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Indian equity benchmarks traded buoyantly and ended higher for the third consecutive day on Tuesday, taking positive cues from global markets. After making positive start, key gauges turned volatile as traders got anxious with the Centre for Monitoring Indian Economy (CMIE) in its latest data has showed that the unemployment rate in the country touched a four-month high of 7.91 percent in December 2021. The unemployment rate had stood at 7 percent in November, the highest since August which was at 8.3 percent. But, markets soon gained traction, taking support from government data showing that India’s exports surged 37 percent on an annual basis to $37.29 billion in December 2021, the highest-ever monthly figure, on the back of healthy performance by sectors like engineering, textiles and chemicals, even as the trade deficit widened to $21.99 billion. Imports in December too rose by 38 per cent to $59.27 billion on account of an increase in oil imports, which soared 65.17 per cent to $15.9 billion.

Key gauges extended gains in late afternoon session, as traders remain energized with a another private report stating that export-dependent software companies are set to report a strong sequential revenue growth in the range of 2.6 to 6 per cent in the seasonally weak December quarter. Some optimism also came with Union Commerce and Industry Minister Piyush Goyal’s statement that the Omicron variant of COVID-19 will be a short-term disruption on businesses, adding that supply chains and industrial activities will continue at full speed. In another positive development, foreign institutional investors stood as buyer with net buying of shares worth Rs 902.64 crore, while domestic institutional investors’ net purchased shares worth Rs 803.11 crore in the Indian equity market on 3 January.

On the global front, Asian markets settled mostly higher on Tuesday after a string of new studies suggested that the Omicron virus variant might be less severe than initially feared. Strong economic data from China, Germany and the U.K. also boosted investor hopes for a quick economic recovery from the pandemic. European markets were trading higher, as preliminary data from Destatis showed Germany's retail sales rose for a second straight month in November, defying expectations for a decline. Retail sales increased a calendar and seasonally adjusted 0.6 percent from the previous month. Economists had forecast a 0.5 percent fall. In October, sales grew a revised 0.5 percent.

Back home, on the sectoral front, insurance industry stocks were in watch as Regulator Irdai proposed to modify the guidelines on remuneration of non-executive directors, managing directors, CEOs and whole-time directors of private insurance companies with a view to check excessive risk taking behaviour of top executives. Sugar industry stocks were in watch as industry body ISMA said Indian sugar mills are still waiting for global sugar prices to rise to enter into further export deals. It added owing to fall in global prices of raw sugar, not many export contracts happened in the last one month or so, beyond the 38-40 lakh tonne of export contracts which have already been signed.

Finally, the BSE Sensex rose 672.71 points or 1.14% to 59,855.93 and the CNX Nifty was up by 179.55 points or 1.02% to 17,805.25.          

The BSE Sensex touched high and low of 59,937.33 and 59,084.40, respectively and there were 25 stocks advancing against 5 stocks declining on the index.     

The broader indices ended in green; the BSE Mid cap index rose 0.05%, while Small cap index was up by 0.39%.

The top gaining sectoral indices on the BSE were Power up by 2.25%, Utilities up by 2.18%, Energy up by 1.77%, PSU up by 1.74% and Bankex up by 1.31%, while Healthcare down by 0.74%, Realty down by 0.58% and Metal down by 0.56% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 5.48%, Power Grid Corporation up by 2.73%, SBI up by 2.69%, Titan Company up by 2.31% and Reliance Industries up by 2.22%. On the flip side, Sun Pharma down by 1.21%, Indusind Bank down by 0.90%, Ultratech Cement down by 0.85%, Dr. Reddy's Lab down by 0.36% and Infosys down by 0.05% were the top losers.

Meanwhile, rating agency ICRA Ratings in its latest report has said that the assets under management (AUM) of the small finance banks (SFBs) are expected to register a marginal improvement in the growth rate to around 20 per cent in FY2022 compared to the growth rate of 18 per cent witnessed in FY2021, though the same would be lower compared to the compound annual growth rate (CAGR) of around 30 per cent during FY2016-FY2020.

It stated growth in assets under management of Indian small finance banks is likely to show improvement in the current financial year although elevated credit costs may eat into profitability. It mentioned that amid the second wave of the pandemic, SFBs witnessed a decline in collections and, hence weakening of the quality metrics with reported gross non-performing assets (GNPAs) of 6.4 per cent as of September 30, 2021.

The agency's Vice-President and Sector Head (Financial Sector Ratings) Sachin Sachdeva said the AUM growth of SFBs declined during H1 FY 2022 after the disbursements got impacted in Q1 FY 2022 due to the second wave of the pandemic. The industry is estimated to have reported an annualised growth rate of 7-8 per cent in H1 FY2022. He added ‘Nevertheless, since disbursements have started picking up, we expect the pace of growth to improve in H2 FY 2022, pushing the full-year AUM growth to around 20 per cent, though the same would be subject to no major impact from the recent rise in coronavirus infections.’

The CNX Nifty traded in a range of 17,827.60 and 17,593.55 and there was 35 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were NTPC up by 5.16%, ONGC up by 3.67%, SBI up by 2.75%, Power Grid Corporation up by 2.63% and Reliance Industries up by 2.34%. On the flip side, Tata Motors down by 1.66%, Coal India down by 1.48%, Tata Consumer Product down by 1.20%, Sun Pharma down by 1.18% and Shree Cement down by 1.09% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 93.16 points or 1.26% to 7,477.70, France’s CAC increased 78.20 points or 1.08% to 7,295.42 and Germany’s DAX increased 80.35 points or 0.5% to 16,101.08.

Asian markets settled mostly higher on Tuesday after all three major US indexes hit record highs overnight with optimistic that Omicron variant of Covid-19 would not upset the economic recovery. Japanese shares rallied after the Japanese currency yen fell to its weakest since 2017 against the US dollar, following a spike in US Treasury yields. Hong Kong shares ended little changed as shares in crisis-hit Chinese property developer Evergrande rose as they resumed trading in Hong Kong after the developer said a government order to demolish 39 buildings on the resort island of Hainan would not affect the rest of its project there. But Chinese tech stocks listed in Hong Kong declined after China's cyberspace regulator announced that internet platforms with data for more than 1 million users will need to undergo a security review before listing overseas from February 15. Chinese shares fell slightly due to profit taking with concerns over support for the financial system after the Chinese central bank PBoC cut its net injection of short-term cash to the markets. This fall is in spite of data showed Chinese factory activity growth accelerated in December. The Caixin/ Markit manufacturing Purchasing Managers’ Index came in at 50.9, rising from November’s reading of 49.9.

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