Markets witness consolidation on Wednesday
Indian equity benchmarks witnessed consolidation on Wednesday and ended the session on quiet note. Markets started the session on optimistic note as sentiments remained upbeat with report that a mega immunisation drive against Covid-19 has kicked off with nine flights transporting over 5.6 million doses of the vaccine to 13 cities across the country on Tuesday. Kerala will get the first consignment of over 400,000 coronavirus vaccines today. Traders also took support from the government data showing that Consumer Price Index (CPI)-based inflation eased to 4.59 per cent in December 2020 compared to 6.93 per cent in November. Food inflation declined to 3.41 per cent in December, compared to 9.5 per cent in the previous month.
However, markets lost grip as the day progressed with traders turning pessimistic with the Ministry of Statistics and Programme Implementation data showing that the Index of Industrial Production (IIP) contracted by 1.9 per cent in November as against 3.6 per cent growth in October. Market extended losses as the State Bank of India’s (SBI) Ecowrap report has said India's fiscal deficit in the current financial year (FY21) is likely to reach 7.4 per cent of the GDP on the back of enhanced government expenditure amid the pandemic. The report noted that as per the first advanced estimate of the GDP, real GDP will contract by 7.7 per cent in FY21, and nominal GDP growth is expected at (-) 4.2 per cent. Accordingly, the nominal GDP for FY22 would grow by 15 per cent to Rs 224.04 lakh crore. But, buying in last leg of trade helped markets to recouped all their losses and end flat. Traders took note of report that Union Ministry of Commerce and Industry has said that India's new Foreign Trade Policy 2021-2026, under formulation, will come into effect from April 1, 2021, for five years and will strive to make the country a leader in international trade.
Positive opening in European markets too provided some solace to domestic markets, as investors monitor vaccine rollouts and coronavirus containment measures. Asian market ended mostly higher on Wednesday, even after a measure of the public assessment of the Japanese economy decreased for the second month in a row in December. The survey data from the Cabinet Office showed that the current conditions index of the Economy Watchers' Survey, which measures the current situation of the economy, decreased to 35.5 in December from 45.6 in November. However, a reading below 50 suggests pessimism. The outlook index that signals future activity rose to 37.1 in December from 36.5 in the previous month. In October, the reading was 49.1.
Back home, the Central Board of Direct Taxes (CBDT) has launched an automated dedicated e-portal on the e-filing website of the Department to receive and process complaints of tax evasion, foreign undisclosed assets as well as complaints regarding benami properties. On sectoral front, Oil-linked companies stocks edged higher reacting to a sharp jump in crude prices to 11-month high level of $57 a barrel.
Finally, the BSE Sensex slipped 24.75 points or 0.05% to 49,492.32, however the CNX Nifty was up by 1.40 points or 0.01% to 14,564.85.
The BSE Sensex touched high and low of 49,795.19 and 49,073.85, respectively and there were 14 stocks advancing against 16 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index declined 0.63%, while Small cap index was down by 0.38%.
The top gaining sectoral indices on the BSE were PSU up by 1.61%, Telecom up by 1.32%, Auto up by 0.84%, Oil & Gas up by 0.67% and Bankex was up by 0.61%, while Consumer Durables down by 1.04%, Healthcare down by 0.80%, Energy down by 0.46%, Realty down by 0.30% and Consumer Discretionary Goods & Services down by 0.28% were the top losing indices on BSE.
The top gainers on the Sensex were Mahindra & Mahindra up by 6.24%, SBI up by 4.80%, ITC up by 2.35%, NTPC up by 2.24% and Bharti Airtel was up by 2.21%. On the flip side, Bajaj Finance down by 2.85%, HDFC down by 2.76%, Bajaj Finserv down by 1.95%, Titan Company down by 1.48% and Sun Pharma down by 1.25% were the top losers.
Meanwhile, the State Bank of India’s (SBI) Ecowrap report has said India's fiscal deficit in the current financial year (FY21) is likely to reach 7.4 per cent of the GDP on the back of enhanced government expenditure amid the pandemic. The report noted that as per the first advanced estimate of the GDP, real GDP will contract by 7.7 per cent in FY21, and nominal GDP growth is expected at (-) 4.2 per cent. Accordingly, the nominal GDP for FY22 would grow by 15 per cent to Rs 224.04 lakh crore.
It mentioned current trends in the GDP for FY21 will translate into Rs 3.2 lakh crore net revenue shortfall for the Centre this fiscal and at the same time, expenditure is higher by around Rs 3.3 lakh crore, thus taking the fiscal deficit to Rs 14.46 lakh crore and with new revised nominal GDP estimate for FY21, it will be around 7.4 per cent of GDP.
For FY22, assuming the government keeps the expenditure growth at 6 per cent over FY21 estimates and overall receipts, excluding borrowing and other liabilities, expected at 25 per cent, it would result in fiscal deficit of around Rs 11.67 lakh crore or 5.2 per cent of GDP.
The CNX Nifty traded in a range of 14,435.70 and 14,653.35 and there were 26 stocks advancing against 24 stocks declining on the index.
The top gainers on Nifty were Mahindra & Mahindra up by 5.66%, SBI up by 4.60%, Adani Ports up by 4.43%, Indian Oil Corporation up by 3.16% and NTPC up by 2.35%. On the flip side, Bajaj Finance down by 2.94%, Shree Cement down by 2.83%, HDFC down by 2.75%, UPL down by 2.09% and Bajaj Finserv down by 1.95% were the top losers.
European markets were trading mostly higher; UK’s FTSE 100 rose 1.38 points or 0.02% to 6,755.49 and France’s CAC increased 6.46 points or 0.11% to 5,657.43, while Germany’s DAX was down by 12.88 points or 0.09% to 13,912.18.
Asian market ended mostly higher on Wednesday, tracking Wall Street’s gains overnight on hopes that the incoming Biden administration would ramp up US distribution of Covid-19 vaccines and spend more on fiscal stimulus to help the US economy. Japanese shares ended higher even after the government plans to expand the nation's second state of emergency to seven more prefectures as the corona virus pandemic worsened in areas beyond Tokyo. However, Chinese shares ended lower amid lingering worries over Sino-US tensions as Donald Trump's administration pushed through a ban on Americans investing in 35 firms it considers to be linked to China's military, while surging corona virus infections too added pressure on sentiment.
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