Benchmarks wipe out gains to end flat on Friday

Indian equity benchmarks wiped out all gains and ended flat with negative bias on Friday triggered by a late sell-off mainly in Banking, Auto and Finance shares. The benchmark indices opened fairly positive and stayed in green for most part of the day, as traders took some encouragement with the commerce ministry’s statement that India’s electronic goods exports surged by 49 percent to $11 billion during April-December 2021 as against $7.4 billion recorded in the corresponding period of last year. In 2020-21, the exports stood at $11.11 billion. Sentiments were upbeat as Deputy Governor Michael Patra stated that Reserve Bank of India (RBI) remains committed to revive and sustain growth and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within target. Traders took note of report that the Income Tax department said it has issued refunds worth Rs 1.62 lakh crore to more than 1.79 crore taxpayers so far this fiscal.

The frontline indices were firm in noon deals, taking support from Deputy Governor Michael Patra, addressing criticism of the RBI being ‘behind the curve’ by continuing with the accommodative stance longer than other countries, said the approach has served us well. He also said India is placed ''much better'' to deal with future waves of the pandemic as compared to being affected the worst in the first after the nationwide lockdown. However, the key indices erased entire day's gains, and slipped into red for a brief moment as investors preferred to lighten positions ahead of the weekend and the upcoming Union Budget. Meanwhile, India has initiated an anti-dumping probe against 'Ursodeoxvcholic Acid', used in the medical field, imported from China and Korea following a complaint by a domestic player. Arch Pharmalabs has filed an application before the directorate for initiation of anti-dumping investigation and imposition of the duty.

On the global front, Asian markets ended mixed on Friday, as traders looked ahead to data on U.S. employment costs that might influence Federal Reserve decisions on planned interest rate hikes. European markets were trading lower as risk-off sentiment prevailed amid concerns over higher interest rates and rising geopolitical tensions in Ukraine. Investors were also reacting to mixed economic readings from Germany and France. Back home, on the sectoral front, telecom stocks were in focus as the DoT has agreed with the telecom players' plea to not proceed with the process of adopting 5Gi as a national standard. Stocks related to renewable energy sector were in action as an independent study stated that India's renewable energy sector has the potential to employ around one million people by 2030, and most of the new jobs would be generated by small-scale renewable energy projects. There was some buzz in the gold related stocks as the World Gold Council (WGC) said India's gold consumption is expected to rise further in 2022 after jumping 79% last year as pent-up demand and an improvement in consumer confidence are seen boosting retail jewellery sales.

Finally, the BSE Sensex fell 76.71 points or 0.13% to 57,200.23 and the CNX Nifty was down by 8.20 points or 0.05% to 17,101.95.

The BSE Sensex touched high and low of 58,084.33 and 57,119.28, respectively. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.02%, while Small cap index was up by 1.07%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.10%, Basic Materials up by 0.90%, IT up by 0.88%, Telecom up by 0.87%, TECK up by 0.78% while, Bankex down by 0.75%, Auto down by 0.64%, Finance down by 0.29%, Capital Goods down by 0.14% and Consumer Durables down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.89%, Sun Pharma up by 1.85%, Indusind Bank up by 1.72%, Mahindra & Mahindra up by 1.38% and Wipro up by 1.37%. On the flip side, Maruti Suzuki down by 2.99%, Tech Mahindra down by 2.43%, Power Grid Corporation down by 2.14%, ICICI Bank down by 1.62% and Axis Bank down by 1.08% were the top losers.

Meanwhile, the commerce ministry has said that India’s electronic goods exports surged by 49 percent to $11 billion during April-December 2021 as against $7.4 billion recorded in the corresponding period of last year. In 2020-21, the exports stood at $11.11 billion.

The ministry noted that top five export destinations were the US, UAE, China, Netherlands and Germany. Mobile phones constituted a major chunk of electronic goods shipments. Other sectors which recorded healthy growth included IT hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics, auto electronics, components, LED lighting and telecom equipment.

It further said the sector is set to break all-time record highs, far exceeding the previous high USD 11.7 billion recorded in 2019-20. Steps taken by the government which are expected to increase the domestic manufacturing and exports include the Production Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), and Modified Electronics Manufacturing Clusters. 

The Ministry of Electronics and Information Technology recently released the second volume of a five-year roadmap and vision document for the sector. The document lays the roadmap to transform India into a $300 billion electronics manufacturing powerhouse over the next five years, from the current $75 billion. Electronic goods exports are expected to increase from the projected $15 billion in 2021-22 to $120 billion by 2026.

The CNX Nifty traded in a range of 17,373.50 and 17,077.10 and there was 31 stocks advancing against 19 stocks declining on the index. 

The top gainers on Nifty were NTPC up by 3.89%, UPL up by 2.48%, Sun Pharma up by 2.14%, Tata Consumer Products up by 1.78% and Indusind Bank up by 1.76%. On the flip side, Maruti Suzuki down by 3.21%, Tech Mahindra down by 2.53%, Power Grid Corporation down by 1.82%, ICICI Bank down by 1.59% and Hero MotoCorp down by 1.51% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 106.93 points or 1.42% to 7,447.38, France’s CAC decreased 118.57 points or 1.69% to 6,905.23 and Germany’s DAX decreased 310.27 points or 2% to 15,214.00.

Asian markets ended mixed on Friday. Seoul shares gained after the release of encouraging industrial output and retail sales data. Japanese shares recovered from a 14-week low, with transport, real estate and paper & pulp stocks outperforming, but still registered its biggest weekly drop in two months. Positive fourth-quarter US GDP data and Apple Inc's impressive earnings supported markets to some extent. Meanwhile, Chinese shares declined to close at a 16-month low even after state-backed newspapers and fund houses trying to calm investor nerves following a sharp sell-off on worries over faster US monetary policy tightening. Mainland Chinese markets would be shut for the week-long Lunar New Year holiday, starting January 31.


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