Post Session: Quick Review

Extending previous session’s jubilation, Indian equity benchmarks ended Thursday’s trade with a gain of over a percent with Sensex and Nifty settling above their crucial 58,400 and 17,400 levels, respectively. The investors’ mood remained up-beat throughout the day and there appeared not even an iota of profit booking, as investors continued hunt for beaten down but fundamentally strong stocks. Sentiments remained upbeat since morning as India's merchandise exports in November rose by 26.49 per cent to $29.88 billion on account of healthy growth in sectors such as engineering, petroleum, chemicals and marine products. Besides, the income tax department said it has issued refunds of over Rs 1.29 lakh crore in 8 months of the current fiscal. This includes Rs 16,691.50 crore worth refunds to 79.70 lakh taxpayers for Assessment Year 2021-22.

Markets extended gains to end near intraday high levels as traders took encouragement with Union Minister for Electronics and Information Technology Ashwini Vaishnaw’s statement that the government is keen to make India a $250 billion electronic manufacturing hub in the next five years. He also expressed happiness over the electronics manufacturing industry assuring $300 billion revenue by 2025-26. Adding some more optimism, with an aim to boost consumption in the economy and enhance the tax base, industry body -- the PHD Chamber of Commerce and Industry (PHDCCI) has suggested the rationalisation of direct and indirect tax rates. PHDCCI President Pradeep Multani said refuelling of consumption demand should be the theme of the Budget to have a multiplier effect on production possibilities, private investments and employment creation in the country.

On the global front, European counters were trading in red with fears around the Omicron coronavirus variant and warnings about inflation from major central banks weighing on sentiment. However, Asian markets ended mostly in green supported by advances in Chinese real estate shares, though fears about the Omicron variant of the new coronavirus capped gains regionally.

Back home, Moody's Investors Service in its latest report has said that the economic impact of the Omicron variant of COVID-19 on emerging market countries will differ and will depend on a mix of government restrictions, public comfort with social interactions, and the capacity of governments and central banks to provide additional policy support to the private sector if needed. On the sectoral front, power stocks remained in focus as power ministry data showed that India’s power consumption grew by 3.6 per cent in November to 100.42 billion units (BU), showing consistent recovery for the second month in a row. Banking stocks remained in limelight as Banks' slippages have declined quarter-over-quarter (QoQ). Total slippages were at Rs 79,951 crore in the Q2 of FY22, as compared to Rs 98,536 crore in the first quarter.

The BSE Sensex ended at 58461.29, up by 776.50 points or 1.35% after trading in a range of 57680.41 and 58513.93. There were 28 stocks advancing against 2 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index surged 1.01%, while Small cap index was up by 1.12%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 2.21%, Power up by 2.11%, IT up by 1.88%, TECK up by 1.85% and Oil & Gas up by 1.74%, while there were no losers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were HDFC up by 3.87%, Power Grid up by 3.79%, Sun Pharma up by 3.11%, Tata Steel up by 2.90% and Bajaj Auto up by 2.56%. On the flip side, ICICI Bank down by 0.62% and Axis Bank down by 0.45% were the only losers on the Sensex. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) in its annual publication titled 'State Finances: A Study of Budgets of 2021-22' has said the combined debt-to-GDP ratio of states is expected to remain at 31 per cent by end-March 2022 which is worryingly higher than the target of 20 per cent to be achieved by 2022-23. Further, it said as the impact of the second COVID-19 wave wanes, state governments need to take credible steps to address debt sustainability concerns.

It noted that the budgeted consolidated gross fiscal deficit (GFD) of 3.7 per cent of GDP for states for the year 2021-22 - lower than the 4 per cent level as recommended by the FC-XV (15th Finance Commission) reflect the state governments’ intent towards fiscal consolidation. Besides, it mentioned that in the medium term, improvements in the fiscal position of state governments will be contingent upon reforms in the power sector as recommended by FC-XV and specified by the Centre – creating transparent and hassle-free provision of power subsidy to farmers; preventing leakages; and improving the health of the power distribution companies (DISCOMs) by alleviating their liquidity stress in a sustainable manner.

Timely payments of state dues to DISCOMS and, in turn, by them to Generation Companies (GENCOS) hold the key to the sector’s financial health. Moreover, it said undertaking power sector reforms will not only facilitate additional borrowings of 0.25 per cent of GSDP (Gross State Domestic Product) by the states but also reduce their contingent liabilities due to improvement in financial health of the DISCOMs.

It pointed out that in 2020-21, the first wave of the pandemic posed states the critical challenge of declining revenue and the need for higher spending. To partially offset the revenue shortfall, it said states hiked their duties on petrol, diesel and alcohol and focused on rationalising non-priority expenditures to make room for higher expenditure on healthcare and social services. It said the year 2021-22 started on a similar note, with the outbreak of the second wave.  Hoverer, it stated the impact of the second wave on state finances is likely to be less severe than the first wave due to less stringent and localised restrictions imposed this time as opposed to the nationwide lockdown during the first wave of COVID-19.

The CNX Nifty ended at 17401.65, up by 234.75 points or 1.37% after trading in a range of 17149.30 and 17420.35. There were 47 stocks advancing against 3 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports up by 4.40%, HDFC up by 3.85%, Power Grid up by 3.52%, Sun Pharma up by 2.80% and Tata Steel up by 2.76%. On the flip side, Cipla down by 0.74%, ICICI Bank down by 0.73% and Axis Bank down by 0.52% were the few losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 fell 38.99 points or 0.54% to 7,129.69, France’s CAC declined 46.13 points or 0.67% to 6,835.74 and Germany’s DAX was down by 131.52 points or 0.85% to 15,341.15.

Asian markets ended mostly higher on Thursday due to some better-than-expected readings on the world’s largest economy. US Payroll processor ADP reported that private sector employment shot up by 534,000 jobs in November after surging by a revised 570,000 jobs in October. That was slightly above forecasts for a rise in employment of 525,000. While, the ISM’s Manufacturing PMI measure of activity in the US manufacturing sector increased to a reading of 61.1% in November in line with expectations, from 60.8% in October, indicating expansion at a faster rate. Investors were shrugging off Federal Reserve Chair’s hawkish comments on inflation and news that the first United States case of the Omicron variant of the coronavirus had been found in California. However, Japanese shares ended lower on concerns over the impact of the new Omicron corona-virus variant on the global economic recovery. Chinese shares ended unchanged after reports that the country is planning to block companies from going public on foreign stock markets through variable interest entities, but the China Securities Regulatory Commission rejected this report. While, Chinese real estate shares advanced amid signs that Beijing is easing liquidity strains on the cash-strapped property sector.