Markets snap two session losing streak

Indian equity benchmarks snapped their 2-day losing streak and ended higher in a lacklustre trade on Thursday amid stock-specific bets by investors. Markets made negative start as traders got anxious with Fitch’s statement that India’s medium-term growth outlook will assume a more critical role in sovereign assessment due to higher deficits and a slower consolidation path. Also, India recorded 12,760 fresh Covid-19 cases of the coronavirus disease (Covid-19). However, benchmark indices soon turned positive and traded in a narrow range on the back of heightened volatility owing to weekly expiry of index derivative contract. Traders also took note of SBI Research revised its contraction forecast for the current fiscal year to 7 per cent. The agency had earlier forecast a 7.4 per cent contraction in 2020-21 GDP numbers.

Markets extended gains in last hour of trading session, taking support from Industry body the Confederation of Indian Industry (CII) stating that steps taken by the government is helping the country's exports to record positive growth and the trend is expected to continue. Sentiments remained positive with Engineering Export Promotion Council of India stating the country's engineering exports have increased by 18.69 per cent in January this year and demand for such products in the international markets is expected to be steady in the remaining two months of the current fiscal. Some support also came with private report stated that the job market continues to improve sequentially across the country and job postings in some industries have improved, with some doing even better than the pre-Covid levels, led by IT, agro-based sectors.

On the global front, Asian markets ended mostly higher on Thursday, while European markets were trading mostly in green, as the outlook for more global stimulus got a major boost overnight from a surprisingly soft reading on core U.S. inflation and dovish comments by Federal Reserve chairman Jerome Powell. Powell said he wanted to see inflation at 2 percent or more before even thinking of tapering the bank's super-easy policies. Back home, on the sectoral front, cement industry stocks were in focus as CARE Ratings in a report said outlook for the cement industry in FY22 seems sanguine due to the government's thrust towards infrastructure creation and development and it being the propeller of growth in the economy going forward. Aviation industry stocks too were in watch as Civil Aviation Minister Hardeep Singh Puri said international passenger traffic fell by 90.56 per cent to 18.55 lakh in March-December period of 2020 due to the COVID-19 pandemic as compared to the corresponding period of 2019.

Finally, the BSE Sensex rose 222.13 points or 0.43% to 51,531.52, while the CNX Nifty was up by 66.80 points or 0.44% to 15,173.30.  

The BSE Sensex touched high and low of 51,592.45 and 51,157.31, respectively and there were 16 stocks advancing against 14 stocks declining on the index. 

The broader indices ended in green; the BSE Mid cap index rose 0.45%, while Small cap index was up by 1.06%.

The top gaining sectoral indices on the BSE were Energy up by 3.13%, Telecom up by 1.63%, Oil & Gas up by 1.52%, Utilities up by 1.19%, Basic Materials up by 1.16% while, Capital Goods down by 0.97%, Consumer Durables down by 0.43%, Auto down by 0.41%, PSU down by 0.32%, Industrials down by 0.19% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 4.07%, Sun Pharma up by 2.62%, Bajaj Finance up by 1.60%, Power Grid up by 1.59% and Bharti Airtel up by 1.41%. On the flip side, Titan Company down by 2.50%, Larsen & Toubro down by 1.43%, HDFC Bank down by 0.70%, ITC down by 0.53% and ONGC down by 0.50% were the top losers.

Meanwhile, Fitch Ratings has said that India's high fiscal deficit would pose a challenge in lowering the debt to GDP ratio, which is expected to rise above 90 per cent in the next five years. It said the country entered the coronavirus disease (covid-19) pandemic with little fiscal headroom from a rating perspective. Its general government debt/GDP ratio stood at 72 percent in 2019, against a median of 42 percent for 'BBB' rated peers.

Fitch further said the budget points to a loosening of fiscal policy to support the country's ongoing economic recovery from the pandemic and will consequently lead to a rise in public debt. It noted that the debt/GDP trajectory is core to its sovereign rating assessment, meaning higher deficits and a slower consolidation path will make India's medium-term growth outlook take on a more critical role in its analysis.

It said ‘the budget's deficit projections for the fiscal years ending March 2022 (FY22) to FY26 are about 1pp (percentage point) a year above our previous estimates between, which could make it more challenging to put debt/GDP on a downward trajectory’. India has exceeded its fiscal deficit target of 3.5 percent in the current fiscal by a wide margin due to higher spending to stimulate the economy amid the pandemic.

The CNX Nifty traded in a range of 15,188.50 and 15,065.40 and there were 28 stocks advancing against 22 stocks declining on the index.
The top gainers on Nifty were Hindalco up by 5.51%, Reliance Industries up by 4.43%, Sun Pharma up by 2.63%, Adani Ports &SEZ up by 2.32% and GAIL India up by 2.10%. On the flip side, Eicher Motors down by 2.56%, Titan Company down by 2.45%, Larsen & Toubro down by 1.28%, Tata Motors down by 1.22% and Coal India down by 1.05% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 8.95 points or 0.14% to 6,533.31 and Germany’s DAX increased 61.91 points or 0.44% to 13,994.88, while France’s CAC decreased 8.00 points or 0.14% to 5,662.80.

Asian markets ended mostly higher on Thursday, supported by rising hopes of a US stimulus package. US Federal Reserve Chair Jerome Powell said maintaining patiently accommodative monetary policy will be important to returning to a strong labor market and more needs to be done. Hong Kong shares ended at their highest level since June 2018 ahead of the Lunar New Year holidays. Stock markets of Taiwan, South Korea and China were closed for the Lunar New Year holidays, while Japanese markets were also closed in observance of National Foundation Day.