Post Session: Quick Review

Markets extended their gains from the previous session, as investors drawn their attention towards Budget expectations. Besides, ongoing World Economic Forum in Davos, Switzerland also in focused. Budget expectations were influencing markets to keep positive trend. Worries related to outlook for the economy and interest rates are ignored by markets participants. Huge buying in metal counters mainly helped markets to trade higher throughout day, while foreign investors turning net buyers of domestic shares also helped the sentiment.

Tracking broadly negative cues from Wall Street overnight, local domestic markets made cautious start, but soon gained strength to trade positive as the Bank of Japan surprised markets by keeping its yield tolerance band unchanged. Besides, foreign institutional investors snapped a 17-day sales run, purchasing Rs 211 crore worth of equity shares on a net basis on January 17. Sentiments got boost as a private report stated that the government is likely to increase the allocation for the ongoing Production-Linked Incentive (PLI) schemes by as much as 20-30 per cent in the next Budget to spur domestic manufacturing and boost exports. The broader indices, the BSE Mid cap index and Small cap index maintained their gains during the day. Indices showed stability till end of the session as traders expecting that the Reserve Bank of India (RBI) may pause rate hikes in February amid uncertainty over the global economic outlook.

On the global front, European markets were trading mostly in green as investors awaited a slew of U.S. economic data and more earnings this week for directional cues. Asian markets ended mostly in green with Tokyo soaring and the yen tumbling after the Bank of Japan decided against further tweaking monetary policy. Back home, mines ministry has said the country's mineral production rose by 9.7 per cent in November 2022 as compared to the year-ago period. It stated the index of mineral production of mining and quarrying sector for the month of November, 2022 at 105.8, is 9.7 per cent higher as compared to the level in the month of November, 2021.

The BSE Sensex ended at 61,045.74, up by 390.02 points or 0.64% after trading in a range of 60,569.19 and 61,110.25. There were 23 stocks advancing against 7 stocks declining on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index gained 0.46%, while Small cap index was up by 0.17%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.44%, Capital Goods up by 1.46%, Industrials up by 1.24%, Telecom up by 0.92% and Consumer Durables was up by 0.67%, while Utilities down by 0.45%, Auto down by 0.07%, Power down by 0.06% and Realty was down by 0.06% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 2.43%, Larsen & Toubro up by 2.23%, Wipro up by 1.89%, HDFC Bank up by 1.88% and HDFC up by 1.85%. On the flip side, Tata Motors down by 1.44%, Ultratech Cement down by 1.28%, Indusind Bank down by 0.67%, Nestle down by 0.53% and Bajaj Finserv down by 0.44% were the top losers. (Provisional)

Meanwhile, SBI Research in its latest Ecowrap report has said that the upcoming Indian budget for 2023-24 will be a challenging one for the government to follow the roadmap for fiscal consolidation amidst a global environment of declining inflation. It said for India, this could make things difficult to set a nominal gross domestic product (GDP) number significantly higher than 10 per cent, with a deflator about 3.5 per cent. But this could also mean a higher GDP growth than anticipated at about 6.2 per cent. It added that fiscal deficit for FY24 is estimated at around Rs 17.95 lakh crore or 6.0% of GDP in FY24, thereby resulting in fiscal consolidation of 40 bps from the current fiscal.

As per the report, for FY23, total receipts of the Government would be higher than BE by around Rs 2.3 lakh crore, on account of higher direct tax receipts (around Rs 2.2 lakh crore), higher GST receipts (Rs 95,000 crore) but lower dividends (around Rs 40,000 crore), lower fuel tax net of cess (Rs 30,000 crore) and lower disinvestment receipts (around Rs 15000-20,000 crore). Meanwhile, expenditure is likely to be on the higher side of the BE by around Rs 3 lakh crore on account of higher subsidy bill and additional spending announced by the Government. Taking this into account, fiscal deficit of the Government in FY23 is expected to come at Rs 17.5 lakh crore. However, higher nominal GDP growth (15.4%) estimates will help in keeping the fiscal deficit at 6.4% of the GDP.

In FY24, it assumes the Government expenditure is likely to increase by around 8.2% over FY23 estimates to Rs 46.0 lakh crore. Subsidy bill which increased significantly in FY23 is estimated to be reduced in FY24 to around Rs 3.8-4.0 lakh crore and capital expenditure is expected to grow by 12%. Meanwhile, receipts (minus borrowing and other liabilities) are expected to grow by ~12.1% with tax revenue receipts growth likely at 11.0%. With nominal GDP growth at 10%, tax buoyancy is thus expected at close to 1.1 compared to expected tax buoyancy of 1.5 in FY23. It said as far as borrowing is concerned, it expects net market borrowing of the Centre in FY24 will be around Rs 11.7 lakh crore and with repayments of Rs 4.4 lakh crore, gross borrowing are expected at Rs 16.1 lakh crore.

The CNX Nifty ended at 18,165.35, up by 112.05 points or 0.62% after trading in a range of 18,032.45 and 18,183.75. There were 38 stocks advancing against 12 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 3.08%, Tata Steel up by 2.60%, Larsen & Toubro up by 2.41%, UPL up by 1.83% and HDFC up by 1.78%. On the flip side, Tata Motors down by 1.66%, HDFC Life Insurance down by 1.38%, Ultratech Cement down by 1.28%, Adani Enterprises down by 1.17% and BPCL down by 0.67% were the top losers. (Provisional)

European markets were trading mostly in green, UK’s FTSE 100 increased 3.35 points or 0.04% to 7,854.38 and France’s CAC was up by 3.4 points or 0.05% to 7,080.56. On the flip side, Germany’s DAX lost 18.57 points or 0.12% to 15,168.50.

Asian markets settled mostly higher on Wednesday, with Japanese markets leading regional gains as the yen plunged after the Bank of Japan maintained its ultra-low interest rates, despite data that showed Japan's core machinery orders fell more than expected in November. Chinese shares traded almost flat after experts cautioned that a massive spike in Covid-19 cases and fatalities is expected to hit China post the holiday season. Although, South Korean shares declined driven by growing fears of a potential recession this year.