Post Session: Quick Review

Snapping a two-session losing run, Indian equity benchmarks ended Tuesday’s trade on an optimistic note with gains of over half percent, on the back of strong trend seen in other Asian markets. The markets had started session on a strong footing, as traders took encouragement with Commerce and Industry Minister Piyush Goyal’s statement that use of artificial intelligence (AI) in different forms can help achieve the target of making India a $5 trillion economy in the coming years. Traders remained optimistic with report that with an aim to ensure expeditious resolution of financial stress, the Reserve Bank of India (RBI) has revised the Supervisory Action Framework (SAF) for urban cooperative banks (UCBs). The Apex bank will continue to monitor asset quality, profitability and capital/net worth of UCBs under the revised SAF.

However, in late afternoon deals, key indices pared much of day’s gains, as market-men got anxious with private report that India's government is likely to cut spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent year. It added that Asia's third largest economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending. Investors were also looking forward to the release of the first advance estimates of the GDP for FY20 by the government later in the day. The estimates will be keenly watched for as the economic turbulence has taken a toll on growth numbers in the first and the second quarter.

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading in green as concerns over a U.S.-Iran standoff eased. Back home, renewable sector was in focus with Fitch Solutions stating that the government’s proposed carbon tax waiver on coal may pose substantial downside risks to India's renewable sector growth. It noted that in a bid to alleviate significant debt levels in the power industry, the government had proposed to waive carbon taxes on coal by Rs 400 per tonne. Besides, stocks related to Coffee sector were in focus after the Coffee Board indicated that Coffee exports from India rose marginally to 3.50 lakh tonne in 2019 as compared to 3.48 lakh tonne in the previous year. India is the third-largest producer and exporter of coffee in Asia.

The BSE Sensex ended at 40907.25, up by 230.62 points or 0.57% after trading in a range of 40727.37 and 41230.14. There were 21 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.69%, while Small cap index was up by 1.04%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.98%, Basic Materials up by 1.56%, Energy up by 1.14%, Metal up by 0.77% and Industrials up by 0.66%, while Telecom down by 1.21%, TECK down by 0.36% and IT down by 0.28% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Ultratech Cement up by 2.27%, HDFC Bank up by 1.71%, Reliance Industries up by 1.70%, Sun Pharma up by 1.61% and HDFC up by 1.53%. (Provisional)

On the flip side, Infosys down by 1.58%, Bharti Airtel down by 1.16%, Nestle down by 0.93%, Hero MotoCorp down by 0.85% and Power Grid down by 0.67% were the top losers. (Provisional)

Meanwhile, ICRA in its latest report has said that credit to infrastructure sector from banks and non-bank financing companies (NBFCs) remained muted at Rs 21.2 lakh crore in April-September period of the current fiscal (H1FY20).  The tepidness in the first half of FY20 has been led by de-growth in banking sector credit to infrastructure segment, though infrastructure finance non-bank companies (IFCs) continued to grow at a modest pace of 17 per cent year-on-year, and and 12 per cent sequentially.

The infrastructure credit had witnessed a 19 per cent growth in FY19 to Rs 21.1 lakh crore. Majority of the infrastructure credit growth in FY19 was also back ended. Hence, a pickup in H2 FY20 cannot be ruled out, though the pressure on fiscal position may limit the government's push towards expenditure on infrastructure and hence constrain a major reversal in trend. The growth in the total infrastructure credit in FY20 is likely to remain lower than last year.

The report mentioned that the decline in share of banks during past few years was largely attributable to the conversion of their exposures to state distribution companies (discoms) into bonds and the subdued lending amid asset quality issues and capital constraints. Moreover, it said the progress on stressed thermal asset resolution is slow, despite the various measures undertaken by the government and the lenders.

The CNX Nifty ended at 12060.30, up by 67.25 points or 0.56% after trading in a range of 12005.35 and 12152.15. There were 32 stocks advancing against 18 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 3.75%, Zee Entertainment up by 2.41%, Ultratech Cement up by 1.99%, UPL up by 1.72% and Reliance Industries up by 1.69%. (Provisional)

On the flip side, Bharti Infratel down by 1.81%, BPCL down by 1.51%, Infosys down by 1.39%, Bharti Airtel down by 1.02% and Power Grid down by 0.93% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 4.93 points or 0.07% to 7,580.27, France’s CAC increased 24.59 points or 0.41% to 6,038.18 and Germany’s DAX increased 108.73 points or 0.83% to 13,235.72.

Asian markets ended mostly higher on Tuesday following the killing of a top Iranian general by the United States eased in the absence of any fresh developments in the standoff between the two countries. Chinese shares ended higher on expectations of more policy support for the slowing economy and as concerns over tensions in the Middle East eased. Japanese shares ended up, helped by an overnight recovery in US shares on expectations that the situation in the Middle East will not escalate into full-fledged military action. Meanwhile, investors are focused on much-awaited Phase 1 trade deal between the United States and China set to be signed on January 15 at the White House.