Bulls back on Dalal Street; Nifty reclaims 10,500 mark

Thursday turned out to be a fabulous day of trade of Indian equity benchmarks, with frontline gauges recapturing their crucial 10,500 (Nifty) and 33,900 (Sensex) levels amid firm global cues. After a positive start, there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained upbeat 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. Some support also came with the Union Cabinet approving 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.

Markets extended northward journey 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. Market participants also took some encouragement with private report that the second quarter results of the Indian Corporate sector have started showing some signs of stability, attributable to declining negative impact of the Goods and Services Tax (GST) and the festive season.

Firm opening in European counters too aided sentiments, 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. Asian markets ended mostly in green with Japanese manufacturing activity expanding 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.

Back home, PSU banks remained on buyers’ radar, as the government sought parliament approval for Rs 800 billion extra spending to recapitalise state banks as part of a move to help lenders deal with bad debts and revive credit growth. Infra stocks firmed up after the government approved Rs 12,178 crore worth of infrastructure projects and an AIIMS in Bilaspur in Himachal Pradesh to be constructed at a cost of Rs 1,351crore. IT stocks exhibited mixed trend on report that the US is considering new regulations to prevent the extension of H-1B visas as part of president Donald Trump's 'Buy American, Hire American' initiative, a move which could hit tech firms and hundreds of thousands of Indian IT professionals.

Finally, the BSE Sensex surged 176.26 points or 0.52% to 33,969.64, while the CNX Nifty was up by 61.60 points or 0.59% to 10,504.80.

The BSE Sensex touched a high and a low of 33,995.40 and 33,802.13, respectively and there were 21 stocks on gaining side as against 9 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.71%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Metal up by 2.77%, Consumer Durables up by 2.53%, Capital Goods up by 2.11%, Basic Materials up by 1.99% and PSU was up by 1.55%, while Realty down by 0.22% and Auto was down by 0.11% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.74%, Dr. Reddys Lab up by 3.14%, Larsen & Toubro up by 3.08%, ONGC up by 2.92% and Asian Paints up by 2.71%. On the flip side, Tata Motors down by 0.81%, Power Grid Corporation down by 0.67%, Axis Bank down by 0.40%, Infosys down by 0.37% and Maruti Suzuki down by 0.37% were the top losers.

Meanwhile, as part of the  banks recapitalisation plan to boost capital adequacy ratio, the Ministry of Finance has given its nod to the proposal for capital infusion of Rs 7,577 crore in six weak public sector banks (PSBs). All of these banks that would be receiving capital support are those who have been put under the prompt corrective action of the Reserve Bank of India (RBI). The six lenders, which will receive capital through preferential issue of shares are Bank of India, IDBI Bank, Central Bank of India, Dena Bank, Bank of Maharashtra and UCO Bank.

The recapitalisation is part of the Indradhanush plan of the government which promised Rs 70,000 crore over period of four years ending March 2019. The actual fund infusion will happen in the next few weeks after necessary regulatory approval and nod from the shareholders. While the government decides the mode for recapitalisation of all state-run banks, it advanced the release of funds to these six banks to help them meet their equity requirements and enable them to resume normal business and help them come out of prompt corrective action.

In October, the Union government had unveiled an ambitious plan to infuse Rs 2.11 lakh crore capital over the next two years into public sector banks (PSBs) that are saddled with high, non-performing assets (NPAs) and facing the prospect of having to take haircuts on loans stuck in insolvency proceedings. The NPAs of public sector banks have increased from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as on June 2017.

The CNX Nifty traded in a range of 10,513.00 and 10,441.45. There were 34 stocks in green as against 16 stocks in red on the index.

The top gainers on Nifty were Tata Steel up by 3.88%, Dr. Reddys Lab up by 3.24%, Larsen & Toubro up by 2.98%, Asian Paints up by 2.92% and ONGC was up by 2.74%. 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 Corporation was down by 0.62% were the top losers.

The European markets were trading in green; UK’s FTSE 100 rose 7.32 points or 0.1% to 7,678.43, France’s CAC gained 44.55 points or 0.84% to 5,375.83 and Germany’s DAX was up by 117.56 points or 0.91% to 13,095.77.

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.