Benchmarks end higher backed by supportive global cues, encouraging macro economic data

Indian equity benchmarks traded with positive bias throughout the day and ended over a percent higher on Wednesday backed by supportive global cues and encouraging macro economic data. The frontline indices started gap-up as India's gross domestic product (GDP) in the second quarter of the fiscal year 2021-22 grew at 8.4 percent. The numbers mark a significant increase as compared to the COVID-19-hit second quarter of last fiscal year, when the GDP had declined by 7.4 percent. Sentiments remained upbeat with a private survey showed India’s manufacturing activity grew at the fastest pace in 10 months in November, buoyed by a strong pick-up in demand, but higher inflationary pressure left factories worried about their future prospects. Compiled by IHS Markit, the Purchasing Managers’ Index rose to 57.6 in November from 55.9 in October. The reading was the highest since January and the fifth straight month above the 50-mark that separates growth from contraction. Some support came in with government data showing that the combined output of eight core industries has surged by 7.5 percent in October, as compared to the same period last year. Investors are eyeing Manufacturing PMI data to be out later in the day.

However, key benchmark indices have pared some initial gains, as some concern came with a periodic labour force survey by the National Statistical Office (NSO) showed that unemployment rate for persons of age 15 years and above in urban areas rose to 9.3 per cent in January-March 2021 from 9.1 per cent in the same month of the previous year. Besides, the labour ministry said retail inflation for industrial workers rose marginally to 4.5 per cent in October as compared with 4.41 per cent in September. But, key gauges regained traction to end higher, as some support came with the finance ministry has said that Goods and Services Tax (GST) collections jumped to over Rs 1.31 lakh crore in November, the second highest since its implementation in July 2017. Adding to the optimism, Chief Economic Adviser (CEA) K V Subramanian has exuded confidence that India would achieve double-digit growth in the current financial year (FY22) on the back of policy initiatives and continuing reforms. He also said the country is well poised to meet the fiscal deficit target of 6.8 per cent of Gross domestic product (GDP). Some relief also came with data showing that the central government's fiscal deficit at end-October worked out to be 36.3 percent of the annual budget target for 2021-22 due to an improvement in the revenue collection.

On the global front, Asian markets ended mostly higher on Wednesday as a slew of positive regional data helped counter growing concerns about the omicron coronavirus variant and expectations of an accelerated bond purchase rollback in the United States. Investors shrugged off the results of a survey, which showed the manufacturing sector in China slipped into contraction territory in November. European markets were trading lower, as the U.K. Manufacturing PMI was finalized at 58.1 vs. 58.2 estimated while Germany reported disappointing retail sales data amid surging price pressures and supply bottlenecks. Back home, on the sectoral front, fertiliser industry’s stocks jumped after report stated that the government plans to increase fertiliser subsidies to a record of more than 1.55 trillion rupees ($20.67 billion) in 2021-2022 to avoid shortages amid a sharp rise in global prices.

Finally, the BSE Sensex rose 619.92 points or 1.09% to 57,684.79 and the CNX Nifty was up by 183.70 points or 1.08% to 17,166.90. 

The BSE Sensex touched high and low of 57,846.45 and 57,346.78, respectively and there were 22 stocks advancing against 8 stocks declining on the index.    

The broader indices ended in green; the BSE Mid cap index rose 1.00%, while Small cap index was up by 0.27%.

The top gaining sectoral indices on the BSE were Metal up by 2.40%, Energy up by 1.97%, Bankex up by 1.76%, Auto up by 1.47% and Finance up by 1.43%, while Healthcare down by 1.43%, Consumer Durables down by 0.51% and Telecom down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 5.73%, Axis Bank up by 3.46%, SBI up by 3.19%, Tech Mahindra up by 3.07% and Maruti Suzuki up by 2.66%. On the flip side, Dr. Reddy's Lab down by 1.58%, Ultratech Cement down by 1.48%, Sun Pharma down by 1.14%, Bharti Airtel down by 1.06% and Titan Co down by 0.57% were the top losers.

Meanwhile, Controller General of Accounts (CGA) in its latest data has said that the Union government's fiscal deficit works out to be Rs 5.47 lakh crore or 36.3% of the budget estimates at the end of October 2021 on the back of improvement in revenue collection. For the current financial year, the government expects the deficit at 6.8% of GDP or Rs 15.06 lakh crore.

The deficit figures in the current fiscal appear better than the previous financial year when the gap between expenditure and revenue had soared to 119.7% of the last year's Budget Estimates (BE) mainly on account of a jump in expenditure to deal with the COVID-19 pandemic.

Besides, it said the government of India received about Rs 12.79 lakh crore (64.8 per cent of corresponding BE 2021-22 of total receipts) up to October, 2021 comprising Rs 10.53 lakh crore tax revenue (net to centre), Rs 2.06 lakh crore of non-tax revenue and Rs 19,722 crore of non-debt capital receipts.

The CNX Nifty traded in a range of 17,213.05 and 17,064.25 and there were 35 stocks advancing against 14 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Indusind Bank up by 5.83%, JSW Steel up by 4.99%, Tata Motors up by 4.23%, Axis Bank up by 3.71%, and Bharti Airtel down by 0.86%. On the flip side, Cipla down by 4.42%, Divi's Lab down by 2.31%, Ultratech Cement down by 1.53%, Dr. Reddy's Lab down by 1.51% and Sun Pharma Inds. down by 1.09% were the top losers.

European markets were trading lower; UK’s FTSE 100 increased 97.17 points or 1.38% to 7,156.62, France’s CAC rose 86.78 points or 1.29% to 6,807.94 and Germany’s DAX was up by 223.97 points or 1.48% to 15,324.10.

Asian markets ended mostly higher on Wednesday, despite growing concerns about the omicron corona-virus variant with US Fed's faster tapering and early rate hike bets. US based drug maker Moderna’s CEO said that existing Covid-19 vaccines would be much less effective at combating omicron compared with previous variants of the virus. Meanwhile, slew of positive regional data helped market sentiment to finish higher. Japanese shares gained after data showing the country's factory activity grew in November at the fastest pace since 2018. The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) in November rose to 54.5 against prior month’s 53.2 and a 54.2 flash reading. Seoul shares rose after a survey showed the country's factory activity expanded further in November. Moreover. Chinese shares improved on economic optimism after Vice Premier Liu He pledged enhanced support for businesses and said he's fully confident about the Chinese economy’s outlook next year. However, a survey showed the manufacturing sector in China slipped into contraction territory in November.

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