Bourses back in green on Tuesday; Sensex up by 0.47%

Indian equity bourses came back in green terrain in Tuesday’s trading session, with Sensex and Nifty ending higher by around 0.50% each. The start of the day was fabulous, aided 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. Adding more relief on the street, the Reserve Bank of India (RBI) has revised the Supervisory Action Framework (SAF) for urban cooperative banks (UCBs), with an aim to ensure expeditious resolution of financial stress being faced by some of them.

But, indices pared some of gains in noon deals, amid a 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. Some concerns also came with reports that markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India’s FY20 current account deficit and forecasts for a balance of payment surplus.

On the global front, European markets were trading in green, as Eurozone investor confidence rose for third successive month in January, and at a faster-than-expected pace, to its highest level in over a year amid signs of an easing in the US-China trade dispute. The Sentix investor confidence index climbed to 7.6 points from 0.7 in January. Asian markets ended mostly higher, after South Korea's current account surplus increased in November from last year. The current account balance showed a surplus of $5.97 billion versus $7.83 billion in the previous month. The surplus increased from $5.13 billion logged in the same period of last year.

Back home, the telecom sector stocks ended lower, despite the telecom industry urged the government to facilitate funding for telecom companies at lower interest rates to help them reduce capital costs. Further, stocks related to the renewable sector remained in focus, as credit rating agency Fitch Solutions stated 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.

Finally, the BSE Sensex gained 192.84 points or 0.47% to 40,869.47, while the CNX Nifty was up by 59.90 points or 0.50% to 12,052.95.

The BSE Sensex touched high and low of 41230.14 and 40727.37, respectively and there were 21 stocks advancing against 09 stocks declining.

The broader indices ended in green; the BSE Mid cap index rose 0.65%, while Small cap index was up by 0.99%.

The top gaining sectoral indices on the BSE were Realty up by 1.83%, Basic Materials up by 1.48%, Energy up by 1.02%, Metal up by 0.66% and Industrials up by 0.61%, while Telecom down by 0.97%, TECK down by 0.32%, IT down by 0.26%, Consumer Durables down by 0.05% and PSU down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.10%, HDFC Bank up by 1.59%, Reliance Industries up by 1.57%, Sun Pharma up by 1.47% and NTPC up by 1.35%. On the flip side, Infosys down by 1.48%, ICICI Bank down by 0.94%, Bharti Airtel down by 0.92%, Nestle down by 0.83% and Hero MotoCorp down by 0.81% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has conducted its simultaneous purchase and sale of government securities (G-Secs) under open market operations (OMOs). It bought Rs 10,000 crore of three long-term securities and sold a same amount of three short-term bonds. This is the third such special OMO by Central Bank. Like last week, though the RBI offered to sell four securities in the auction, it accepted bids for three bonds. In the current OMO purchase auction, the RBI offered to purchase three securities including 10-year benchmark government bond, as against just one bond in the previous two auctions.

It got bids worth Rs 64,505 crore for the three bonds but choose to accept only Rs 10,000 crore of bids under the OMO purchase auction. It got 198 bids for 7.32 per cent-2024 but accepted 12 bids and for 7.27 per cent-2026 bonds the RBI received 163 bids and accepted only two bids. The RBI received 224 bids for 6.45 per cent-2029 security but accepted only 22 bids. It offered to sell four government securities-6.65 per cent- 2020; 7.80 per cent-2020; 8.27 per cent-2020 and 8.12 per cent-2020 through OMO sale. These securities were offered by the RBI in the previous two OMO sale auctions. It received Rs 47,540 crore of bids but accepted to sell Rs 10,000 crore of bids.

In terms of number of bids, the central bank received 26 bids for 6.65 per cent-2020; 40 for 7.80 per cent-2020 and 35 for 8.27 per cent-2020 but accepted 7, 3 and 4 bids, respectively. For 8.12 per cent-2020 bond, it received 41 bids but did not accept any of them. In the previous two similar auctions, the RBI had purchased Rs 20,000 crore and sold Rs 15,326 crore of bonds.

Indian services companies expect marketing efforts and favourable economic conditions to boost business activity during 2020. Despite rising to a four-month high, the overall level of positive sentiment remained below its long-run average.

The CNX Nifty traded in a range of 12,152.15 and 12,005.35. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.65%, Zee Entertainment up by 2.35%, Ultratech Cement up by 1.99%, UPL up by 1.72% and Reliance up by 1.69%. On the flip side, Bharti Infratel down by 1.81%, BPCL down by 1.51%, Infosys down by 1.29%, Bharti Airtel down by 1.02% and Power Grid down by 0.93% were the top losers.

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.