Bourses hold strength in afternoon session

Markets were continuing their rally mood in the afternoon session as investors cheered the report that India's services sector expanded for the fourth consecutive month in January as business activities quickened and rising business optimism is set to sustain the growth momentum. The seasonally-adjusted India Services Business Activity Index rose from 52.3 in December to 52.8 in January, pointing to a quicker expansion in output. Sentiments also got boost with report that signaling a recovery, merchandise exports in January 5.4% from a year before, the highest since September 2020 and compared with a 0.1% rise in December. Imports, too, recorded a second successive month of growth, though the pace of expansion slowed from the January level, reflecting the fragile state of domestic demand. Trade deficit narrowed to $14.75 billion in January from $15.44 billion in the previous month. At present, benchmarks were up by over 1% each, holding their psychological levels of 50300 (Sensex) and 14800 (Nifty). The market breadth remained optimistic, as there were 1744 shares on the gaining side against 1012 shares on the losing side, while 176 shares remained unchanged.

On the global front, Asian markets were trading mostly higher as investors bet on eventual approval of a relatively big version of President Joe Biden's pandemic relief bill. Back home, in scrip specific developments, Dr.Reddy’s surges after report that Russia’s Sputnik V COVID-19 vaccine would be granted emergency use authorization in India soon. Dr.Reddy has a partnership with the Russian Direct Investment Fund to distribute the vaccine in India.

The BSE Sensex is currently trading at 50394.80, up by 597.08 points or 1.20% after trading in a range of 49515.88 and 50394.91. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 1.55%, while Small cap index was up by 1.61%.

The top gaining sectoral indices on the BSE were Healthcare up by 3.25%, Telecom up by 2.49%, Utilities up by 2.47%, Power up by 2.40% and Industrials was up by 2.04%, while there were no losing sectoral indices.

The top gainers on the Sensex were Indusind Bank up by 8.57%, Power Grid up by 5.69%, Sun Pharma up by 5.55%, Dr. Reddys Lab up by 4.95% and Mahindra & Mahindra was up by 4.41%. On the flip side, Maruti Suzuki down by 1.38%, ITC down by 0.60%, Ultratech Cement down by 0.29% and Asian Paints was down by 0.01% were the top losers.

Meanwhile, Finance Secretary Ajay Bhushan Pandey has said that the GST revenue shortfall faced by the states is likely to come down with the improved collections in the last few months. He noted that January was the fourth straight month of over Rs 1 lakh crore tax collections, which is a sign of strong recovery. He also said the GST collections surged to an all-time high of about Rs 1.20 lakh crore in January, while the second-best was in December 2020 at over Rs 1.15 lakh crore. He added that the collections, which directly reflect the state of economic activity, had plummeted to a record low of Rs 32,172 crore in April 2020, after the government imposed a nationwide lockdown to curb the spread of coronavirus.

Finance Secretary further said that the Budget proposal of taxing interest on employee contributions to provident fund over Rs 2.5 lakh per annum is aimed at correcting anomalies and is based on ‘principles of equity’ and large depositors into the Employee Provident Fund (EPF) should pay tax on assured 8 percent return. According to the Budget, interest on employee contributions to provident fund over Rs 2.5 lakh per annum would be taxed from April 1, 2021.

Pandey said people with less than Rs 25 lakh annual income can continue to deposit 12 percent into the EPF without paying any tax. He also said ‘there were anomalies in the system ... There are some cases which are depositing crores of rupee into the fund and there you are getting 8 per cent assured tax-free return. This is a question of equity. This is against the Principles of Equity. If you have surplus money, you invest, but you have to pay tax.’

The CNX Nifty is currently trading at 14827.70, up by 179.85 points or 1.23% after trading in a range of 14574.15 and 14839.80. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 8.13%, Power Grid up by 5.77%, Sun Pharma up by 5.66%, Cipla up by 5.39% and Dr. Reddys Lab was up by 4.87%. On the flip side, Maruti Suzuki down by 1.35%, ITC down by 0.53%, Shree Cement down by 0.39%, Ultratech Cement down by 0.26% and Asian Paints was down by 0.05% were the top losers.

Asian markets were trading mostly in green, Nikkei 225 surged 284.33 points or 1% to 28,646.50, Taiwan Weighted strengthened 11.27 points or 0.07% to 15,771.32, KOSPI rose 32.87 points or 1.06% to 3,129.68, Straits Times advanced 15.19 points or 0.52% to 2,932.48 and Jakarta Composite was up by 70.43 points or 1.17% to 6,114.27.

On the other side, Hang Seng decreased 32.99 points or 0.11% to 29,215.71 and Shanghai Composite was down by 7.47 points or 0.21% to 3,526.21.