Indian equity benchmarks rebounded on Monday amid a broad-based buying after the benchmark indices suffered their biggest one-day drop on Friday. Markets, after a gap-up start, traded with optimism throughout the session, as India’s Gross Domestic Product (GDP) grew by 0.4 per cent for the October-December quarter (Q3) of current fiscal (FY21). The GDP growth has returned the economy to the pre-pandemic times of positive growth rates. It is also a reflection of a further strengthening of V-shaped recovery that began in Q2 of 2020-21, after a large GDP contraction in Q1 followed one of the most stringent lockdown imposed by Government relative to other countries. Sentiments remained up-beat as data released by the Ministry for Commerce and Industry showed that the core sector index, which measures output of eight infrastructure industries, rose marginally by 0.1 per cent in January, indicating a wobbly recovery from the pandemic shock. Output in five of the eight crucial sectors fell on a year-on-year (YoY) basis.
However, the strong trade turned mildly volatile in the noon deals as they trimmed most of gains, after Indian manufacturing activity eased marginally in the month of February but it remains above the boom-or-bust line of 50 that separates expansion from contraction, as firms responded to strong increases in new work intakes by lifting production, input buying and stocks of purchases. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - stood at 57.5 in February as against 57.7 in January. But, markets regained traction to end higher, taking support from the labour ministry stating that retail inflation for industrial workers eased to 3.15 per cent in January against 7.49 per cent in the same month last year, mainly due to lower prices of certain food items. Adding more optimism on the street, India Ratings and Research (Ind-Ra) upgraded its FY21 credit growth estimates to 6.9 per cent from 1.8 per cent, given the improved economic environment in 2H FY21 and the government's focus on higher -- spending especially on infrastructure.
On the global front, Asian markets ended mostly higher on Monday reflecting investor optimism about the vaccine rollout and the stimulus-driven global economic recovery. Johnson & Johnson's single-shot Covid-19 vaccine received emergency use authorization from the FDA on Saturday, paving the way for its distribution. Besides, the latest survey from Caixin showed the manufacturing sector in China continued to expand in February, albeit at a slower pace with a manufacturing PMI score of 50.9, down from 51.5 in January. European markets were trading higher as expectations of faster economic recovery and stimulus hopes helped investors shrug off inflation fears. Eurozone PMI Manufacturing was finalized at a three-year high of 57.9 in February, up from January's 54.8, adding to optimism about economic recovery.
Back home, on the sectoral front, banking stocks were buzzing after the Reserve Bank of India's weekly statistical supplement showed Indian banks' loans rose 6.6% in the two weeks to February 12 from a year earlier, while deposits rose 11.8%. Outstanding loans fell Rs 10.44 billion ($141.30 million) to Rs 107.04 trillion in the two weeks to February 12. Aviation stocks ended in green as Minister of State for Civil Aviation Hardeep Singh Puri said the domestic air traffic is expected to be back to the full pre-COVID-19 level by the summer schedule with the traffic seeing a sharp recovery from the July quarter onwards after the resumption of the services post Unlock 1.0. Besides, majority of power stocks ended higher despite report stated that total dues owed by electricity distribution companies to power producers rose nearly 24 percent to Rs 1,36,966 crore in December 2020 compared to the same month a year ago, reflecting stress in the sector.
Finally, the BSE Sensex rose 749.85 points or 1.53% to 49,849.84, while the CNX Nifty was up by 232.40 points or 1.60% to 14,761.55.
The BSE Sensex touched high and low of 50,058.42 and 49,440.46, respectively. There were 29 stocks advancing against 1 stock declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 1.46%, while Small cap index was up by 1.61%.
The top gaining sectoral indices on the BSE were Basic Materials up by 2.91%, Utilities up by 2.49%, Auto up by 2.32%, Metal up by 2.08% and Power up by 2.05%, while Telecom down by 3.41% was the only losing index on BSE.
The top gainers on the Sensex were Power Grid up by 5.94%, ONGC up by 5.40%, Ultratech Cement up by 4.30%, Asian Paints up by 3.76% and Kotak Mahindra Bank up by 3.53%. On the flip side, Bharti Airtel down by 4.45% was the only top loser.
Meanwhile, India Inc has said that the recouping of India’s Gross domestic product (GDP) to a positive trajectory by posting a growth of 0.4 percent in Q3 (October-December) of FY21 is a promising sign as it portends the end of the pandemic-induced recessionary phase seen in the first-half of the fiscal year. Industry bodies expressed confidence that the GDP will improve further in the coming months on the back of positive growth stimuli emanating from the Union Budget and initiatives like the Production Linked Incentive scheme unveiled by the government.
Chandrajit Banerjee, Director General, CII, has observed that one of highlights of the data is the positive momentum seen in investment demand as it grew by 2.6 percent in the third quarter after being in doldrums for several quarters now. This bears testimony to the unrelenting efforts of the government to go all-out to revive investments under the ambit of the various measures which formed a part of the Aatmanirbhar Bharat package.
Assocham Secretary General Deepak Sood has said the GDP growth of 0.4 percent for the third quarter of FY21 is no surprise, but it marks a significant turnaround into the Indian economy returning to a positive trajectory after sharp drops in the first two quarters, even as the war against COVID-19 is continuing. According to him, the last quarter of the current fiscal should be far better.
The CNX Nifty traded in a range of 14,806.80 and 14,638.55. All 50 stocks were declining on the index. There were 49 stocks advancing against 1 stock declining on the index.
The top gainers on Nifty were Power Grid up by 6.04%, ONGC up by 5.50%, Grasim Industries up by 5.40%, UPL up by 5.06% and Shree Cement up by 4.49%. On the flip side, Bharti Airtel down by 4.26% were only top losers.
European markets were trading higher; UK’s FTSE 100 increased 105.07 points or 1.62% to 6,588.50, France’s CAC rose 86.22 points or 1.51% to 5,789.44 and Germany’s DAX was up by 156.92 points or 1.14% to 13,943.21.
Asian markets ended mostly higher on Monday on investors' optimism over swift global economic recovery after the US House of Representatives passed President Joe Biden’s $1.9 trillion corona virus relief package early Saturday. Further, optimism over Covid-19 vaccine rollouts too supporting market sentiments. Johnson & Johnson's single-dose Covid-19 vaccine was given the green light by the United States Food and Drug Administration (USFDA) on Saturday for emergency use purposes. Chinese shares ended up despite reports that China’s factory activity grew in February at a slower pace than a month earlier. The latest survey from Caixin showed that the manufacturing sector in China continued to expand in February, albeit at a slower pace with a manufacturing PMI score of 50.9, down from 51.5 in January. Moreover, Japanese stocks settled with strong gains after a survey showed that Japan climbed into expansion territory in February with a 22-month high manufacturing PMI score of 51.4, while the corona virus related state of emergency was lifted in six prefectures outside the Tokyo region amid signs of an improvement in the infection situation too kept the sentiments positive. Meanwhile, markets in South Korea and Taiwan were closed for holidays.
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