Markets trade in fine-fettle in early deals; Nifty surpasses 13,950 mark

With favorable global cues, Indian equity benchmarks made optimistic start on Tuesday. Markets are trading at fresh lifetime highs in early deals on account of buying in Bankex, IT and TECK counters. Coronavirus vaccine hopes aided sentiments in domestic markets. Serum Institute of India (SII) CEO Adar Poonawalla said he was hoping for the emergency use approval of AstraZeneca-Oxford University COVID-19 vaccine Covishield by the end of this month or January in the UK and India. Adding more optimism, FICCI report stated that India could benefit from the likely shift in global supply chains from China to other economies in the aftermath of the COVID-19 pandemic, likely to boost sentiments in markets. Meanwhile, with 16,072 fresh Covid-19 cases, India's caseload has now reached 10,224,797. The country's death toll has mounted to 148,190.

On the global front, Asian markets were trading mixed  amid improved risk appetite as U.S. President Donald Trump's signing of a $2.3 trillion pandemic bill and the Brexit trade deal raised hopes of an economic recovery. Back home, sugar stocks were in focus as Crisil Ratings said the Centre's export subsidy for the October-September sugar season 2020-21 (SS21) will help sustain the commodity's exports at almost last year's level. In scrip specific development, Axis Bank gained as it is pruning its overseas operation as part of a strategy of focusing Indian market.

The BSE Sensex is currently trading at 47674.33, up by 320.58 points or 0.68% after trading in a range of 47466.62 and 47680.57. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.46%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Bankex up by 1.30%, IT up by 0.72%, TECK up by 0.65%, Healthcare up by 0.58%, PSU up by 0.46%, while Metal down by 0.28%, Power down by 0.20% were the only losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 3.80%, HCL Technologies up by 1.68%, HDFC up by 1.43%, HDFC Bank up by 1.33% and Axis Bank up by 1.32%. On the flip side, NTPC down by 0.70%, Nestle down by 0.57%, Power Grid down by 0.50%, Ultratech Cement down by 0.33% and Hindustan Unilever down by 0.09% were the top losers.

Meanwhile, Reserve Bank of India (RBI) paper has said that maintaining the inflation target at 4 percent is appropriate for India as targeting a lower rate could impart deflationary bias to the monetary policy. It said under the current dispensation, the RBI has been mandated by the government to maintain retail inflation at 4 percent with a margin of 2 percent on either side.

The paper, authored by RBI Deputy Governor Michael Debabrata Patra and another official Harendra Kumar Behera, has found a steady decline in trend inflation to 4.1-4.3 percent since 2014. It also noted that a target set too below the trend imparts a deflationary bias to monetary policy because it will go into overkill relative to what the economy can intrinsically bear in order to achieve the target. Analogously, it said a target that is fixed above-trend renders monetary policy too expansionary and prone to inflationary shocks and unanchored expectations. The paper notes that estimating trend inflation with regular updates is important for the formulation of monetary policy, irrespective of the country setting.

In a bid to keep inflation under specified level, the government in 2016 had decided to set up Monetary Policy Committee headed by the RBI Governor entrusted with the task of fixing the benchmark policy rate (repo rate). The six-member panel, which had its first meeting in October 2016, was given the mandate to maintain annual inflation at 4 percent until March 31, 2021, with an upper tolerance of 6 percent and lower tolerance of 2 percent.

The CNX Nifty is currently trading at 13959.00, up by 85.80 points or 0.62% after trading in a range of 13909.95 and 13964.85. There were 34 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 3.85%, HCL Technologies up by 1.66%, Wipro up by 1.66%, HDFC up by 1.59% and Grasim Industries up by 1.51%. On the flip side, JSW Steel down by 1.00%, NTPC down by 0.90%, Power Grid down by 0.60%, Ultratech Cement down by 0.54% and Hindalco down by 0.54% were the top losers.

Asian markets were trading mixed; Nikkei 225 surged 470.16 points or 1.75% to 27,324.19, Straits Times rose 7.46 points or 0.26% to 2,847.60 and Hang Seng jumped 275.99 points or 1.05% to 26,590.62. On other hand, Taiwan Weighted inched down 4.10 points or 0.03% to 14,478.97, KOSPI fell 2.03 points or 0.07% to 2,806.57, Jakarta Composite slipped 16.37 points or 0.27% to 6,077.18 and Shanghai Composite was down by 11.15 points or 0.33% to 3,386.14.