Post Session: Quick Review

Indian equity Markets traded on a flat note for most part of the day but staged an up move in the last hour of trade, which helped to close Tuesday's session at a record close. Traders took support with report that the government is expected to address the issue of inverted duty structure, especially in sectors such as chemicals and electronics, in the forthcoming Budget, to boost manufacturing as part of the 'Make In India' campaign. Inverted duty structure refers to taxation of inputs at higher rates than finished products that results in build-up of credits and cascading costs. Some optimism also came as the Reserve Bank of India remained a net purchaser of the US dollar in November, buying $6.928 billion from the spot market on a net basis. The RBI had bought $7.458 billion of the greenback and sold $530 million in the spot market in the reporting month. The sentiments were also supported by broadly positive Asian indices coupled with expectations of healthy quarterly earnings results

However, further up-ward move got restricted on the back of weak macro-economic data. India’s retail inflation spiked to five year high. India's retail inflation spiked to a five-year high in December, breaching the upper end of the RBI's 2-6 percent target for the first time since July 2016. Inflation increased notably to 7.35 percent from 5.54 percent in November, driven by higher food prices. Also, wholesale prices based inflation surged to 2.59 per cent in December, as against 0.58 per cent in November due to increase in prices of food articles like onion and potato. The annual inflation, based on monthly WPI, was at 3.46 per cent during the same month a year ago (December 2018).

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading higher as signs of goodwill between China and the United States supported optimism for global growth, with the world's two biggest economies preparing to formalise a trade-war truce. Back home, metal stocks were in focus as India imposed anti-subsidy duty for a period of five years on copper wire rods from Indonesia, Malaysia, Thailand and Vietnam after concluding a probe that these imports have impacted domestic players. Besides, textile sector were in focus with Invest India stating that India's textile and apparel exports are expected to reach $300 billion by 2024-25, resulting in a tripling of the country's market share globally from 5 percent to 15 percent. 

The BSE Sensex ended at 41934.42, up by 74.73 points or 0.18% after trading in a range of 41770.90 and 41994.26. There were 23 stocks advancing against 7 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.75%, while Small cap index was up by 0.73%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 1.47%, Metal up by 0.93%, Consumer Disc up by 0.86%, Power up by 0.77% and Utilities up by 0.75%, while Energy down by 0.49%, Bankex down by 0.41% and Realty down by 0.04% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 1.81%, ITC up by 1.80%, NTPC up by 1.72%, Mahindra & Mahindra up by 1.42% and Axis Bank up by 1.40%. (Provisional)

On the flip side, Indusind Bank down by 3.89%, Reliance Industries down by 0.96%, Kotak Mahindra Bank down by 0.82%, SBI down by 0.67% and Larsen & Toubro down by 0.55% were the top losers. (Provisional)

Meanwhile, the government is expected to address the issue of inverted duty structure, especially in sectors such as chemicals and electronics, in the forthcoming Budget, to boost manufacturing as part of the 'Make In India' campaign. Inverted duty structure refers to taxation of inputs at higher rates than finished products that results in build-up of credits and cascading costs.

Inverted duty structure impacts the domestic industry adversely as manufacturers have to pay a higher price for raw material in terms of duty, while the finished product lands at lower duty and cost. The commerce and industry ministry has proposed to the finance ministry to address the inverted duty structure on several products such as consoles, panels, certain steel products, calcined alumina, ethyl acetate, and viscose staple fibre.

Further, concessions given by India under free trade agreements (FTAs) to its partner countries has also resulted in inverted duty structure that makes Indian manufactured goods (those dependent on imported raw materials) uncompetitive in domestic market. India has implemented FTAs with many countries including Japan, South Korea and Singapore, and is in discussion with several other nations.

The CNX Nifty ended at 12360.05, up by 30.50 points or 0.25% after trading in a range of 12308.70 and 12374.25. There were 37 stocks advancing against 13 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 2.87%, Britannia Industries up by 2.30%, Hero MotoCorp up by 2.06%, ITC up by 1.61% and Cipla up by 1.58%. (Provisional)

On the flip side, Yes Bank down by 8.31%, Indusind Bank down by 3.99%, UPL down by 1.14%, Reliance Industries down by 0.95% and SBI down by 0.83% were the top losers. (Provisional)

All European markets were trading higher; UK’s FTSE 100 increased 26.73 points or 0.35% to 7,644.33, France’s CAC rose 3.97 points or 0.07% to 6,040.11 and Germany’s DAX was up by 27.23 points or 0.2% to 13,478.75.

Asian markets ended mostly higher on Tuesday, with China's yuan jumped after the United States removed the currency manipulator label it imposed on China last summer, in a sign of easing Sino-US tensions after nearly two years of conflict. Further, Japanese shares ended up as traders returned to their desks after a public holiday on Monday. Though, Chinese shares ended lower despite upbeat trade data. China's exports rose an annual 7.6 percent in the month, marking the first gain in the country's exports since July 2019 and the fastest growth rate since March 2019, official data showed. At the same time, imports in the month grew 16.3 percent from a year earlier.