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Markets manage to eke out marginal gain
Jan-14-2021

Indian equity benchmarks managed to end the choppy day of trade with marginal gains on Thursday. Markets made a negative start as traders remained cautious on report that India registered 17,015 fresh Covid-19 cases in last 24 hours, taking the tally to 10,512,8311. The five most affected states by total cases are Maharashtra (1974488), Karnataka (928806), Andhra Pradesh (885234), Tamil Nadu (827614), and Kerala (819765). Sentiments also remained dampened with Fitch Ratings stating that the Indian economy will suffer lasting damage from the coronavirus crisis and after an initial strong rebound in FY22 (fiscal year ending March 2022) growth will slow to around 6.5 per cent a year over FY23-FY26. Fitch said India’s coronavirus-induced recession has been among the most severe in the world, amid a stringent lockdown and limited direct fiscal support.

However, in second half of the trade, key gauges gained some traction and managed to end the day with marginal gain after India’s inflation based on wholesale price index (WPI) eased to 1.22% (provisional) for the month of December 2020 as compared to 2.76% during the corresponding month of the previous year. Component wise, primary articles index having weight of 22.62%, declined by (-3.11%) to 146.5 (provisional) in December 2020 from 151.2 (provisional) for the month of November 2020. Traders also took some support with a private report that economic activity continued with its pace of normalisation and the festivities helped narrow the deficits as compared to the year-ago period in December. It also revised up wits FY21 GDP forecast to a contraction of 6.7 per cent, as against the official estimate of a 7.7 per cent contraction in the pandemic-impacted fiscal year.

Firm opening in European counters too provided support to domestic markets as hopes of a large stimulus under incoming U.S. President Joe Biden and upbeat Chinese export data boosted sentiment. Asian markets ended mixed on Thursday, even after China's exports continued to log robust growth in December driven by higher global demand for pandemic-induced goods. The official data revealed that exports grew 18.1 percent on a yearly basis in December, faster than the expected growth of 15.0 percent, data from the General Administration of Customs, showed. Nonetheless, the rate of increase slowed from 21.1 percent posted in November. Driven by domestic demand, imports growth advanced to 6.5 percent from 4.5 percent a month ago.

Back home, the Income Tax Department said it has issued refunds worth over Rs 1.73 lakh crore to more than 1.57 crore taxpayers in the ongoing fiscal till January 11. Of this, personal income tax refunds are worth Rs 57,139 crore, while corporate tax refunds are worth Rs 1.15 lakh crore. On the sectoral front, stocks related to textiles industry remained in focus with ICRA’s report that the textile industry's performance will recover to pre-Covid levels in the next fiscal on account of boost in demands from domestic as well as export markets. The agency assigned outlook for the sector as stable for FY2022.

Finally, the BSE Sensex rose 91.84 points or 0.19% to 49,584.16, while the CNX Nifty was up by 30.75 points or 0.21% to 14,595.60.

The BSE Sensex touched high and low of 49,663.58 and 49,182.37, respectively and there were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.29%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.67%, Oil & Gas up by 1.38%, Energy up by 1.13%, Healthcare up by 1.07% and FMCG was up by 0.84%, while Metal down by 1.24%, Basic Materials down by 0.59%, Consumer Durables down by 0.27%, Consumer Discretionary Goods & Services down by 0.26% and Bankex down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.89%, Indusind Bank up by 2.84%, Larsen & Toubro up by 1.80%, ITC up by 1.35% and Reliance Industries up by 1.11%. On the flip side, HCL Tech down by 2.63%, Axis Bank down by 1.71%, Asian Paints down by 1.32%, Ultratech Cement down by 1.26% and Infosys down by 1.23% were the top losers.

Meanwhile, Rating agency ICRA has said there is a need to increase capital outlay in the road sector by at least 15 per cent besides expediting asset monetisation programme. It also said that hybrid annuity mode of highways building presents huge refinancing opportunities and 70 such projects involving Rs 35,800 crore of debt are expected to become operational in the next two years. It added that FY2022 remains a crucial year for two reasons: a) Importance of government spending to revive economy and b) Significant catch up to do in the ongoing Bharatmala and allied programmes. As a result, the capital outlay is required to be increased by at least 15 per cent.

Shubham Jain, Senior Vice President, Corporate Ratings, ICRA, said increase in capital outlay needs to be supported by increase in budgetary allocation to the sector at least by 20 per cent to around Rs 0.98 lakh crore to make up for shortfall in the last three years and slow progress on asset monetisation. He said ‘Investors also expect funding road map for the ambitious NIP (National Infrastructure Pipeline). Given the limited fiscal headroom, the government could consider relaxation of fiscal deficit targets to meet the huge funding requirements for productive asset creation, failing which both the Bharatmala and the NIP could get jeopardized’.

The NIP involves outlay of around Rs 20.3 lakh crore in road sector over next five years. However, the budgetary allocations in the past have not kept pace with these plans. Consequently, the dependence on debt funding remained elevated. The total debt for the NHAI has increased by more than three times to Rs 2.49 lakh crore as on March 31, 2020 from Rs 75,385 crore as on March 31, 2017. The borrowings are expected to surpass Rs 3.5 lakh crore by FY2023 to fund the Bharatmala Pariyojana programme (subset of NIP). Liquidity boosting measures for highways sector have helped in reducing the cash conversion cycle, while also getting the performance guarantees and associated margin monies released for the executed portion of the projects.

The CNX Nifty traded in a range of 14,471.50 and 14,617.80 and there were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were UPL up by 3.70%, BPCL up by 3.18%, TCS up by 2.90%, Indusind Bank up by 2.86% and Indian Oil Corporation up by 2.23%. On the flip side, HCL Tech down by 2.36%, Grasim down by 1.77%, JSW Steel down by 1.66%, Axis Bank down by 1.64% and Tech Mahindra down by 1.37% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 43.46 points or 0.64% to 6,788.98, France’s CAC gained 8.17 points or 0.14% to 5,670.84 and Germany’s DAX was up by 26.14 points or 0.19% to 13,965.85.

Asian markets ended mixed on Thursday tracking Wall Street overnight as investors await further stimulus support under the Biden Administration, while the House of Representatives started a debate on a historic second impeachment of President Donald Trump over his supporters’ attack of the Capitol. Chinese shares ended lower on profit taking as the country reported its biggest jump in Covid-19 cases in more than 10 months. While data showed Chinese exports continued to log robust growth in December driven by higher global demand for pandemic-induced goods. Exports rose 18.1% in December from a year earlier, slowing from a 21.1% jump in November but beating expectations for a 15% rise. Imports growth advanced 6.5% year-on-year last month, topping a 5% forecast and picking up pace from November’s 4.5% growth. Japanese shares gained after data showed better-than-expected core machinery orders.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,565.90
-32.75
-0.91

Hang Seng

28,496.86
261.26
0.93

Jakarta Composite

6,428.32
-6.89
-0.11

KLSE Composite

1,635.71

-0.98

-0.06

Nikkei 225

28,698.26
241.67
0.85

Straits Times

3,000.00
22.49
0.76

KOSPI Composite

3,149.93
1.64
0.05

Taiwan Weighted

15,707.19
-62.79
-0.40
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