Benchmarks end higher in highly volatile trade on Monday

Indian equity benchmarks ended higher in a highly volatile trade on Monday on the back of recovery in IT, TECK and Telecom stocks. Key gauges made a negative start but soon turned positive as traders took support with latest data showing that the Reserve Bank of India’s (RBI’s) foreign exchange reserves climbed $1.7 billion to $573.73 billion in the week ended January 20.  The rise was on account of an increase in the RBI’s foreign currency assets as well as its gold holdings. But, markets failed to hold gains and slipped into red terrain in late morning deals, as market participants remained on sidelines ahead of crucial Union Budget to be presented on February 01 and a slew of central bank policy meetings due this week.

Key gauges extended fall in late afternoon deals, as sentiments remained downbeat amid a private report stating that foreign investors have pulled out a net of over Rs 17,000 crore this month so far due to the attractiveness of the Chinese markets and the cautious stance adopted by them ahead of the Union Budget and US Federal Reserve meeting. The outflow in January came after a net inflow of Rs 11,119 crore in December and Rs 36,239 crore in November. However, markets erased all of their initial losses towards the end and settled higher.  Meanwhile, calling for the creation of an international network of mentors, investors and entrepreneurs to strengthen the global startup ecosystem, Union Minister for Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Piyush Goyal has said that this network must support and inspire startups, act as a team to facilitate exchange of ideas, best practices and funding mechanisms and promote collaborations in Research and Development.

On the global front, European markets were trading lower as Official data showed that the German economy unexpectedly fell in the fourth quarter, creating uncertainty going into 2023. GDP decreased 0.2 percent quarter on quarter in adjusted terms. Asian markets ended mixed on Monday as traders remained cautious ahead of a busy week, when the US Fed, Bank of England and European Central Bank are due to lift interest rates in an effort to bring inflation down from a multi-decade high.

Back home, banking stocks were in watch, as latest data released by Reserve Bank of India (RBI) showed after a slight moderation in growth in the previous fortnight, bank credit growth picked up in the fortnight ended January 13, 2023, with 16.5 per cent YoY growth to Rs 132.81 trillion. Telecom stocks were in focus, as data by sector regulator TRAI showed that telecom operators Reliance Jio and Bharti Airtel cumulatively gained nearly 25 lakh mobile subscribers in November even as troubled Vodafone Idea lost nearly 18.3 lakh customers.

Finally, the BSE Sensex rose 169.51 points or 0.29% to 59,500.41 and the CNX Nifty was up by 44.60 points or 0.25% to 17,648.95.

The BSE Sensex touched high and low of 59,644.24 and 58,699.20, respectively. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.22%, while Small cap index was down by 0.10%.

The top gaining sectoral indices on the BSE were IT up by 1.00%, TECK up by 0.91%, Telecom up by 0.69%, Consumer Durables up by 0.50% and Financial Services up by 0.28%, while Utilities down by 5.74%, Power down by 5.30%, Oil & Gas down by 4.06%, Energy down by 3.12% and Capital Goods down by 1.30% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 4.61%, Ultratech Cement up by 2.51%, Bajaj Finserv up by 2.22%, HCL Technologies up by 1.85% and NTPC up by 1.53%. On the flip side, Power Grid Corporation down by 3.38%, Indusind Bank down by 2.56%, Larsen & Toubro down by 2.11%, Tata Steel down by 1.62% and Hindustan Unilever down by 1.55% were the top losers.

Meanwhile, Minister of State for Electronics and IT Rajeev Chandrasekhar has said electronics manufacturing in the country is expected to cross Rs 1.28 lakh crore in the next financial year. The minister said the government is now going to broaden and widen the electronics manufacturing ecosystem with a new production-linked incentive scheme for hearable-wearable, IT hardware and component makers.

He mentioned ‘Electronics manufacturing as a whole, we see next year that we will at least do Rs 1.28 lakh crore. I have already said that we will see mobile phone production reaching Rs 1 lakh crore in 2023-24.’ He added there has been a focus on mobile phones because it is the fastest-growing segment in electronics across the world.

Further, he stated ‘Value addition in manufacturing is a function of scale. First, you need to hit the scale. The component industry is the one which does value addition. Components will not come if the scale of manufacturing is not there. The next stage of our PLI is to get components PLI, hearable-wearable PLI and the IT server PLI.’ He noted the government will do 100 per cent hand-holding of component players to boost the local ecosystem.

The CNX Nifty traded in a range of 17,709.15 and 17,405.55. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 4.55%, Adani Enterprises up by 3.93%, Ultratech Cement up by 2.37%, Bajaj Finserv up by 2.30% and Asian Paints up by 1.92%. On the flip side, Power Grid Corporation down by 3.28%, Bajaj Auto down by 2.41%, Indusind Bank down by 1.96%, Larsen & Toubro down by 1.75% and JSW Steel down by 1.73% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 5.07 points or 0.07% to 7,760.08, France’s CAC fell 41.24 points or 0.58% to 7,055.97 and Germany’s DAX lost 97.84 points or 0.65% to 15,052.19.

Asian markets ended mixed on Monday as investors’ caution ahead of policy meetings from the US Fed, the European Central Bank and the Bank of England later this week. Japanese shares gained slightly tracking last week's gains on Wall Street, while the earnings season reaches its peak this week. Chinese shares rose marginally as investors returned to their desks following Lunar New Year week-long holiday. Meanwhile, China's cabinet pledged to boost consumption this year as to help drive the economy's recovery.