Benchmarks end higher on easing WPI inflation

Thursday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges settling just shy of their crucial 10,550 (Nifty) and 34,300 (Sensex) levels. Markets after an optimistic start gained momentum and traded jubilantly on private report that the RBI’s revised framework for quicker and time-bound resolution of stressed assets is a long-term positive for banks. The report stated that the new framework has the potential to bring about a big change in the approach of banks to monitor their exposures and resolution of NPAs. Markets managed to reconquer their psychological 10,600 (Nifty) and 34,500 (Sensex) levels in noon deals after India's inflation on wholesale level softened for the second consecutive month in January 2018. Wholesale price inflation (WPI) stood at 2.84 percent (provisional) in January as against 3.58 percent (provisional) for the previous month and 4.26 percent during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 2.30 percent compared to a build up rate of 4.55 percent in the corresponding period of the previous year.

Despite some profit booking in last leg of trade, markets managed to end the session with a gain of around half a percent as sentiments remained up-beat with Chief Economic Advisor Arvind Subramanian’s statement that although India has made a lot of progress towards achieving financial inclusion, a lot more needs to be done. He added that providing essential goods and services to citizens was only the first policy step towards financial inclusion. Meanwhile, a private report highlighted that consumption is reviving as the effect of demonetization fades and companies get used to the Goods and Services Tax (GST), with some recording multi-quarter highs in volume and sales in the October-December period, exceeding street expectations.

Firm opening in European counters too aided sentiments, as investors appeared to take stronger-than-anticipated US inflation data in their stride. Asian markets ended mostly in green, led by around one and a half percent gain in Japanese Nikkei despite the country’s core machinery orders tumbled in December at the fastest pace in more than three years.

Back home, a report showed that India Inc reported strong earnings growth in the December 2017 quarter after declines in the previous two quarters. This was largely expected given the lower base effect due to demonetization in the year-ago quarter. In the December quarter, net profit of a sample of 2,043 companies rose to a six quarter high of 27.5% year-on-year. Net sales rose by 11.5%. After excluding oil and gas companies along with banks and finance entities, sales and profit growth in the December 2017 quarter was 8.8% and 25%, respectively. In scrip specific development, Punjab National Bank (PNB) continued to remain under pressure after Enforcement Directorate reportedly told that PNB fraud is bigger than Rs 11,000 crore. Enforcement Directorate is likely to soon get in touch with other banks involved. Apart from PNB, Union Bank, Axis Bank, Allahabad Bank and SBI Overseas Bank are involved in the fraud.

Finally, the BSE Sensex surged 141.52 points or 0.41% to 34,297.47, while the CNX Nifty was up by 44.60 points or 0.42% to 10,545.50.

The BSE Sensex touched a high and a low of 34,535.08 and 34,186.01, respectively and there were 18 stocks on gaining side as against 13 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.46%, while Small cap index was down by 1.27%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.96%, Metal up by 0.72%, Energy up by 0.47%, IT up by 0.44% and Bankex was up by 0.43%, while Telecom down by 1.16%, Industrials down by 0.92%, Consumer Durables down by 0.86%, Realty down by 0.85% and Capital Goods was down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.15%, Infosys up by 1.47%, Power Grid Corporation up by 1.46%, ONGC up by 1.37% and Bajaj Auto up by 0.96%. On the flip side, Hero MotoCorp down by 1.85%, Tata Steel down by 1.20%, Bharti Airtel down by 1.15%, Larsen & Toubro down by 0.78% and Wipro down by 0.49% were the top losers.

Meanwhile, the number of foreign tourist arrivals (FTAs) in India in the month of January witnessed a growth of 8.4 percent over the same period last year. As per the tourism ministry data, the number of FTAs in India last month was 10.66 lakh as compared to 9.83 lakh in January 2017 and 8.45 lakh in January 2016.  The maximum number of tourists came from Bangladesh contributing 16.36 percent of FTAs, followed by the USA with 14.10 percent, the UK with 10.81 percent, Canada with 4.63 percent, Canada with 4.39 percent and Russian Federation with 4.49 percent. The Delhi airport remained the busiest with almost 28.03 percent share of FTAs, followed by Mumbai with 17.47 percent share, Haridaspur Land Check Post with 7.63 percent and Chennai airport with 7.17 percent.

January 2018 also saw a substantial rise in the number of tourists arriving on e-tourist visas. During the month of January, 2018, a total of 2.40 lakh foreign tourists arrived on e-tourist visa as compared to 1.52 lakh during the month of January, 2017, registering a growth of 58.5 percent. Out of the 2.40 lakh visitors, New Delhi Airport received 37.3 percent of the footfalls, followed by Mumbai Airport 19.6 percent and Dabolim (Goa) Airport 12.4 percent.

The Tourism Ministry compiles monthly estimates of FTAs, including those with e-tourist visas, on the basis of their nationality and port. The estimates are based on data received from the Bureau of Immigration (BOI).

The CNX Nifty traded in a range of 10,618.10 and 10,511.05. There were 30 stocks in green as against 19 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were BPCL up by 3.38%, Hindalco up by 3.35%, ICICI Bank up by 3.07%, Vedanta up by 2.68% and HPCL up by 2.14%. On the flip side, Indiabulls Housing down by 2.70%, Aurobindo Pharma down by 1.68%, Cipla down by 1.64%, Bharti Airtel down by 1.40% and Zee Entertainment Enterprises down by 0.97% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 49.06 points or 0.68% to 7,263.03, France’s CAC soared 88.27 points or 1.71% to 5,253.53 and Germany’s DAX was up by 137.11 points or 1.11% to 12,476.27.

Asian stocks closed mostly in green on Thursday as investors brushed aside concerns that the Federal Reserve could move more quickly to raise short-term interest rates to tame inflation. Trading activity remained relatively thin across the region as some of the markets were closed for public holidays. Markets in Taiwan and China were closed for the Lunar New Year holidays, while the South Korean markets were closed for Seollal Day. Hong Kong shares ended a shortened trading day nearly 2 percent higher, led by financials and information technology companies. The Singapore stock market also closed early at noon for the Lunar New Year holiday. Meanwhile, Japanese shares posted solid gains following three successive days of losses that took the Nikkei average to a four-month low on Wednesday. The gain came despite a firmer yen and the release of mixed industrial output and core machinery orders data. Japan's industrial production grew more than initially estimated in December, while core machinery orders tumbled 11.9 percent from the previous month, separate reports showed.