Post Session: Quick Review

Wednesday turned out to be a decent day of trade for Indian equity benchmarks where frontline gauges managed to end the session on positive note after trading between green and red terrain throughout the day. Soon after making a positive start, local bourses entered into red terrain as traders turned cautious on reports that India witnessed a slight rise in fresh Covid cases with 20,529 cases. India's caseload now stands at 10,245,326. India had reported six cases of new coronavirus variant. But the government said the existing vaccines for Covid-19 will protect against the new variants as there is no evidence to prove otherwise. Markets traded subdued throughout the session as traders remained pessimistic after the Reserve Bank of India (RBI) in its report on Trend and Progress of Banking in India 2019-20 has said that going forward, the profitability of non-banking finance companies (NBFCs) may be dampened due to loan impairment, lower credit demand and a tendency to preserve cash. The RBI has also cautioned about the imminent stress in the banking sector after unwinding of the measures taken to combat the impact of COVID-19, and it said banks will need to adapt and adjust themselves to meet the upcoming challenges.

However, buying which emerged in last leg of trade helped markets to end in green as traders opted to buy beaten down but fundamentally strong stocks. Market participants took some support with Former RBI Governor Duvvuri Subbarao Rao’s statement that though Covid -19 and the subsequent lockdown left a trail of economic devastation on most countries, India can potentially build upon three positive aspects- push in the rural economy, stronger federalism and a huge consumption base. Buying in auto metal and realty sector too provided strength to markets.

Positive global cues too supported domestic sentiments amid hopes countries would speed up coronavirus vaccinations. Most of the European counters were trading in green as Britain approved a COVID-19 vaccine developed by AstraZeneca and Oxford University, while bets of more U.S. fiscal aid and massive vaccination efforts spurred hopes of a strong global economic recovery next year. Asian markets ended mostly in green as investors are looking ahead to the New Year with optimism after a turbulent 2020.

The BSE Sensex ended at 47746.22, up by 133.14 points or 0.28% after trading in a range of 47,358.36 and 47,807.85. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.53%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.61%, Auto up by 1.37%, Realty up by 1.31%, Metal up by 1.24% and Consumer Discretionary Goods & Services was up by 1.10%, while Telecom down by 0.68%, TECK down by 0.22%, IT down by 0.15% and Healthcare down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 4.59%, Bajaj Finance up by 2.66%, Maruti Suzuki up by 2.00%, Mahindra & Mahindra up by 1.82% and Asian Paints up by 1.62%. On the flip side, Indusind Bank down by 1.60%, Sun Pharma down by 1.13%, SBI down by 1.04%, Axis Bank down by 0.99% and TCS down by 0.70% were the top losers.

Meanwhile, former RBI Governor Duvvuri Subbarao Rao has said that though Covid -19 and the subsequent lockdown left a trail of economic devastation on most countries, India can potentially build upon three positive aspects- push in the rural economy, stronger federalism and a huge consumption base. He said ‘the challenge for the government in the months and years ahead is clear: to put the economy back on a healthy growth trajectory and ensure that growth is inclusive, with lower income households too enjoying the benefits of rapid growth.’

Subbarao has stated that the expanded MNREGA provided a lifeline when most needed, and the frontloaded transfer payments to women, pensioners and farmers have put money in the hands of households and have helped revive demand. The brisk procurement by the FCI (Food Corporation of India) has buttressed farmers’ incomes while it helped the government extend the food security programme until end November.

Stating that the Indian economy was already in a troubled shape even before the Covid -19 crisis, the former RBI Governor said a ‘V’ shaped recovery in the growth rate does not mean a ‘V’ shaped recovery in absolute output and the level of output in 2021-22 will be lower than what the country achieved in 2019-20. The book is expected to be released shortly.

The CNX Nifty ended at 13981.95, up by 49.35 points or 0.35% after trading in a range of 13864.95 and 13997.00. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 4.04%, Shree Cement up by 3.19%, Grasim Industries up by 2.74%, UPL up by 2.73% and Bajaj Finance up by 2.57%. On the flip side, Indusind Bank down by 1.52%, Sun Pharma down by 1.12%, Axis Bank down by 0.81%, Bharti Airtel down by 0.79% and TCS down by 0.72% were the top losers.

European markets were trading mostly in green, UK’s FTSE 100 increased 17.09 points or 0.26% to 6,619.74 and France’s CAC increased 5.76 points or 0.10% to 5,617.55, while Germany’s DAX was down by 2.97 points or 0.02% to 13,758.41.

Asian markets ended mostly higher on Wednesday, despite weakness in Wall Street overnight due to uncertainty over increasing the size of the individual stimulus checks to $2,000 from $600. While, the start of mass Covid-19 vaccination drives in several countries has fueled recovery hopes. Chinese shares ended higher amid expectations of a strong economic recovery next year. Though, Japanese shares finished lower as investors booked profits after Nikkei index hits 30-year high on Tuesday. Growing worries over spiking corona virus cases as well as confirmation of new virus strains in Japan that were first detected in the United Kingdom and South Africa also put pressure on Japanese markets.