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EQUITY
Key indices snap 5-day losing run on Tuesday
Jan-25-2022

Breaking 5-day losing streak, Indian equity benchmarks staged a smart recovery from opening lows and closed at day's high on Tuesday, led by strong buying interest in PSU, telecom and utilities stocks. The benchmark indices had opened with a massive downside gap, as traders remained cautious after ICRA projects fiscal deficit at a higher Rs 17.9 trillion, driven by the two major outlays intended to bolster confidence amongst households, namely free food grains under the PMGKAY scheme and an enhanced outgo for MGNREGA. Some cautiousness also came as private report stated that the ongoing third wave of the coronvirus pandemic has dragged business activity almost back to the pre-pandemic levels. Traders were also worried as exchange data showed Foreign Institutional Investors (FIIs) remained net sellers in the capital market as they offloaded shares worth Rs 3,751.58 crore on Monday.

However, equity markets reversed losses during the second half of the trading session, taking support from former Niti Aayog Vice Chairman Arvind Panagariya’s statement that the Indian economy has recovered 'handsomely' from the pandemic-induced disruptions, while expressing hope that the recovery will be sustained and the growth rate of 7 to 8 per cent will be restored. Traders also found some solace with the commerce ministry’s statement that exports of engineering goods rose 54 per cent to $81.8 billion during April-December 2021-22 as compared to the same period of the previous year. In the corresponding nine-month period of 2020-21, exports stood at $52.9 billion. The sector accounted for over 27 per cent in India’s total exports basket during the period. Adding to the optimism, around 10.28 lakh new members joined the ESIC-run social security scheme in November 2021 against 12.39 lakh in the previous month, giving a perspective on formal sector employment in the country. The latest data is part of a report released by the National Statistical Office (NSO).

On the global front, Asian markets settled lower on Tuesday as investors awaited the outcome of FOMC meet on Wednesday, which is expected to give clues on its monetary policy direction. Geopolitical tensions also remained on investors' radar after NATO announced that it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.  European markets were trading higher, as Germany's Ifo business climate index improved to 95.7 from 94.8 in December, reaffirming better business conditions to start the year.  Back home, on the sectoral front, agriculture industry related stocks were in focus as the Union Food Ministry said the Centre has procured 606.19 lakh tonne of paddy in the ongoing 2021-22 marketing season so far, with maximum quantities being purchased from Punjab. Textile industry’s stocks were in action as ICRA ratings in its report stated that Indian cotton spinners are likely to report double-digit revenue growth and all-time high profits in 2021-22, mainly driven by high demand and realizations.

Finally, the BSE Sensex rose 366.64 points or 0.64% to 57,858.15 and the CNX Nifty was up by 128.85 points or 0.75% to 17,277.95.

The BSE Sensex touched high and low of 57,966.93 and 56,409.63, respectively.  There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.03%, while Small cap index was up by 0.81%.

The top gaining sectoral indices on the BSE were PSU up by 2.53%, Telecom up by 2.46%, Utilities up by 2.44%, Power up by 2.41% and Auto up by 2.32%, while IT down by 0.39% and Consumer Durables down by 0.13% were the few losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 6.88%, Axis Bank up by 6.76%, SBI up by 4.20%, Indusind Bank up by 3.87% and Bharti Airtel up by 3.23%. On the flip side, Wipro down by 1.75%, Bajaj Finserv down by 1.16%, Titan Company down by 0.98%, Infosys down by 0.85% and Tech Mahindra down by 0.80% were the top losers.

Meanwhile, the Commerce Ministry said exports of engineering goods rose 54 per cent to $81.8 billion during April-December 2021-22 as compared to $52.9 billion in the corresponding nine-month period of 2020-21. The sector accounted for over 27 per cent in India’s total exports basket during the period. In entire 2020-21, exports from the sector was $76.62 billion.

It said ‘with the sector already logging $81.8 billion in the first three quarters of 2021-22, the sector is set to scale further record highs despite the impact of the COVID-19 pandemic in January, 2020’. India’s top five export destinations for engineering goods include the US, China, the UAE, Italy and Germany. The ministry added that the zero duty Export Promotion Capital Goods (EPCG) scheme has helped in pushing up the exports.

The scheme allows import of capital goods for pre-production, production and post-production (including completely knocked down/ semi knocked down thereof as well as computer software systems) at zero customs duty, subject to an export obligation equivalent to six times of duty saved on capital goods imported under the scheme, to be fulfilled in six years reckoned from authorization issue-date. The engineering goods sector comprises metal products, industrial machinery and equipment, automobiles and its components, transport equipment, bicycles, medical devices and renewable equipment.

The CNX Nifty traded in a range of 17,309.15 and 16,836.80 and there was 36 stocks advancing against 14 stocks declining on the index. 

The top gainers on Nifty were Maruti Suzuki up by 7.42%, Axis Bank up by 6.52%, SBI up by 3.89%, Indusind Bank up by 3.57% and UPL up by 3.51%. On the flip side, Wipro down by 1.62%, Bajaj Finserv down by 1.42%, Titan Company down by 1.18%, ultratech cement down by 1.05% and Tech Mahindra down by 0.87% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 61.76 points or 0.85% to 7,358.91, France’s CAC increased 75.51 points or 1.11% to 6,863.30 and Germany’s DAX increased 125.70 points or 0.84% to 15,136.83.

Asian markets settled lower on Tuesday ahead of the outcome of US Federal Reserve’s meet on Wednesday that expected to give clues on its monetary policy direction. Further, growing Omicron concerns and geopolitical tensions over Ukraine also added pressure on market sentiments. Seoul shares declined on account of massive sell-off from foreign investors. Meanwhile, Bank of Korea data showed earlier in the day that South Korea's economy expanded at the fastest pace in 11 years in 2021 helped by a jump in exports and construction activity.

Indices

Last Trade           

Change in Points

Change in %    

Shanghai Composite

3,433.06
-91.05
-2.58

Hang Seng

24,243.61
-412.85
-1.67

Jakarta Composite

6,568.17
-87.00
-1.31

KLSE Composite

1,508.91-12.95-0.85

Nikkei 225

27,131.34
-457.03
-1.66

Straits Times

3,247.76
-35.59
-1.08

KOSPI Composite

2,720.39
-71.61
-2.56

Taiwan Weighted

17,701.12
-287.92
-1.60
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