Benchmarks extend opening gains; rise over 1%

Indian equity benchmarks made optimistic start on Monday tracking firm global cues. Markets extended their opening gains and are trading firm with gains of over a percent each on account of board based buying in Bankex, Energy and Realty stocks. Investors reacted to positive earnings updates and the US announcement that it would remove bottlenecks in the export of raw materials essential for the production of vaccines in India. Sensex and Nifty are trading above their psychological levels of 48,500 and 14,500, respectively. Some support came in with Union Minister Nitin Gadkari’s statement that the pandemic has caused a slowdown in India but the country's inherent resilience and capability will help it transform into a new India with a faster growth path fuelled by infrastructure. Traders took note of report that the centre has allowed state governments to borrow 75% of their annual market borrowing limit of 4% of their respective Gross State Domestic Product (GSDP) in the first nine months of the current fiscal year. Meanwhile, India reported 354,531 fresh coronavirus infections, taking the cumulative caseload to 17,306,300, Worldometer showed.

On the global front, most of the Asian markets were trading higher following broadly positive cues from Wall Street on Friday. The markets remain tense and cautious amid the surge in coronavirus cases in the region, particularly in Japan and India, as well as the possible related lockdowns in economic activity in several markets. Traders also await fresh cues from the Fed and BoJ gatherings later this week.

Back home, auto stocks were in focus as India Ratings and Research (Ind-Ra) in its latest report stated that the second wave of COVID-19could pose downside risks to the domestic auto industry demand in the near term. It said the demand for commercial vehicles (CVs) may revive in the second quarter of 2021-22 as economic activities improve, and also due to the lower capacity in the system after consecutive double-digit decline in 2019-20 and 2020-21. In scrip specific development, ICICI Bank and Indiabulls Real Estate rallied on reporting upbeat quarterly earnings. Lupin and Sun Pharma shed after recalling different products in the United States.

The BSE Sensex is currently trading at 48526.21, up by 647.76 points or 1.35% after trading in a range of 48152.24 and 48577.78. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.61%, while Small cap index was up by 0.95%.

The top gaining sectoral indices on the BSE were Bankex up by 2.36%, Energy up by 1.46%, Realty up by 1.34%, Basic Materials up by 1.21%, PSU up by 1.21%, while Power down by 0.01% was the sole losing index on BSE.

The top gainers on the Sensex were ICICI Bank up by 4.60%, Ultratech Cement up by 2.83%, Kotak Mahindra Bank up by 2.70%, SBI up by 2.62% and ONGC up by 2.54%. On the flip side, HCL Technologies down by 1.32%, Power Grid down by 0.57%, Sun Pharma down by 0.41%, NTPC down by 0.05% and Tech Mahindra down by 0.05% were the top losers.

Meanwhile, 15th Finance Commission Chairman NK Singh has said India's tax revenue potential is lower by 4 per cent of Gross domestic product (GDP) and the country needs to bring in deep reforms in the revenue management system. He also said an incentive mechanism for states needs to be worked out so that their policies are aligned to those of the central government.

Singh said there is a need to redo direct and indirect taxes and bring about deep reforms in the revenue system. Singh mentioned ‘at least 4 per cent of GDP is a lost potential in terms of India's revenue and if some part of it could be realised it would help greatly in aligning not only inevitable expenditure needs, pandemic needs, health needs, but find a convergence between sustainable development and medium-term fiscal policy statement.’

The 15th Finance Commission report, tabled in Parliament in February, had highlighted that the actual tax collections by the Centre during the last ten years, on average, was 4 per cent less than what was budgeted.

The CNX Nifty is currently trading at 14525.30, up by 183.95 points or 1.28% after trading in a range of 14421.30 and 14536.05. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 4.70%, Kotak Mahindra Bank up by 2.76%, Ultratech Cement up by 2.63%, SBI up by 2.62% and ONGC up by 2.49%. On the flip side, Britannia Industries down by 1.51%, HCL Technologies down by 1.29%, Cipla down by 1.13%, Hero MotoCorp down by 1.04% and Power Grid down by 0.54% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 gained 216.75 points or 0.75% to 29,237.38, Straits Times rose 4.64 points or 0.15% to 3,198.68, Hang Seng added 6.85 points or 0.02% to 29,085.60, Taiwan Weighted surged 219.09 points or 1.27% to 17,519.36, KOSPI jumped 22.62 points or 0.71% to 3,208.72 and Shanghai Composite was up by 6.51 points or 0.19% to 3,480.68. However, Jakarta Composite fell 31.58 points or 0.52% to 5,985.28.