Markets extend gains for second straight day; Nifty settles above 23,200 mark

Indian equity markets closed on higher note for second straight day on Thursday, supported by strong buying in IT, Consumer Durables and TECK stocks amid positive trend in global markets. After making a cautious start, soon indices turned positive and remained higher till the end, following firm cues from Wall Street overnight as well as broadly positive cues from Asian counterparts. 

Some of the important factors for the markets:

Impressive Q3 numbers from Indian Inc. lifted sentiments: Buying was witnessed in IT stocks post better-than-expected Q3 numbers from Zensar Technologies, Coforge and Persistent System. UltraTech Cement also reported good set of numbers.

Foreign fund outflow capped upside: The Foreign institutional investors (FIIs) extended their selling on the 14th day as they offloaded equities worth Rs 4,026 crore on January 22.

Lingering uncertainty over US trade tariff measures: Uncertainty lingers whether the US trade tariff measures will affect global trade, lead to higher inflation, and currencies volatility. 

India emerges as most trusted place: Sentiment were upbeat as Union Minister Ashwini Vaishnaw has said India has emerged as the most trusted place amid disruptions across the world. 

Global cues remained positive: Most of the European markets were trading in green, even as French manufacturing sentiment deteriorated more than expected in January on falling orders. The manufacturing sentiment index registered 95 in January, down from 97 in December. The score was expected to drop to 96. Asian markets settled mixed, due to uncertainty over tariffs from the US Trump administration and ahead of policy decisions from several major central banks in the coming weeks. 

Finally, the BSE Sensex surged 115.39 points or 0.15% to 76,520.38, and the CNX Nifty was up by 50.00 points or 0.22% to 23,205.35.    

The BSE Sensex touched high and low of 76,743.54 and 76,202.12 respectively. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose by 1.76%, while Small cap index was up by 0.67%.

The top gaining sectoral indices on the BSE were Basic Materials up by 1.86%, Consumer Durables up by 1.85%, IT up by 1.51%, Healthcare up by 1.30% and Consumer Disc up by 1.23%, while Oil & Gas down by 0.51%, Bankex down by 0.36% and Energy down by 0.31% were the few losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 6.60%, Zomato up by 2.45%, Sun Pharma up by 2.17%, Mahindra & Mahindra up by 1.99% and Tech Mahindra up by 1.69%. On the flip side, Power Grid down by 1.21%, HCL Tech. down by 1.15%, Kotak Mahindra Bank down by 1.14%, Reliance Industries down by 1.06% and SBI down by 0.93% were the top losers.

Meanwhile, the Confederation of Indian Industry (CII) has called for a comprehensive review of the recognition and accounting of intangible assets as India transitions towards a digital economy. According to CII, intangible assets are crucial for value creation in modern business models, especially in sectors like Software as a Service (SaaS), Platform as a Service (PaaS), blockchain platforms, and advanced manufacturing. However, the current accounting standards, particularly India’s Financial Reporting Standard Ind AS 38, which is based on IAS 38, limit recognition to only acquired intangible assets and prohibit capitalisation of internally generated intangibles.

Emphasising on sharing a comprehensive set of recommendations to harness India’s potential of Digital Economy, Chandrajit Banerjee, Director General, CII said ‘Inability to recognise internally generated intangibles means that such investments are largely excluded from the governance, financial reporting, and auditing ecosystems. Therefore, such investments are less likely to have corresponding disclosures or be included in the management discussion and analysis (MD&A), and are less likely to receive scrutiny from auditors, visibility to investors and comparability of financial statement.’

Further, Banerjee stated that there are concerns that at least some of the differences between market capitalisation and book value is due to non-recognition of internally generated assets. Among the major recommendations, the industry body added that intangible assets related to brand development, such as proprietary algorithms and user engagement, should be capitalized if they have enduring value. CII recommended that the accounting for SaaS, PaaS, and IaaS should be reviewed, allowing for the capitalization of development costs with long-term economic benefits. It said intangible assets acquired as part of a basket acquisition in pharma should be recognized based on their economic value.

The industry body said capitalisation of development costs for new automotive platforms should be allowed based on management judgment. It added that as India moves towards Net Zero, the recognition of Carbon Credits (CERs) as assets should be revisited. A more flexible approach to revaluation and measurement of intangible assets is needed, especially as the gap between market and book value grows.

The CNX Nifty traded in a range of 23,090.65 and 23,270.80. There were 32 stocks advancing against 17 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Ultratech Cement up by 6.80%, Grasim Industries up by 3.06%, Wipro up by 2.78%, Shriram Finance up by 2.15% and Eicher Motors up by 2.13%. On the flip side, BPCL down by 2.29%, Kotak Mahindra Bank down by 1.18%, HCL Tech. down by 1.13%, Power Grid down by 1.08% and Reliance Industries down by 1.05% were the top losers.

European markets were trading mostly in green; France’s CAC rose 26.71 points or 0.34% to 7,864.11 and Germany’s DAX gained 62.09 points or 0.29% to 21,316.36, while UK’s FTSE 100 decreased 2.96 points or 0.03% to 8,542.17. 

Asian markets ended mixed on Thursday due to uncertainty over tariffs from the US Trump administration and ahead of policy decisions from several major central banks in the coming weeks. Chinese shares gained after China announced a plans to channel hundreds of billions of yuan of investment from state-owned insurers into shares as part of the government's latest efforts to support a struggling stock market. Also, China's capital market regulator pledged to step up efforts to propel cross-border investment and financing, increase the appeal of A-shares to international investors, and enhance communication to address investor concerns and their legitimate demands. Japanese shares rose, tracking Wall Street’s gains overnight driven by optimism over artificial intelligence spending, while investors are awaiting the CPI data and the BoJ rate decision due Friday. Meanwhile, Seoul shares declined sharply after data showed South Korean economy barely grew in the fourth quarter of 2024 and missed the market expectations amidst the worst political crisis in decades.