Key equities extend gains in morning deals

Frontline equity indices enticing some more traction and have added more points on the streets. The Sensex and Nifty eked out over one percent gains. Among heavy-weights Larsen & Toubro, Power Grid and ICICI Bank exhibited a smart performance. Buying crept in with a report that key policymakers from India and African nations will brainstorm on strategies for scaling up bilateral trade volume to $150 billion in the next few years at the India-Africa Project Partnerships Conclave. Meanwhile, the government has notified phased increase in basic customs duty on parts of electric passenger vehicles to be assembled in India to 15 per cent from April 2020 and 10 per cent on imported lithium-ion cells by April 2021 to promote domestic manufacturing of EVs. Traders took note of a report that the Reserve Bank of India’s (RBI) board had warned of short-term negative impact of demonetisation on the country's economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace.

On the global front, Asian markets were trading mostly in green, following strong gains on Wall Street. Investors may have also been buoyed by increased optimism over a BREXIT vote in the British Parliament later in the day. Back home, CRISIL Research Report stated that capacity addition in solar energy sector has slowed down on account of lack of clarity on several policy issues and arbitrary bid cancellations, casting shadow over developer’s sentiment. In wake of delayed capacity additions, development of the solar energy sector has constrained.

The BSE Sensex is currently trading at 37467.01, up by 412.91 points or 1.11% after trading in a range of 37230.85 and 37470.73. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.05%, while Small cap index was up by 1.42%.

The top gaining sectoral indices on the BSE were Realty up by 3.49%, Capital Goods up by 2.86%, Industrials up by 2.08%, Consumer Durables up by 1.86% and Power was up by 1.45%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Larsen & Toubro up by 3.92%, Power Grid up by 3.03%, ICICI Bank up by 2.95%, Axis Bank up by 1.89% and Asian Paints was up by 1.78%. On the flip side, Bajaj Auto down by 0.66%, Hero MotoCorp down by 0.20%, ONGC down by 0.16% and Infosys was down by 0.13% were the few losers.

Meanwhile, CRISIL Research in its latest report has said that the outlook for solar energy development in India is constrained as capacity additions get delayed. It noted that inconsistent policy measures on part of the government have dampened the investors’ sentiment in the sector, thereby leading to a slowdown in the capacity addition. It expects solar power capacity additions of 48-50 GW between fiscals 2019 and 2023. The country has set an ambitious target of having 175 GW of renewables including 100 GW of solar energy by 2022.

The report mentioned that over fiscals 2017 to 2019, while previously tendered capacities continued to be commissioned apace, certain risks to future project implementation manifested. There were frequent bid cancellations, lack of clarity on GST procedures, and cost pressure from the imposition of the safeguard duty on imported cells/modules. Besides, it noted that while the good and services tax (GST) clarity was lacking for over a year with a final decision taken in December by the GST council, it ended with an increase in taxation compared to what was expected by the industry.

Similarly, the safeguard duty has turned out to be a double whammy of sorts, impacting costs of solar power projects and not resulting in any significant offtake for the domestic manufacturing sector. This was coupled by the cancellation of bids post auctions as state utilities / SECI (Solar Energy Corporation of India found tariffs to be higher than expectations. Close to 4.7 GW was cancelled in such a manner over March - December 2018.

The CNX Nifty is currently trading at 11288.65, up by 120.60 points or 1.08% after trading in a range of 11227.00 and 11290.45. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 4.03%, Power Grid up by 3.09%, ICICI Bank up by 2.99%, Titan Company up by 2.36% and Hindalco was up by 2.11%. On the flip side, Bharti Infratel down by 1.44%, Bajaj Auto down by 0.43%, ONGC down by 0.29%, Tech Mahindra down by 0.20% and Hero MotoCorp was down by 0.14% were the top losers.

Asian markets were trading mostly in green, Hang Seng increased 401.03 points or 1.41% to 28,904.33, Nikkei 225 surged 397.19 points or 1.88% to 21,522.28, Shanghai Composite gained 48.70 points or 1.61% to 3,075.69, Taiwan Weighted strengthened 110.96 points or 1.08% to 10,361.24, Straits Times advanced 35.25 points or 1.1% to 3,226.67 and KOSPI was up by 17.60 points or 0.82% to 2,155.70. On the other hand, Jakarta Composite was down by 3.20 points or 0.05% to 6,363.23.