Sensex, Nifty end higher for sixth day

A decent recovery in the final hour of the trade helped Indian equity benchmarks extend their winning streak to the sixth straight day, led by gains in Basic Materials, Auto, Realty and Metal stocks. The benchmark indices made positive start, but quickly pared the gains and spent rest of the session fluctuating between gains and losses, as traders remained anxious with 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. Sentiments remained in lackluster mood with the Reserve Bank of India (RBI) in its Report stated that the profitability of non-banking finance companies (NBFCs) may be ‘dampened’ going ahead due to the loan impairment and lower credit demand. But, it said many NBFCs have made additional provisioning as per expected credit loss (ECL) norm; and bolstered their capital position by ploughing back dividends.

However, late buying and positive trends in the European stocks helped the indices rebound and end at record closing high levels. Some respite also came 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. Adding to the optimism, government approved the 15th tranche of electoral bonds which will be open for sale between January 1 and January 10. Electoral bonds have been pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding. 

On the global front, Asian markets ended mostly higher despite uncertainty about whether the U.S. Senate would approve a measure increasing the size of the stimulus checks to $2,000. Nevertheless, the start of mass COVID-19 vaccination drives in several countries and the passage of U.S. fiscal stimulus boosted hopes for a strong economic recovery next year. European markets were trading higher, continuing to ride on optimism about a global economic recovery thanks to the rollout of coronavirus vaccines. Back home, on the sectoral front, banking and financial stocks were in focus after the RBI in a report said that India’s financial sector should brace for challenging times ahead with an increased risk of deterioration in asset quality and lower demand for loans. Besides, auto component industry stocks were buzzing as ratings agency ICRA said it has revised its outlook on the auto component industry from negative to stable, on the back of demand revival across original equipment manufacturers (OEMs), replacements and exports.

Finally, the BSE Sensex rose 133.14 points or 0.28% to 47,746.22, while the CNX Nifty was up by 49.35 points or 0.35% to 13,981.95.

The BSE Sensex touched high and low of 47,807.85 and 47,358.36, respectively and there were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 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 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 top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 4.11%, Bajaj Finance up by 2.63%, Maruti Suzuki up by 2.11%, Mahindra & Mahindra up by 1.93% and Tech Mahindra up by 1.78%. On the flip side, Indusind Bank down by 1.62%, Sun Pharma down by 1.08%, Axis Bank down by 0.84%, Bharti Airtel down by 0.83% and TCS down by 0.74% were the top losers.

Meanwhile, Ratings agency ICRA has said it has revised its outlook on the auto component industry from negative to stable, on the back of demand revival across original equipment manufacturers (OEMs), replacements and exports. ICRA expects the domestic auto component industry's revenue to grow 16-18 per cent in the financial year starting April 2021, supported by factors such as increasing content per vehicle, low base effect, and higher realisations.

It said that long-term demand drivers include increased focus on localised supply chains by Indian OEMs. Diversification of supply chain risk by global OEMs is also expected to lead to increased sourcing from India in the coming years.

It added OEMs, which account for over 56 per cent of the auto component demand, have recorded a sharp increase in demand since September across all segments, barring the medium and heavy commercial vehicle (M&HCV) industry. Volumes of the automotive industry will take 2-3 years to revert to the pre-COVID-19 highs. Schemes such as production-linked incentives could encourage OEMs and large auto component vendors to advance their investment plans, targeted at exports.
The CNX Nifty traded in a range of 13,997.00 and 13,864.95 and there were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 4.42%, Grasim Industries up by 3.03%, Shree Cement up by 2.98%, Bajaj Finance up by 2.59% and Eicher Motors up by 2.46%. On the flip side, Indusind Bank down by 1.47%, Sun Pharma down by 1.10%, Axis Bank down by 1.05%, SBI down by 0.86% and Bharti Airtel down by 0.82% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 15.73 points or 0.24% to 6,618.38, France’s CAC increased 7.21 points or 0.13% to 5,619.00 and Germany’s DAX increased 7.98 points or 0.06% to 13,769.36.

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.