Post Session: Quick Review

Indian equity benchmarks ended higher on Tuesday. After a positive start, indices remained in green terrain for the most part of the session, as the finance ministry stated that GST collections crossed the Rs 1 lakh crore-mark for the fifth month in a row in February, rising 7 per cent annually to over Rs 1.13 lakh crore, indicating economic recovery. Goods and Services Tax (GST) collections had risen for two straight months to touch record Rs 1,19,875 crore in January and Rs 1.15 lakh crore in December. Besides, the Reserve Bank of India (RBI) remained net buyer of the US dollar in December after it purchased $3.991 billion from the spot market.

In late morning deals, markets cut most of their gains and remained volatile during afternoon deals, as traders got cautious, after the Biden administration has told the US Congress that India's recent emphasis on import substitution through the ‘Make in India’ campaign has ‘epitomised’ the challenges facing the bilateral trade relationship. In its 2021 Trade Policy Agenda and 2020 Annual Report, the US Trade Representative (USTR) said that during 2020, the US continued its engagement with India to try to resolve longstanding market access impediments affecting US exporters.

However, in the last hour of the trading session, key indices added strong gains to end on higher note, as the Crisil report stated that on the back of timely government and regulatory measures this fiscal, which helped the economy to recover faster than expected, bank credit is seen growing 400-500 bps to 9-10 percent in the next financial year. In the current fiscal, bank credit is expected to rise 4-5 percent despite the sharpest contraction in the economy since Independence. Some support also came with the finance ministry stating that the Centre has released Rs 1.04 lakh crore to states in four months since October 2020, to meet GST compensation shortfall.

On the global front, European markets were trading lower, handing back some of the sharp gains made during the previous session as investors digest a fresh warning about the coronavirus. Asian markets ended mixed on Tuesday, after the manufacturing sector in Taiwan continued to expand in February, and at a faster pace, the latest survey from Markit Economics revealed on Tuesday with a manufacturing PMI score of 60.4. That's up from 60.2 in January, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Individually, production spiked amid a steep increase in sales, while supply chain delays were among the worst seen in 17 years. Input costs continue to rise sharply, leading to higher selling prices.

The BSE Sensex ended at 50296.89, up by 447.05 points or 0.90% after trading in a range of 49807.12 and 50439.82. There were 24 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.55%, while Small cap index was up by 1.60%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 3.18%, IT up by 2.85%, TECK up by 2.84%, Industrials up by 2.20% and Consumer Disc up by 2.17%, while there were no losing sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 4.98%, NTPC up by 3.83%, Bajaj Auto up by 3.53%, Tech Mahindra up by 3.44% and TCS up by 2.88%. On the flip side, ONGC down by 3.16%, HDFC down by 1.63%, Power Grid down by 1.19%, Dr. Reddy’s Lab down by 1.06% and SBI down by 0.27% were the top losers. (Provisional)

Meanwhile, in order to meet the GST compensation shortfall , the Ministry of Finance, Department of Expenditure has released the 18th weekly instalment of Rs 4,000 crore to the States. Out of this, an amount of Rs 3,677.74 crore has been released to 23 States and an amount of Rs 322.26 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

The amount released this week was the 18th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.7924%. So far, an amount of Rs 1,04,000 crore has been borrowed by the Central Government through the special borrowing window at an weighted average interest rate of 4.8236%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have given their preference for Option-I.

The CNX Nifty ended at 14919.10, up by 157.55 points or 1.07% after trading in a range of 14760.80 and 14959.10. There were 41 stocks advancing against 9 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 5.32%, Mahindra & Mahindra up by 4.95%, Adani Ports & SEZ up by 3.98%, Wipro up by 3.86% and NTPC up by 3.78%. On the flip side, ONGC down by 3.03%, HDFC down by 1.61%, Dr. Reddy’s Lab down by 1.09%, Power Grid down by 0.97% and Coal India down by 0.62% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 5.32 points or 0.08% to 6,583.21, France’s CAC decreased 4.34 points or 0.07% to 5,788.45 and Germany’s DAX was down by 26.85 points or 0.19% to 13,985.97.

Asian markets ended mixed on Tuesday after China’s top banking regulator warned about asset bubbles in overseas financial markets. Japanese shares ended lower as investors booked profits after the benchmark Nikkei 225 climbed back towards the 30,000 level in early trades. However, Seoul shares ended sharply higher as trading resumed after a long holiday weekend.