Key gauges snap three-day losing streak on Monday

Snapping a three-day losing streak, Indian equity benchmarks ended higher by around one and half percent on Monday amid positive trends in global markets and buying in TECK, IT and Power stocks. Markets opened higher and remained in positive territory throughout the day as traders took support with latest central bank data showing that the Reserve Bank of India’s foreign exchange reserves rose by $44 million to $562.85 billion in the week ended December 30. Sentiments remained up-beat with Commerce and Industry Minister Piyush Goyal’s statement that negotiations for bilateral free trade agreements with several countries are ‘well on track’ and India is also looking at some multilateral pacts that are fair and equitable for all the member countries. Buying further crept in with Crisil Ratings’ report stating that capital goods companies are poised to see revenue growth at a healthy 16-18 per cent during current financial year ending March 2023 on account of improved order flows. Revenue growth in the next financial year starting April 2023 too is expected to be in double digits.

However, markets trimmed some gains in late afternoon deals, as some pessimism came with advanced estimates of National Income for 2022-23 revealed by the National Statistical Office (NSO) showing that Indian economy is likely to grow at 7 per cent in 2022-23 as compared to 8.7 per cent in 2021-22. The fall will mainly be due to poor performance of the manufacturing sector. Some cautiousness came as foreign institutional investors (FII) net sold shares worth Rs 2,902.46 crore on January 6, as per provisional data available on the NSE. But, markets regained traction to end higher, as some optimism remained among traders with Finance Minister Nirmala Sitharaman’s statement that the central government is engaging with states and local administrations to ensure that benefits of Ease of Doing Business (EoDB) initiatives reach the ground. She said EoDB is not just the Centre's responsibility but that of states as well.

On the global front, European markets were trading mostly higher as data showed German industrial production recovering at a faster than expected pace in November. Industrial output grew 0.2 percent from October, when output was down by revised 0.4 percent. Production was expected to gain 0.1 percent. Asian markets settled higher on Monday following the broadly positive cues from global markets, as data showing a drop in U.S. wage growth to a 50-year low and a contraction in U.S. service sector activity in the month of December helped ease concerns about aggressive policy tightening by the US Federal Reserve.

Back home, agriculture industry stocks were in focus as Trade Promotion Council of India (TPCI) said India's agri exports are growing at a healthy pace and there is a need to focus on the processed food sector as it holds huge potential to boost the country's outbound shipments. There were some reaction in power companies stocks with report that total outstanding dues owed by electricity distribution companies (discoms) to power producers almost halved to Rs 62,681.68 crore in January, compared to Rs 1,21,030 crore in same month in 2022.

Finally, the BSE Sensex rose 846.94 points or 1.41% to 60,747.31 and the CNX Nifty was up by 241.75 points or 1.35% to 18,101.20.

The BSE Sensex touched high and low of 60,889.41 and 60,109.94, respectively. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.93%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were TECK up by 2.61%, IT up by 2.54%, Power up by 1.79%, Utilities up by 1.56% and Metal up by 1.51%, while Consumer Durables down by 0.82% was the lone losing index on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 3.59%, HCL Technologies up by 3.37%, TCS up by 3.35%, Indusind Bank up by 3.06% and Tech Mahindra up by 2.92%. On the flip side, Titan Company down by 2.12%, Bajaj Finserv down by 1.21% and Maruti Suzuki down by 0.09% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said that the optional income tax regime with seven tax slabs was brought in by the government to ensure lower rates for those in the low income bracket. Sitharaman said in the old tax regime, every tax assesses can claim about 7-10 exemptions and the  income tax rates vary between 10, 20, and 30 per cent, depending on income threshold.

The minister said along with the old tax regime, the government has come up with a parallel system which has no exemptions, but with simpler and more favourable tax rates. She said ‘The reason why I had to bring in seven slabs was to make simpler and lower rates for those who are in the lower income (bracket).’ The government in Budget 2020-21 introduced the optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail specified exemptions and deductions like house rent allowance (HRA), interest on home loan and investments made under Section 80C.

Under this, total income up to Rs 2.5 lakh will be tax exempt. A 5 per cent tax is levied on total income between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh. Under the old tax system too, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5 lakh and Rs 5 lakh attracts 5 per cent tax, while that between Rs 5 lakh and Rs 10 lakh is levied with 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent.

The CNX Nifty traded in a range of 18,141.40 and 17,936.15. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Mahindra & Mahindra up by 3.57%, SBI Life Insurance up by 3.24%, Indusind Bank up by 3.05%, TCS up by 3.03% and HCL Technologies up by 3.02%. On the flip side, Titan Company down by 1.90%, Bajaj Finserv down by 1.28%, Grasim Industries down by 0.69%, Bajaj Auto down by 0.64% and HDFC Life Insurance down by 0.60% were the top losers.

European markets were trading mostly higher; France’s CAC increased 2.61 points or 0.04% to 6,863.56 and Germany’s DAX increased 37.36 points or 0.26% to 14,647.38, while UK’s FTSE 100 decreased 8.95 points or 0.12% to 7,690.54.

Asian markets settled higher on Monday, on the back of strong Wall Street gains last Friday with expectations of slower interest rate hikes by the US Federal Reserve. Chinese shares rose on comments from Chinese Central bank PBoC Official suggesting optimism surrounding China’s growth conditions. Market sentiments improved further after China reopened its borders for the first time in three years. Hong Kong shares jumped after shares of tech giant Alibaba surged after news emerged that founder Jack Ma ceded control of sister company Ant Group, following China's crackdown on tech companies since 2020. Meanwhile, Japanese market was closed on Coming-of-Age holiday.