Local indices manage to settle flat with positive bias

After remaining in the negative territory for most part of the session, Indian equity benchmarks managed to settle flat with a positive bias on Tuesday, led by gains in heavyweights Bajaj Finance, Bajaj Finserv, HDFC and Tech Mahindra. The benchmarks opened lower as sentiments remained down-beat with industry body CII stating that the current agitation by farmers has led to supply chain disruptions, which will impact the economy in the coming days and may impinge upon the ongoing recovery from the economic contraction due to COVID-19. Trades overlooked the government data showing that retail Inflation has eased marginally to 6.93% in November due to considerable easing in vegetable prices. Retail inflation had remained above 7 per cent for two month in a row. Market participants also paid no heed towards rating agency CRISIL’s report in which it has projected a slower contraction of 7.7% for the Indian economy in the ongoing fiscal, compared to the 9% forecast in September on the back of faster-than-expected recovery in the second quarter, but called for more fiscal measures to sustain it. 

However, late buying helped benchmarks erase all intraday losses. Traders found some solace with Commerce and Industry Minister Piyush Goyal’s statement that Foreign direct investments (FDIs) into India have been continuously growing as the country has one of the most facilitative policies to attract overseas investors. He said that during April-September 2020, FDI increased 13 per cent to about $40 billion. Some support also came after the Finance Ministry highlighted the economic reforms for growth and development of the country. It said that from January 2021, taxpayers up to the turnover of Rs 5 crore will have the option of filing a quarterly Goods and Service Tax Returns (GSTR) under QRMP Scheme i.e. Quarterly Returns Monthly Payment Scheme.

On the global front, Asian markets ended mostly lower on Tuesday, as concerns about increasing Covid-19 infections and lockdowns around the world overshadowed investor optimism stemming from vaccine rollouts in Britain, Canada and the United Stated. Investors are looked ahead to policy announcements later this week by the U.S. Federal Reserve and the Bank of Japan for directional cues. However, a slew of data showed that the economic recovery in China remains on track. Industrial production in China was up 7.0 percent year-on-year in November- matching forecasts and up from 6.9 percent in October. The bureau also said that retail sales rose an annual 5.0 percent - shy of expectations for an increase of 5.2 percent but still up from 4.3 percent in the previous month. Fixed asset investment gained 2.6 percent on year, in line with expectations and up from 1.8 percent a month earlier. European markets were trading higher, as investors clung to hopes of a Brexit trade deal and a U.S. coronavirus relief plan. But, the Office for National Statistics reported that the U.K. unemployment increased in three months to October and the employment rate declined as the pandemic weighed on job creation. The unemployment rate rose to 4.9 percent in three months to October.

Finally, the BSE Sensex rose 9.71 points or 0.02% to 46,263.17, while the CNX Nifty was up by 9.70 points or 0.07% to 13,567.85.

The BSE Sensex touched high and low of 46,350.30 and 45,841.67, respectively and there were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.42%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.17%, Finance up by 0.68%, Auto up by 0.60%, Metal up by 0.56% and Basic Materials up by 0.52%, while FMCG down by 1.25%, Oil & Gas down by 1.01%, Energy down by 0.86%, PSU down by 0.63% and IT down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.69%, Bajaj Finserv up by 4.15%, HDFC up by 2.19%, Tech Mahindra up by 2.08% and HDFC Bank up by 1.50%. On the flip side, Hindustan Unilever down by 2.12%, Nestle down by 2.12%, ICICI Bank down by 1.51%, Axis Bank down by 1.46% and SBI down by 1.33% were the top losers.

Meanwhile, terming lower government spending as a ‘constraint’ for growth, Ratings agency Crisil in its latest report has revised upwards its FY21 Gross domestic product (GDP) contraction estimate to 7.7 percent from the earlier expectation of 9 percent. It noted that a faster-than-expected revival in activity in the second quarter, which continues into the festive season, is one of the reasons for the upward revision. It also said that the coronavirus disease (covid-19) pandemic, which has pushed the economy into contraction mode, will result in a permanent loss of 12 percent in real GDP terms.

According to the report, after its initial expectation of 9.5 percent GDP contraction in FY21, the Reserve Bank revised up its estimate to 7.5 percent earlier this month. It said other analysts have also revised upwards their projections as the unlocking of economy led to higher activities. It also stated that inadequate fiscal spending remains a constraint for economic growth, and pointed out a possible second wave of covid-19 afflictions, uncertainty regarding availability of vaccine, and hiccups in global economic revival due to resurgence of cases as factors which call for caution.

However, the agency said that the GDP will grow by 10 percent in FY22 on a very low base of previous fiscal year. It noted that the newer estimate on a lower contraction has considered a better than expected growth in manufacturing sector in the second quarter, lighter restrictions as people's attitudes shift to learning to live with the virus and a flattening of the infection curve. It has also considered that fiscal policy support, which hitherto remains inadequate to revive demand could be forthcoming.

The CNX Nifty traded in a range of 13,589.65 and 13,447.05 and there were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 5.13%, Bajaj Finserv up by 4.18%, Eicher Motors up by 3.10%, JSW Steel up by 2.49% and Shree Cement up by 2.11%. On the flip side, Hindustan Unilever down by 2.07%, Nestle down by 2.05%, BPCL down by 1.76%, ICICI Bank down by 1.73% and Axis Bank down by 1.46% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 11.81 points or 0.18% to 6,543.64, France’s CAC rose 25.79 points or 0.47% to 5,553.63 and Germany’s DAX was up by 88.70 points or 0.67% to 13,311.86.

Asian markets ended mostly lower on Tuesday tracking mixed cues from Wall Street as optimism about Covid-19 vaccines was offset by concerns about the impact of new lockdown measures due to the spiking corona virus infections in the United States. New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio both warned that a full shutdown is possible in the coming weeks. Japanese shares declined after its Prime Minister Yoshihide Suga announced that the ‘GoTo Travel’ domestic tourism campaign would be suspended nationwide from December 28 to January 11. Chinese shares ended marginally lower, despite slew of positive economic data. The data showed that Industrial production in China grew 7% year-on-year in November, in line with forecasts and up from 6.9 percent in October. Retail sales in China rose 5% in November as compared with a year ago, missing expectations for an increase of 5.2% but still up from 4.3% in the previous month. Meanwhile, Fixed asset investment gained 2.6% on year, in line with expectations and up from 1.8% a month earlier.