Key gauges erase gains to end with minor cut

Indian equity benchmarks erased all of their initial gains and ended marginally in red on Thursday, ahead of the announcement of advance estimate of gross domestic product (GDP) for financial year of 2020-21 (FY21). The benchmarks staged a gap up opening and traded firmly higher for most part of the day, taking support from Geneva-based World Trade Organisation (WTO) stating that during the period 2015-20, India has implemented several measures to facilitate trade, such as a reduction in the number of documents required and the automation of the customs clearance system for imports and exports. Some support also came with private report stating that in the upcoming union budget for FY 2021-22, the government is likely to announce SWIFT - Special Window for Financial Investors Facilitation - for big foreign investors in India.  SWIFT will cater to global financial investors with an investment proposal of more than Rs 5,000 crore.

However, the sudden fall in benchmarks is last hour of trade was due to spike in volatility owing to weekly expiry of index futures and option contracts. Market participants also took a note of ICRA Ratings' report that non-banking finance companies (NBFCs) are likely to see a 7-9 percent growth in their asset under management (AUM) in FY22 but access to funding would be crucial for them to have a sustained improvement. Meanwhile, another report stated that the currency in circulation (CIC) expanded by 22.1 per cent in calendar year 2020, as people hoarded cash at a time when the nation went into a lockdown and uncertainty prevailed over how liquidity needs would be met. Data released by the Reserve Bank of India showed that in calendar year 2020, the currency in circulation growth was way higher than 2019’s 11.8 per cent growth rate.

On the global front, Asian markets ended mostly higher on Thursday, while European markets were trading mostly in green on hopes that a Democrat-controlled U.S. Senate will be a net positive for economic growth globally. Besides, China’s central bank pledged to keep its monetary policy accommodative in 2021, focusing on supporting small firms as the economy recovers. European markets were trading mostly in green, as figures from the Federal Statistical Office/Destatis showed German manufacturing orders grew further in November, defying expectations for a decline. Factory orders rose 2.3 percent month-on-month in November, while economists had forecast a 1.2 percent fall. The growth for October was revised to 3.3 percent from 2.9 percent. On a year-on-year basis, factory orders grew 6.3 percent in November after a 2.3 percent increase in the previous month.

Back home, on the sectoral front, telecom stocks were in focus after the government said it will auction wireless spectrum in seven bands on March 01. Spectrum will be offered in seven frequency bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz. There was some reaction in auto stocks with a private report stating that the demand recovery for automobiles continued in the December quarter, with strong momentum witnessed in retail sales of tractors and passengers vehicles.

Finally, the BSE Sensex fell 80.74 points or 0.17% to 48,093.32, while the CNX Nifty was down by 8.90 points or 0.06% to 14,137.35.

The BSE Sensex touched high and low of 48,558.34 and 48,037.87, respectively and there were 13 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.05%, while Small cap index was up by 0.85%.

The top gaining sectoral indices on the BSE were Metal up by 3.70%, Telecom up by 2.99%, Basic Materials up by 1.67%, Industrials up by 1.57% and Capital Goods up by 1.38%, while FMCG down by 1.07%, IT down by 0.95%, Power down by 0.62%, TECK down by 0.42% and Utilities down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.75%, Indusind Bank up by 3.22%, Axis Bank up by 2.48%, Bajaj Finserv up by 2.31% and Larsen & Toubro up by 1.92%. On the flip side, Titan Company down by 2.03%, Nestle down by 2.00%, Hindustan Unilever down by 1.97%, Infosys down by 1.53% and HCL Technologies down by 1.38% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that non-banking finance companies (NBFCs) are likely to see a 7-9 percent growth in their asset under management (AUM) in FY22 but access to funding would be crucial for them to have a sustained improvement. It said NBFCs would require an additional funding lines of about Rs 1.9-2.2 lakh crore, apart from the refinance of the existing lines, to achieve a 7-9 percent growth in AUM in FY22.

According to the report, the segment's AUM had registered a growth at a CAGR of 16 percent over the period March 2016-March 2020. Growth in FY22 is envisaged to be driven by the improvement in demand from all the key target segments vis a vis current fiscal, which was impacted by the COVID-19 lockdown. It noted that some of the key segments which would bolster growth include gold loans, home loans, personal credit, rural finance and microfinance. Growth in the vehicle finance (commercial vehicle, passenger vehicle), business loans including loan against property and other commercial lending segments, which are closely linked to the economic activities are expected to take longer to register a reasonable revival.

The report further said NBFCs exposures to the commercial real estate and other large corporate/ wholesales exposures are expected to register a decline even in FY22 after the decline of about 15 percent in FY20 and about 10 percent expected contraction in FY21. It also stated that majority (around 70 percent) of issuers and investors do not expect co-lending to account for less than 10 per cent of non-bank AUM over the next 2-3 years. Access to adequate funding, therefore, would remain critical for the sector to register a sustained improvement in growth.

The CNX Nifty traded in a range of 14,256.25 and 14,123.10 and there were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 5.28%, Hindalco up by 4.81%, Bharti Airtel up by 3.59%, Adani Ports & SEZ up by 3.35% and Indusind Bank up by 3.26%. On the flip side, Nestle down by 2.04%, HDFC Life Insurance down by 1.88%, Hindustan Unilever down by 1.83%, Titan Company down by 1.82% and Divi's Laboratories down by 1.80% were the top losers.

European markets were trading mostly in green; France’s CAC increased 23.34 points or 0.41% to 5,653.94 and Germany’s DAX increased 91.60 points or 0.66% to 13,983.57, while UK’s FTSE 100 decreased 21.30 points or 0.31% to 6,820.56.

Asian markets ended mostly higher on Thursday as Democratic victories in the Georgia runoff elections give US President-elect Joe Biden a clearer path to boosting fiscal stimulus. Chinese shares ended higher after the country's central bank pledged to keep its monetary policy accommodative in 2021, focusing on supporting small firms as the economy recovers. Though, Hong Kong shares declined after the New York Stock Exchange moved to delist Chinese telecoms firms again. Surging infections around the world and lockdowns in major economies added some pressure on market sentiments.