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Indian benchmarks extend winning streak for the third straight session

Thursday’s trading session was clearly of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained in tight band throughout the day. However, the benchmarks managed to extend the winning momentum for the third consecutive day of trade as local sentiments continued to show signs of improvement. Sentiments remained up-beat with Finance Minister Arun Jaitley’s statement that the implementation of the Goods and Services Tax (GST), coupled with a digitised economy ushered in by demonetization, will make India’s economy look much cleaner and bigger. Finance Minister reiterated that the Centre is still aiming to roll out the Goods and Services Tax (GST) regime from April 1 if all pending issues are sorted out. Besides, appreciation in rupee value against the dollar also fuelled the domestic market sentiments. Some support also came with Reserve Bank of India’s (RBI’s) suggestion of uniform rate of withholding tax for overseas borrowings, irrespective of type and currency. If the government agrees, this could lower the cost of overseas borrowing for Indian companies. Simplifying the levy will improve the ability of Indian companies to raise money. Meanwhile, Footwear stocks rallied on the repot that government may announce package for leather sector in forthcoming Budget. The government is expected to announce an incentive package for labour intensive leather sector in the forthcoming Budget with a view to give a boost to the segment and generate jobs. On the other hand, Pharma stocks came under pressure after US president-elect Donald Trump attacked the pharmaceutical industry for high drug prices and for manufacturing overseas, saying he will create new procedures for bidding on drugs, reports AFP.

On the global front, Asian markets ended mostly in red on Thursday, with Japanese shares coming under heavy selling pressure, after President-elect Donald Trump failed to provide clarity on future fiscal policies in a highly-awaited press briefing. Additionally, a stronger yen weighed on exporters' shares. Chinese market ended lower as investors moved to the sidelines ahead of the Lunar New Year holidays starting on Jan 27. Meanwhile, European counterparts too traded with a negative bias and Germany’s DAX shed over half a percent, being the biggest laggard in the space.

Back home, the local benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices started losing their edge. Thereafter, the indices traded in tight range though the morning session as market percipients remained on the sidelines and refrained from any buying activity ahead of key macroeconomic data to be released later in the day. However, short covering intensified in late hours of trade which stoked the bourses to near the highest point in the session. Eventually, the NSE’s 50-share broadly followed index Nifty, got buttressed by over quarter percent to settle above the crucial 8,400 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over hundred points and closed above the psychological 27,200 mark. Moreover, the broader markets failed to show any kind of fervor and settled on an uninspiring note, underperforming their larger peers by a good margin. On the BSE sectoral space, Power counter remained the top gainer in the space with over three percent gains followed by IT index which ended with gain of around two percent. Good buying was also observed in Capital Goods and PSU counters. On the flipside, FMCG counter languished at the bottom of the table with cut of around a percent, while the Auto and Realty sectors settled with moderate cuts.

The market breadth remained pessimistic as there were 1193 shares on the gaining side against 1575 shares on the losing side, while 155 shares remained unchanged.

Finally, the BSE Sensex surged 106.75 points or 0.39% to 27247.16, while the CNX Nifty rose 26.55 points or 0.32% to 8,407.20.

The BSE Sensex touched a high and a low of 27278.93 and 27166.69, respectively and there were 13 stocks on gainers side against 17 stocks on the losers side on the index.

The broader indices made a positive closing; the BSE Mid cap index ended higher 0.19%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Power up by 3.19%, IT up by 1.92%, TECK up by 1.55%, Capital Goods up by 1.51% and PSU up by 1.06%, while FMCG down by 0.96%, Auto down by 0.19%, Realty down by 0.06% and Consumer Durables down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 5.69%, Power Grid up by 4.14%, Infosys up by 3.20%, Larsen & Toubro up by 2.57% and Wipro up by 1.52%. On the flip side, Lupin down by 2.03%, Hindustan Unilever down by 1.76%, ITC down by 1.29%, Coal India down by 1.28% and Dr. Reddys Lab down by 1.19% were the top losers.

Meanwhile, in order to speed up economic growth and make economy more inclusive by focusing on the health sector, National Institution for Transforming India (NITI) Aayog will come out with three-year action plan within two months. The action plan will also consider the impact of demonetisation of high value notes on the economy, especially on informal sector.

In a three-year action plan which will unveil after the Union budget for 2017-18 is presented, the Aayog has made recommendation to increase social sector spending three times, partially by cutting down on mega subsidies as well as diverting extra revenues to sectors such as health and education. NITI Aayog’s action plan will not contain revenue projection for 2017-18, though it will have the details for 2018-19 and 2019-20.

Furthermore, the 12th Plan (2012-17) is the last five-year Plan and from 2017-18, the Centre would adopt a three-year action plan and a fifteen-year vision document. However, the 12th Five-Year Plan appraisal document, prepared by NITI Aayog has made a strong case for clear tax policies and focus on manufacturing, even as it exuded confidence that growth in 2016-17, the final year of the Plan would be 7 per cent to 7.75 per cent.

The CNX Nifty traded in a range of 8,417.20 and 8,382.30. There were 22 stocks in green against 29 stocks in red on the index.

The top gainers on Nifty were NTPC up by 5.71%, Power Grid up by 4.50%, Infosys up by 3.34%, Tata Power up by 2.99% and Larsen & Toubro up by 2.66%. On the flip side, Idea Cellular down by 3.35%, Lupin down by 1.82%, Hindustan Unilever down by 1.61%, Mahindra & Mahindra down by 1.58% and Aurobindo Pharma down by 1.49% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 19.94 points or 0.27% to 7,270.55, Germany’s DAX decreased 66.55 points or 0.57% to 11,579.62 and France’s CAC decreased 21.98 points or 0.45% to 4,866.73.

Asian equity markets ended mostly in red on Thursday, with Japanese shares coming under heavy selling pressure, as the yen continued to surge and shares of drug makers dropped following Trump's comments on drug pricing. Trump brief failed to offer more clarity around his stimulus plans and trade policies at the news conference, disappointing some investors who had hoped for more details on his plans to cut taxes and reduce regulation. Further, Chinese shares ended lower as investors moved to the sidelines ahead of the Lunar New Year holidays starting on Jan 27.

Asian Indices

Last Trade            

Change in Points

Change in %  

Shanghai Composite

3,119.29 -17.46-0.56

Hang Seng

22,829.02 -106.33-0.46

Jakarta Composite

5,292.75 -8.49-0.16

KLSE Composite

1,679.28 4.070.24

Nikkei 225

19,134.70 -229.97-1.19

Straits Times

2,992.30 -8.64-0.29

KOSPI Composite

2,087.14 11.970.58

Taiwan Weighted

9,410.18 64.440.69

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