Indian equity markets extend northward journey in early deals

Extending their northward journey to third straight day, Indian equity markets have made a positive start with Sensex surpassing its crucial 20,100 level while Nifty inching towards psychological 6,100 mark. The rally was mainly led by buying in index-heavyweight Reliance Industries (RIL) which hit fresh 52-week high after better-than-expected results in the fiscal third quarter. The company reported 23.92% rise in its net profit at Rs 5502.00 crore for the quarter under review as compared to Rs 4440.00 crore for the same quarter in the previous year. Oil and gas sector continue to provide support to frontline indices as stocks of companies like BPCL, HPCL and IOC extended their gains after the government’s decision to allow higher diesel prices. However, the gains remain capped as investors stayed cautious as global rating agency Moody's, despite retaining sovereign credit rating of India at Baa3 its existing level has cautioned that a high fiscal deficit could pull down the growth in the coming years.

On the global front, the US markets made mixed closing on Friday though there was upmove on plan to vote on a three-month extension of US borrowing authority while, Asian equity indices too were trading mixed in Monday’s morning trade as investors opted to stay away of piling up positions in risky assets ahead of the outcome of the Bank of Japan policy meeting this week amid expectations for bold monetary easing measures. Though, the Chinese market was marginally in green but it too was showing cautious mood.

Back home, oil and gas witnessed the maximum gain in trade followed by power and capital goods while, consumer durables and fast moving consumer goods remained the only losers on the BSE sectoral space. The broader indices were trading in-line with benchmarks while, the market breadth on the BSE was positive; there were 1,063 shares on the gaining side against 623 shares on the losing side while 89 shares remain unchanged.

The BSE Sensex opened at 20,132.83; about 93 points higher compared to its previous closing of 20,039.04, and has touched a high and a low of 20,163.38 and 20,078.06 respectively.

The index is currently trading at 20,105.47, up by 66.43 points or 0.33%. There were 18 stocks advancing against 12 declines on the index.

The overall market breadth has made a positive start with 59.89% stocks advancing against 35.10% declines. The broader indices were going neck-to-neck with benchmarks; the BSE Mid cap and Small cap indices rose 0.37% and 0.40% respectively.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 2.18%, Power up by 0.69%, Capital Goods up by 0.62%, PSU up by 0.54% and Metal up by 0.43%. While, Consumer Durables down by 0.07% and FMCG down by 0.06% were the few losers on the index.

The top gainers on the Sensex were RIL up by 3.88%, BHEL up by 2.45%, Maruti Suzuki up by 1.18%, Dr Reddys Lab up by 1.10% and Gail India up by 1.03%.

On the flip side, Hindustan Unilever was down by 1.40%, TCS was down by 0.73%, Sun Pharma was down by 0.72%, HDFC Bank was down by 0.62% and Bharti Airtel was down by 0.61% were the top losers on the Sensex.

Meanwhile, the government has decided to put a cap on budgetary allocations for annuity payments for the public private partnership (PPP) projects to do away the burden on future budgets. On the recommendations made by the Inter-Ministerial Task Force, the cabinet committee on economic affairs (CCEA) has approved the budgetary ceilings for annuity commitments under Public Private Partnership (PPP) projects across sectors.

Recommendations of the committee would ensure that the future budgetary options do not get restricted due to annuity payments for PPP projects. Moreover, the government has observed that annuity payments under PPP projects create a burden on future budgets for a long period of time, making the future budgets inflexible and committed.

Further, annuity payments are essential in the nature of deferred budgetary payments and are borne by the government out of the annual budgetary allocations spread over time. Unlike the projects sustained by user charges, annuity-based projects do not have a revenue stream of their own and essentially, rely on payments out of budgetary allocations over the years. Annuity charge is the periodic payment that the government makes to the concessionaire for financing, operation, construction and maintenance of the PPP project. 

Further, the guidelines would be communicated to ministries for adoption within two weeks. These guidelines will streamline the process of structuring and sanction of projects under annuity mode of PPP.

The S&P CNX Nifty opened at 6,085.75; about 21 points higher compared to its previous closing of 6,064.40, and has touched a high and a low of 6,094.35 and 6,069.40 respectively. The index is currently trading at 6,078.15, up by 13.75 points or 0.23%. There were 29 stocks advancing against 20 declines and one remains unchanged on the index.

The top gainers of the Nifty were Reliance Industries up by 3.47%, BHEL up by 2.21%, BPCL up by 2.20%, JP Associate up by 1.45% and Maruti Suzuki up by 1.18%.

On the flip side, UltraTech Cement down by 1.74%, Hindustan Unilever down by 1.46%, DLF down by 1.18%, ACC down by 1.15% and IDFC down by 0.88% were the major losers on the index.

Most of the Asian equity indices were trading mixed; Shanghai Composite rose 3.24 points or 0.14% to 2,320.31, Hang Seng added 30.07 points or 0.13% to 23,631.85, Straits Times surged 12.29 points or 0.38% to 3,223.51 and KOSPI Composite was up by 1.95 points or 0.10% to 1,989.80.

On the flip side, Jakarta Composite declined 9.35 points or 0.21% to 4,456.14, KLSE Composite tumbled 33.68 points or 2.01% to 1,642.76, Nikkei 225 dropped 100.01 points or 0.92% to 10,813.29 and KOSPI Composite was down by 1.95 points or 0.10% to 1,989.80.