The Indian markets before going for a holiday posted strong gains and the Nifty reclaimed the crucial 8600 level. Today, the start of the new series is likely to be in green and the markets will be extending the gains, as the Finance Ministry has said that the drive to transform India will continue in Budget 2017-18 to be unveiled by Finance Minister Arun Jaitley on February 1. Though, days ahead of the budget, global rating agency Moody's has said that its positive outlook on India reflects expectations of continued policy reforms reducing government debt even as it feels that the high debt level limits room to cut fiscal deficit quickly. It also said the economy will return to the previous trend by mid-2017 after temporary effects of demonetisation fade away. President Pranab Mukherjee too has said that demonetisation may have led to “temporary” slowdown in economy but it will bring more transparency in the system. The sugar stocks will be in action, as the Indian Sugar Mills' Association (ISMA) has revised downwards its estimates for sugar production during the 2016-17 season (October-September) to 213 lakh tones, in view of drought in key growing states of Maharashtra and Karnataka. There will be some buzz in pharma stocks, as the Indian pharmaceutical sector is likely to gain, rather than being impacted, as the new US President Donald Trump aims to reduce drug prices since the country's generic medicines are already affordable. There will be lots of important earnings announcements too, to keep the markets buzzing.
The US markets made a mixed closing in last session following a lackluster trade, as traders seemed reluctant to make significant moves after yesterday's gains, though Dow still ended the session at a new record closing high. The Asian markets have made mostly a positive start and the Japanese market was trading higher as the pace of consumer prices decline eased as oil costs rose, supporting expectations for a return to inflation later this year.
Back home, The January series expiry of Futures and Options turned out to be jubilant event for the Indian frontline indices, which finished the session with strong gains of over a percentage point on account of fresh buying ahead Union Budget next week. Hefty short covering in the dying hours ahead of the series expiry stoked the benchmarks to settle near the high point of the day. Sentiments remained upbeat with report that Donald Trump and Narendra Modi have discussed opportunities to strengthen the partnership between the United States and India in broad areas such as the economy and defense. Strong earnings from lenders such as HDFC Bank and Kotak Mahindra Bank raised optimism that the impact of note ban could be less than expected. Kotak Mahindra Bank posted a 34% Y-O-Y increase in its consolidated net profit at Rs 1266.59 crore for the quarter ended December 2016, while HDFC Bank reported 15.15% rise in its net profit at Rs 3865.33 crore for the quarter as compared to Rs 3356.84 crore for the same quarter in the previous year. Some support also came with the repot that Germany is set to finance long-term strategic projects in India particularly in the railway, infrastructure and smart cities sectors as part of efforts to support India's growth story. Meanwhile, the markets paid no heed to a report that demonetisation has stymied India's GDP growth and the October-December quarter show is likely to be around 6%, while for January-March it could climb down to 5.7%. According to the financial services major, the consumption and services, which were the fastest growing segments pre-demonetisation, were the worst-hit. Meanwhile, credit ratings agency India Ratings in its report said most Indian companies with overseas debt have not hedged enough of their foreign currency risk, making them vulnerable to any sharp movements in the rupee. The study of 100 companies holding 19.5 trillion rupees ($286.30 billion) of debt abroad as of March 2016, showed 54 of them, with 14.5 trillion exposure, were vulnerable given only 35 percent of their balance sheets were hedged. Finally, the BSE Sensex gained 332.56 points or 1.21% to 27708.14, while the CNX Nifty was up by 126.95 points or 1.5% to 8,602.75. Indian markets remained closed on Thursday on account of Republic Day holiday.