 in November. The report highlighted that this expansion was mainly driven by manufacturing companies, with output growth here the sharpest since December 2012.

Some support also crept in with NITI Aayog’s expectation that the first strategic disinvestment of Central Public Sector Enterprises will be conducted within the current financial year. It said that the process of divestment is being carried out by DIPAM (Department of Investment and Public Asset Management) and the first transactions are expected in the current financial year after a long gap of 14 years. Separately, the Union Cabinet approved the revised model concession agreement for public private partnership projects in major ports. The amendments were made in the MCA to attract more investments in the port sector and are expected to clear the hurdles created by some of the provisions in the current model concession agreement.

Meanwhile, public sector banks were buzzing in today’s trade after the finance ministry has approved proposal for infusion of Rs 7,577 crore in 6 weak public sector banks (PSBs) as part of the recapitalization plan to bolster capital adequacy ratio. Lenders, which will receive capital through preferential issue of shares, include Bank of India, IDBI Bank and UCO Bank. Government has also decided to infuse Rs 2,257 crore in the Bank of India, Rs 2,729 crore in IDBI Bank, Rs 650 crore in Bank of Maharashtra, and Rs 243 crore in Dena Bank. Separately, the government is likely to make an announcement on PSU recap. The bond size for the same is likely to be approximately Rs 80,000 crore.

On the global front, Asian markets closed mostly in green. China’s services sector activity expanded at its fastest pace in over three years in December on solid growth in new business, with the outlook improving to a six-month high. Japanese manufacturing activity expanded at the fastest pace in almost four years in December as new orders accelerated, in a sign that steady economic growth will continue into the New Year. The European markets were trading in green as investors reacted to robust economic data from both sides of the Atlantic, while oil prices hovered around two-and-a-half year highs amid unrest in Iran.

Back home, investors took note of the proposed ‘US Bill, Protect and Grow American Jobs’, riddled with onerous conditions and places unprecedented obligations on both Indian IT companies and clients using H-1B visas. Software body NASSCOM has flagged its concerns around visa-related issues in the US with the Senators, Congressmen and the administration, and will engage further in a dialogue over the next few weeks over the proposed legislation.

The BSE Sensex ended at 33973.08, up by 179.70 points or 0.53% after trading in a range of 33802.13 and 33995.40. There were 22 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.74%, while Small cap index was up by 0.87%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.94%, Consumer Durables up by 2.60%, Capital Goods up by 2.10%, Basic Materials up by 2.08% and PSU up by 1.61%, while Realty down by 0.33% and Auto down by 0.09% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.88%, Dr. Reddy’s Lab up by 3.31%, ONGC up by 3.12%, Asian Paints up by 3.12% and Larsen & Toubro up by 2.90%. (Provisional)

On the flip side, Tata Motors down by 0.82%, Power Grid down by 0.79%, Maruti Suzuki down by 0.50%, Hero MotoCorp down by 0.31% and Infosys down by 0.30% were the top losers. (Provisional)

Meanwhile, recovering from last month’s steep fall, the services sector bounced back to growth in the month of December, on the back of stabilization in new order inflows along with easing inflationary pressures. Fastest job creation at both service providers & manufacturers coupled with growth in some industries such as information & communications and finance & insurance, also drove overall business activity during the month. However, the Goods and Services Tax (GST) continued to weigh on underlying sales volumes of some of the firms.

The seasonally adjusted Nikkei Services Business Activity Index rose back above the 50.0 no-change mark in December, posting reading at 50.9 from 48.5 in November. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too climbed to 53.0 in December from 50.3 in November, signaling highest rate of expansion since October 2016.

As per the survey, demand conditions improved in the service sectors after the last month’ decline, while manufacturing new orders grew at sharpest rate since October 2016, backed by strong demand from domestic and international markets. However, backlogs of work increased at both manufacturers and service providers, on account of cash shortages and delayed customer payments.

On inflation front, input cost inflation in the service sector eased from November’s four-year high which softened output charge inflation during the month. On the other hand, manufacturers remained cost burdened in the reported month due GST and to compensate this, firms raised their average selling prices at the fastest pace in 10 months.

The CNX Nifty ended at 10506.30, up by 63.10 points or 0.60% after trading in a range of 10441.45 and 10513.00. There were 33 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 3.86%, Dr. Reddy’s Lab up by 3.24%, Larsen & Toubro up by 3.03%, Asian Paints up by 2.92% and ONGC up by 2.74%. (Provisional)

On the flip side, Tata Motors down by 0.90%, Eicher Motors down by 0.70%, BPCL down by 0.69%, Infosys down by 0.62% and Power Grid down by 0.57% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 16.87 points or 0.22% to 7,687.98, Germany’s DAX increased 115.1 points or 0.89% to 13,093.31 and France’s CAC increased 50.24 points or 0.94% to 5,381.52.

Asian equity markets ended mostly in green on Thursday, although gains remained modest outside Japan, where the benchmark Nikkei average jumped over 3 percent on its first trading day of the New Year. Regional underlying sentiments remained supported by rallying oil prices, encouraging services sector data from China and the record closing highs overnight on Wall Street. Japanese shares rallied as the yen remained relatively weak on global growth optimism and oil prices surged to their highest level since December 2014. Further, Chinese shares ended higher, aided by data showing Chinese services sector activity grew at its best pace in more than three years in December. The latest survey from Caixin showed that the services sector in China continued to expand in December, and at an accelerated pace with a PMI score of 53.9, up from 51.9 in November.