Indian benchmarks showcased an amazing performance on Friday and went on to outclass indices around the world by surging over half a percent and settling above the psychological 8,800 (Nifty) and 28,450 (Sensex) levels. Thursday’s optimism got spilled over into the today’s session helping the frontline indices in extending the winning momentum for second successive session. Sentiments remained sanguine as Reserve Bank of India (RBI) governor Urjit Patel said India is at a ‘good place’ in terms of financial stability and the central bank will manage any sharp volatility in the markets arising out of global developments including concerns over U.S. President Donald Trump's protectionist policies. He also said RBI is looking beyond the headline inflation figures and is focusing on core inflation trends, which excludes more volatile food and fuel prices, to guide RBI's policy moves. Further, Investors’ morale also remained upbeat as Arjun Ram Meghwal, Minister of State for Finance said that the ongoing digital push and encouragement of cashless transactions would boost the country’s gross domestic product (GDP). He also said that India was on the verge of a transition from a large cash economy to a less cash and digital economy. However, weak global cues coupled with depreciation in rupee value have limited the gains. Indian rupee fell 8 paise to 67.15 against the US currency on Friday on increased dollar demand from importers and banks. Some investors remained nervous with Nomura’s report that the impact of demonetisation is still visible and cash levels in the economy are not expected to be sufficient until March, which may keep trade volumes depressed for the next two months. As per data released by the commerce ministry, growth in exports in January was lower than 5.72% in December. Furthermore, India Ratings and Research (Ind-Ra) does not expect the performance of Indian companies to improve substantially in FY18. Pick-up in capital expenditure by the private sector is at least another two fiscal years away. Rise in commodity prices and uptick in interest rates amid rate hikes globally are two important risks to slow-but-improving demand for FY18.
On the global front, Asian equity markets ended mostly in red on Friday as investors took profits, while the dollar inched up after Thursday's slide and optimism over possible renewed supply cuts by OPEC lifted oil prices. A batch of positive economic data out of Asia this week, driven by improving exports and rising commodity prices, has bolstered shares, although concerns linger that any protectionist threats posed by US President Donald Trump could reverse the recovery. Further, Japanese market fell as the yen gained ground amid the G20 gathering in the German city of Bonn, while Chinese and Hong Kong shares ended lower as investors took profits on resources shares, but losses were checked by strength in Chinese brokerage shares after authorities relaxed some rules on stock index futures trading. Meanwhile, European stocks drifted lower in early trade, as investors trimmed risky positions following a pullback from recent market highs and an erratic press conference from President Donald Trump.
Back home, after gap up start, the local benchmarks soon capitalized on the momentum and touched intraday highs in early trade, but the indices failed to hold onto the highs and receded to intraday lows in late morning trades. Thereafter, the indices traded in a tight range for most part of the session, as most traders remained uncomfortable to open fresh positions. Eventually, the NSE’s 50-share broadly followed index, Nifty convalesced by over half a percent to settle above the crucial 8,800 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over one hundred and fifty points and closed above the psychological 28,450 mark. Moreover, the broader markets too went home with notable gains in the session despite underperforming their larger peers. The market breadth remained optimistic, as there were 1424 shares on the gaining side against 1388 shares on the losing side, while 206 shares remained unchanged.
Finally, the BSE Sensex gained 167.48 points or 0.59% to 28468.75, while the CNX Nifty was up by 43.70 points or 0.50% to 8,821.70.
The BSE Sensex touched a high and a low of 28726.26 and 28410.91, respectively and there were 15 stocks on gainers side against 15 stocks on the losers side on the index.
The broader indices ended in green; the BSE Mid cap index jumped 0.53%, while Small cap index was up by 0.40%.
The top gaining sectoral indices on the BSE were Oil & Gas up by 1.38%, Bankex up by 1.21%, Consumer Durables up by 0.45%, FMCG up by 0.37% and PSU up by 0.28%, while IT down by 1.02%, TECK down by 0.86%, Metal down by 0.68% and Auto down by 0.06% were the top losing indices on BSE.
The top gainers on the Sensex were Sun Pharma up by 4.03%, HDFC Bank up by 3.75%, Cipla up by 1.58%, Tata Motors up by 1.53% and ICICI Bank up by 1.52%. On the flip side, TCS down by 1.58%, Hero MotoCorp down by 1.29%, Infosys down by 1.21%, Wipro down by 1.02% and Asian Paints down by 0.91% were the top losers.
Meanwhile, President Pranab Mukherjee has given approval to change government of India, Allocation of Business Rules, 1961, to delegate work of ‘Promotion of Digital Transactions including Digital Payments’ to the Ministry of Electronics and Information Technology (MeitY). As per the new rules, IT Ministry will oversee the works relating to promote digital transactions. The Ministry will promote e-governance for empowering citizens, promoting inclusive and sustainable growth of the electronics, information technology and information technology-enabled services industries, enhancing efficiency through digital services and ensuring a secure cyber space.
Especially after demonetization old Rs 500 and 100 notes, the central government is stressing upon digital payment and taking various steps in this regard. In February last year, the Union Cabinet headed by Prime Minister Narendra Modi had given nod for introduction of steps for promotion of payments through cards and digital means with an aims to reducing cash transactions. Besides, the Centre had in December 2016 decided on a package of incentives and measures for promotion of digital and cashless economy in the country.
Meanwhile, promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to cashless mode, discourage transactions in cash by providing access to financial payment services to the citizens to conduct transactions through card or digital means and shifting payment ecosystem from cash dominated to non-cash/less cash payments.
The CNX Nifty traded in a range of 8,896.45 and 8,804.25. There were 29 stocks in green as against 22 stocks in red on the index.
The top gainers on Nifty were Sun Pharma up by 3.67%, HDFC Bank up by 3.55%, ICICI Bank up by 2.08%, Gail up by 1.98% and Cipla up by 1.44%. On the flip side, Bharti Infratel down by 3.68%, Hindalco down by 2.32%, Idea Cellular down by 1.81%, Wipro down by 1.37% and Eicher Motors down by 1.35% were the top losers.
The European markets were trading in red; UK’s FTSE 100 decreased 16.17 points or 0.22% to 7,261.75, Germany’s DAX decreased 60.21 points or 0.51% to 11,697.03 and France’s CAC decreased 41.56 points or 0.85% to 4,857.90.
Asian equity markets ended mostly lower on Friday after a mixed session on Wall Street overnight. With oil prices caught in a range on concerns over growing US crude production and the yen strengthening, investors opted to stay on the sidelines ahead of the weekend. The arrest of Samsung's de facto leader Lee Jae-yong for bribery, embezzlement and perjury in connection to a massive corruption scandal also hurt regional sentiment. Japanese shares fell as the yen gained ground amid the G20 gathering in the German city of Bonn. Further, Chinese and Hong Kong shares ended lower as investors took profits on resources shares, but losses were checked by strength in Chinese brokerage shares after authorities relaxed some rules on stock index futures trading.
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