Key gauges erase early losses to close with gains on Thursday

Indian equity benchmarks erased early losses and closed with gains on the F&O expiry day, led by the Oil & Gas, Metal and Energy stocks. Both benchmarks opened in the red and traded lower for most part of the trading session amid weak global cues. Sentiments remained downbeat with a private report stating that after three consecutive years of infusing huge funds, foreign portfolio investors retreated from the Indian equity markets in a big way in 2022 with the highest-ever yearly net outflow of nearly Rs 1.21 lakh crore. Some pessimism also came with RBI Monetary Policy Committee (MPC) Member Ashima Goyal’s statement that the government should not go in for an 'aggressive fiscal consolidation' in the upcoming budget as global risks have not abated.

However, last hour buying erased all the intraday losses to help the bourses close on a positive note. Traders found solace with Crisil’s report stating that strong domestic demand, healthier corporate balance sheets, and a well-capitalised banking sector are expected to steer India towards a 7 per cent gross domestic product (GDP) print in 2022-23. Traders got some support with report stated that free trade agreement (FTA) between India and Australia, which comes into effect from December 29, 2022, will help boost bilateral trade in goods and services to cross $70 billion in the next five years. Adding to the optimism, various export promotion councils (EPCs) lauded the trade agreements signed by India with the UAE and Australia, saying the pacts will help the country in boosting exports by granting preferential access to those markets for Indian products.

On the global front, European markets were trading mostly in green tracking gains in U.S. stock futures. Asian markets finished mostly lower on Thursday amid concerns about the rapid spread of COVID infections in China and fears about the potential for new variants to emerge. Several countries including the United States, Japan, Italy, Taiwan and India have imposed new restrictions mandating COVID-19 tests for passengers arriving from China. Investors also assessed the likelihood of a U.S. recession in 2023 due to the Fed's aggressive policy tightening to tame inflation.

Back home, select aviation industry stocks ended higher with Union Minister Jyotiraditya Scindia’s statement that the country's civil aviation sector is witnessing a very strong V-shaped recovery with encouraging domestic passenger numbers, and the growth will continue in the coming years. Coal industry stocks were in watch with report that the Coal Ministry has identified four coking coal mines to be offered in subsequent rounds of auction for the private sector to further increase domestic raw coking coal supply.

Finally, the BSE Sensex rose 223.60 points or 0.37% to 61,133.88 and the CNX Nifty was up by 68.50 points or 0.38% to 18,191.00.

The BSE Sensex touched high and low of 61,210.65 and 60,479.06, respectively. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.09%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.36%, Metal up by 1.14%, Energy up by 1.09%, Bankex up by 0.93% and Utilities up by 0.88%, while Consumer Durables down by 0.51%, Capital Goods down by 0.42% and FMCG down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.99%, SBI up by 1.85%, Tata Steel up by 1.64%, Indusind Bank up by 1.38% and Axis Bank up by 1.09%. On the flip side, Tata Motors down by 1.41%, Titan Company down by 1.10%, Ultratech Cement down by 0.76%, Hindustan Unilever down by 0.65% and Bajaj Finserv down by 0.63% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that despite the government's high-octane push to boost manufacturing through the 'Make in India' initiative, foreign investors continue to chase bets in the services sector. It said this could be because doing business in the services sector is less complicated than doing business in the manufacturing sector in India. It also said a bulk of the foreign direct investment (FDI) in manufacturing is not greenfield or fresh investments which should otherwise be the aspirational aspect.

The agency said FDI increased to $153.01 billion in the services sector during April 2014 to March 2022 from $80.51 billion during to April 2000 to March 2014, while the increase in manufacturing was less fast at $94.32 billion as against $77.11 billion. It reminded that in 2014, India launched a flagship programme called 'Make in India' to facilitate investments across sectors, but with a special focus to build a world-class manufacturing sector and followed it up with the PLI scheme across 14 manufacturing sectors.

Ind-Ra stated that the services sector accounted for the highest share in FDI between 2000-2014 as well, adding that within services, trading, telecommunications, banking/insurance, IT/business outsourcing and hotels/tourism are the favourites. In manufacturing, the FDI has been concentrated in segments such as auto, chemicals, drugs and pharmaceuticals, metallurgical and food processing. It also said the country has done well among emerging market economies in terms of attracting FDI, with its share increasing to 6.65 per cent in 2020 and declining due to COVID impact to 2.83 per cent in 2021. From a region perspective, it noted FDI is highly clustered around few states, hinting that the foreign fund flows may not be helping the cause of broad based development across the country.

The CNX Nifty traded in a range of 18,229.70 and 17,992.80. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 2.39%, Eicher Motors up by 2.38%, SBI up by 2.16%, Axis Bank up by 1.67% and Tata Steel up by 1.50%. On the flip side, Tata Motors down by 1.23%, Apollo Hospital down by 1.21%, Titan Company down by 1.05%, Divi's Lab down by 0.99% and Ultratech Cement down by 0.83% were the top losers.

European markets were trading mostly in green; France’s CAC increased 1.55 points or 0.02% to 6,512.04 and Germany’s DAX increased 16.65 points or 0.12% to 13,942.25, while UK’s FTSE 100 decreased 19.83 points or 0.26% to 7,477.36.

Asian markets finished mostly lower on Thursday, saddled by the concerns over global supply disruptions, persisting inflation, resurgence of Covid-19, and on fears over ramifications of historic tightening campaign by major Central Banks. Moreover, subdued risk taking in the last week of 2022 and lingering uncertainties over economic rebound in China dulled investor sentiments. Japan’s Nikkei finished lower amid the lingering global macroeconomic headwinds. Moreover, hefty technological sector sell-off and lower exporters pressured the index.