Benchmarks trade in fine-fettle; Sensex reclaims 41,200 mark

Indian equity benchmarks made strong comeback, after a steep fall in the previous session, with a gap-up opening on Tuesday. Markets were trading in fine-fettle with gains of over a percent each in early deals, tracking Asian peers and as fears of a Middle East conflict abated for now. Investors were 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. 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. Though, market participants largely overlooked 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.

On the global front, Asian markets were trading mostly higher following the overnight recovery on Wall Street and as no fresh escalation in tensions were reported from the Middle East. Investors are optimistic that the geopolitical tensions will not have a major impact on the global economy. Crude oil and gold prices retreated after strong gains in the overnight session. On the economic front, the Bank of Japan said that the monetary base in Japan was up 3.2 percent on year in December, coming in at 512.776 trillion yen. That's down from 3.3 percent in November.

Back home, on the sectoral front, telecom stocks were in focus as the telecom industry urged the government to facilitate funding for telecom companies at lower interest rates to help them reduce capital costs. In stock specific development, ITI jumped over 10% on BSE on reporting robust earnings with an over 12-fold jump in the consolidated net profit at Rs 168 crore in the December 2019 quarter of the current fiscal year (Q3FY20). HDFC Bank rose as it announced operational performance for Q3 of FY 2020. In Q3 of FY 2020, advances grew 20% to Rs 9,34,000 crore, compared to Q3 of FY 2019. Deposits grew 25% to Rs 1,06,7500 crore as of 31 December 2019, up 25%, compared to Q3 of FY 2019.

The BSE Sensex is currently trading at 41202.58, up by 525.95 points or 1.29% after trading in a range of 40965.94 and 41211.83. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 1.41%, while Small cap index was up by 1.51%.

The top gaining sectoral indices on the BSE were Bankex up by 1.79%, Realty up by 1.79%, Basic Materials up by 1.72%, Energy up by 1.71% and Metal was up by 1.45%, while IT down by 0.13% was the only losing index on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.53%, HDFC Bank up by 2.16%, Reliance Industries up by 2.12%, SBI up by 2.12% and Axis Bank up by 2.08%. On the flip side, Tech Mahindra down by 1.15%, TCS down by 0.37% and HCL Technologies down by 0.29% 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.

The CNX Nifty is currently trading at 12148.75, up by 155.70 points or 1.30% after trading in a range of 12073.00 and 12149.70. There were 46 stocks advancing against 4 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.12%, Zee Entertainment up by 2.54%, Indusind Bank up by 2.44%, HDFC Bank up by 2.24% and SBI up by 2.10%. On the flip side, Tech Mahindra down by 0.99%, Wipro down by 0.36%, HCL Technologies down by 0.32% and TCS down by 0.25% were the top losers.

Asian markets are trading mostly in green, Nikkei 225 surged 320.19 points or 1.38% to 23,525.05, Hang Seng increased 140.99 points or 0.5% to 28,367.18, Straits Times advanced 21.44 points or 0.67% to 3,240.30, KOSPI rose 17.40 points or 0.81% to 2,172.47, Shanghai Composite gained 11.03 points or 0.36% to 3,094.44 and Jakarta Composite soared 2.27 points or 0.04% to 6,259.67. On the flip side, Taiwan Weighted was down by107.66 points or 0.9% to 11,845.70.