Local equities trade higher amid positive global sentiments

Local equity benchmarks maintained their upward momentum in the morning session, following gains in IT, TECK and Realty stocks amid positive global sentiments. Traders remain optimistic ahead of consumer inflation data due after market hours, which would offer more clarity on the monetary policy in the near term. The markets took support from a RBI’s data which showed that the country’s foreign exchange reserves touched a record high of $461.157 billion, after it surged by $3.689 billion in the week to January 3. In the previous week, the reserves had risen by $2.52 billion to $454.948 billion. Some optimism also came with a monthly report that IIP grew by 1.8 per cent in November after contracting for the straight three months. However, upside remain capped with eminent economist R Nagaraj’s statement that India would need to grow at 9% to achieve the target of $5 trillion economy by 2024, which currently looks ‘unimaginably ambitious’. Besides, NITI Aayog CEO Amitabh Kant stated that the service sector is the largest component of India’s GDP but the country cannot achieve an ambitious goal of a $5 trillion economy without the active participation of the manufacturing sector.

On the global front, Asian markets are trading mostly in green, ahead of US President Donald Trump and Chinese officials to sign the long-awaited phase one trade deal between the two countries on January 15, which has been embroiled in a long-running trade dispute. Back home, Steel sector stocks remain in focus as Union Minister Dharmendra Pradhan state that steel ministry is planning at an aggregate investment of $70 billion in the eastern region of the country through accelerated development of the sector.

The BSE Sensex is currently trading at 41862.26, up by 262.54 points or 0.63% after trading in a range of 41720.76 and 41893.41. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.61%, while Small cap index was up by 0.81%.

The top gaining sectoral indices on the BSE were IT up by 1.96%, TECK up by 1.58%, Realty up by 0.96%, Oil & Gas up by 0.93% and Capital Goods was up by 0.87%, while Telecom down by 0.43% and Auto was down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 4.76%, Sun Pharma up by 1.58%, HCL Tech up by 1.04%, Hindustan Unilever up by 0.95% and Tech Mahindra was up by 0.88%. On the flip side, TCS down by 0.45%, HDFC down by 0.31%, Bharti Airtel down by 0.26%, Titan Company down by 0.05% and Nestle was down by 0.01% were the top losers.

Meanwhile, in order to meet the debt obligations of government bonds in the next financial year (FY21) standing at Rs 3.02 trillion to avoid putting pressure on higher borrowings from the market, the government may choose for auctioning of more cash management bills (CMBs). The Reserve Bank of India (RBI) announced the auction of a 63-Day Government of India Cash Management Bill. The central bank carries on the auctioning of GSec on behalf of the government. Cash Management Bills are short term bills issued by the central government to meet its immediate cash needs. The bills will be auctioned on January 13, 2020 and will mature on March 13, 2020 will raise Rs 30,000 crore. Government bonds worth Rs 61,000 crore came up for redemption on January 2 when investors received the money back with interest.

According to RBI data, the redemption pressure that is to come in FY21 include, on April 9, the debt obligations government has to meet is Rs 35,268.36 crore whole on April 22, the amount is Rs 6,000 crore and on May 03, the redemption pressure is of Rs 71,130 crore and on June 9, it is Rs 67,182 crore.  India’s higher market borrowings can impact the fiscal deficit.

However, the Union Budget 2020 will decide the fiscal deficit for FY21, it is now almost certain that the current fiscal deficit of 3.3 per cent may be unattainable given the weak tax and disinvestment revenue positions. Excess borrowing to meet debt servicing will create further mismatch between the revenue and expenditure which the government may try to avoid next fiscal. This leaves to banking on CMBs more for debt servicing to a large extend.

The CNX Nifty is currently trading at 12331.40, up by 74.60 points or 0.61% after trading in a range of 12285.80 and 12337.75. There were 38 stocks advancing against 12 stocks declining on the index.

The top gainers on Nifty were Infosys up by 4.73%, Wipro up by 1.97%, Coal India up by 1.97%, Sun Pharma up by 1.51% and Indian Oil Corporation was up by 1.24%. On the flip side, Yes Bank down by 5.92%, Bharti Infratel down by 1.52%, Tata Motors down by 1.48%, Eicher Motors down by 1.31% and UPL was down by 0.97% were the top losers.

Asian markets are trading mostly in green, Hang Seng increased 222.80 points or 0.78% to 28,861.00, Taiwan Weighted strengthened 59.70 points or 0.5% to 12,084.35, KOSPI rose 17.32 points or 0.78% to 2,223.71, Jakarta Composite soared 3.96 points or 0.06% to 6,278.90 and Shanghai Composite was up by 1.73 points or 0.06% to 3,094.02. On the other hand, Straits Times was down by 2.39 points or 0.07% to 3,253.56.