Markets end higher for second straight day

Indian equity benchmarks ended higher for the second straight day on Wednesday, tracking gains in Hindustan Unilever, Infosys and Mahindra & Mahindra amid a positive trend in global markets. Key gauges made cautious start, amid concerns about a new faster-spreading variant of the coronavirus. But, the benchmarks soon gained traction and traded in fine fettle, as investors took some solace from a private report that India is likely to approve Oxford/AstraZeneca’s coronavirus vaccine for emergency use by next week after its local manufacturer submitted additional data sought by authorities. Traders also took encouragement with PHD Chamber of Commerce and Industry’s EBM Index showing that the continuous improvement in the key economic and business indicators signals that the worst is behind us and expectations of positive GDP growth at 0.1 per cent to 2 per cent in Q3 and 2 per cent to 4 per cent in Q4 FY 2020-21 are becoming strong with a higher growth trajectory in FY 2021-22 at 7.7 per cent.

Domestic indices extended gains in late afternoon deals, taking support from rating agency ICRA’s report that the domestic securitization volumes of retail pools originated by non-banking financial companies (NBFC) and housing finance companies (HFC)) are likely to witness a healthy bounce back in FY2022, after witnessing a sharp contraction in the current fiscal so far. Some respite also came with Financial Services Secretary Debasish Panda’s statement that the government plans to set up a Development Finance Institution (DFI) in the next three to four months, with a view to mobilize Rs 111 lakh crore required for funding of the ambitious national infrastructure pipeline. Meanwhile, Industry body CII said it has demanded higher allocation of fund for food processing schemes and tax incentives for exports of agriculture and food items. In a pre-Budget meeting with senior finance ministry officials, CII highlighted the need to find ways for tapping export markets for wheat.

On the global front, Asian markets finished mostly higher on Wednesday as worries over a new Covid-19 strain eased and U.S. lawmakers approved a $900 billion relief package for the world's biggest economy. U.S. President Donald Trump said he wants an increase in the stimulus checks for individuals to $2,000 from $600, or he may veto the legislation. Besides, minutes from the central bank's meeting on revealed that members of the Bank of Japan's monetary policy meeting said that the country's economy is starting to show signs of recovery following the lengthy COVID-19 shutdown. The minutes also showed that further coordination of fiscal and monetary policy may be necessary as employment and income remained at low levels due to the shutdown. The country also slipped back into deflation after finally shaking off more than a decade's worth of it not that long ago. European markets were trading mostly in green as Brexit talks edged towards their final deadline and France reopened its borders with the U.K. to travelers and truck drivers who test negative for Covid-19.

Finally, the BSE Sensex rose 437.49 points or 0.95% to 46,444.18, while the CNX Nifty was up by 134.80 points or 1.00% to 13,601.10.

The BSE Sensex touched high and low of 46,513.32 and 45,899.10, respectively and there were 26 stocks advancing against 4 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 2.40%, while Small cap index was up by 2.65%.

The top gaining sectoral indices on the BSE were Realty up by 3.97%, Metal up by 2.53%, IT up by 2.34%, Telecom up by 2.23% and TECK up by 2.20%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.67%, Infosys up by 2.64%, Mahindra & Mahindra up by 2.35%, ITC up by 2.14% and SBI up by 2.14%. On the flip side, Titan Company down by 0.81%, Power Grid down by 0.37%, NTPC down by 0.35% and HDFC down by 0.02% were the top losers.

Meanwhile, Rating agency ICRA in its latest report has said that the domestic securitization volumes of retail pools originated by non-banking financial companies (NBFC) and housing finance companies (HFC)) are likely to witness a healthy bounce back in FY2022, after witnessing a sharp contraction in the current fiscal so far. It noted that the rise in volumes for the remainder of the current fiscal and for FY22 would be driven by growing investor confidence in asset quality due to improving collections; higher funding requirement of originators on account of increasing disbursements and improving business activities post the end of lockdown and moratorium period.

According to the report, the collections across all asset classes have bounced back sharply since the dip seen in April 2020 following the nationwide lockdown. It also said the resumption of businesses, as the lockdown has gradually eased, has supported the ability of the retail borrowers to meet their EMI payments. It added that this has reduced investor wariness towards purchase of retail pools that has led to a healthy momentum in fresh securitisation from September 2020 onwards.

The report further said the financing requirements for NBFCs and HFCs are also expected to increase in FY22 as disbursements would be closer to the pre-Covid levels which in turn would support the securitisation market as a tool to diversify funding sources. It said sppetite for securitisation of unsecured loans though still remains relatively weak and would only improve if the collection efficiency for such asset classes continues to increase in a sustainable manner.

The CNX Nifty traded in a range of 13,619.45 and 13,432.20 and there were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Wipro up by 5.70%, Cipla up by 3.76%, Tata Steel up by 3.40%, Tata Motors up by 2.76% and Hindustan Unilever up by 2.68%. On the flip side, Hero MotoCorp down by 0.95%, Divis Lab down by 0.70%, Titan Company down by 0.52%, NTPC down by 0.15% and Power Grid Corporation down by 0.11% were the top losers.

European markets were trading mostly in green; France’s CAC increased 44.79 points or 0.82% to 5,511.65 and Germany’s DAX increased 114.45 points or 0.85% to 13,532.56, while UK’s FTSE 100 decreased 4.79 points or 0.07% to 6,448.37.

Asian markets finished mostly higher on Wednesday following approval of US stimulus package by US Congress. Meanwhile, US President Donald Trump threatened on Tuesday not to sign an $892 billion corona virus relief bill, saying he wants Congress to increase the amount in the stimulus checks for individuals to $2,000 from $600, or he may veto the legislation. Market sentiments improved further as concerns over a new Covid-19 strain eased, and WHO said the new Covid-19 variant found in UK is not out of control and it can be prevented via existing measures. Chinese shares ended higher after Covid-19 vaccine candidate developed by the Chinese Academy of Sciences was found to be safe and triggered immune responses in early and mid-stage trials.