IGI Logo

Indian equity benchmarks extended gains to a third straight day on Thursday, led by strong performance in Power, Metal and Banking stocks.  After making cautious start, benchmark indices rebounded sharply post RBI’s announcements. Reserve Bank of India (RBI) kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target. Besides, RBI retained its growth projection at 9.2 per cent and inflation at 5.3 per cent for the current financial year. Traders also found some solace with Union Minister of State for Commerce and Industry Som Parkash stating that India has received Foreign Direct Investment (FDI) inflows worth $339.55 billion in the last five financial years. There has been a continuous increase in the inflow of FDI in recent years. It increased from $45.15 billion in 2014-15 to $81.97 billion in 2020-21.

Markets maintained their upward momentum in the late afternoon session, taking support from Minister of State for Commerce and Industry Anupriya Patel’s statement that India is in discussion with the 10-nation bloc ASEAN for initiating the review of the free-trade agreement in goods between the two regions to seek more market access for domestic products. Some optimism also came with Finance Minister Nirmala Sitharaman’s statement that the projected fiscal deficit of 6.9 per cent for the current financial year is a ‘responsible’ target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent. The minister also said the Rs 1 lakh crore loan for states will help in speeding up infrastructure development and capital expenditure. Meanwhile, Revenue Secretary Tarun Bajaj said the government is open to some tinkering in the varied rates and holding period for computation of capital gains tax on shares, debt and immovable property, in a bid to make it simple.

On the global front, European markets were trading mostly in green, while Asian markets settled mostly higher on Thursday as investors awaited the release of U.S. consumer price data later in the day for further signs of accelerating inflation. The inflation report will help set expectations for how the U.S. Federal Reserve will set monetary policy at its March 15-6 policy meeting. Back home, on the sectoral front, infrastructure industry stocks were in focus as Union minister Nitin Gadkari said the Road Transport and Highways Ministry has sanctioned highway projects of about Rs 3,36,661 crore during the three years to 2020-21. Stocks related to power industry also remained in watch as with report that Renewable energy capacity addition increased 80 per cent to 3.4 gigawatts (GW) during the December 2021 quarter compared to a year ago.

Finally, the BSE Sensex rose 460.06 points or 0.79% to 58,926.03 and the CNX Nifty was up by 142.05 points or 0.81% to 17,605.85.  

The BSE Sensex touched high and low of 59,060.24 and 58,332.28, respectively. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.30%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were Power up by 1.40%, Metal up by 1.34%, Bankex up by 1.07%, Utilities up by 1.04% and Finance up by 1.06%, while Capital Goods down by 0.07% was the lone losing index on BSE. 

The top gainers on the Sensex were Tata Steel up by 2.11%, Infosys up by 1.80%, HDFC Bank up by 1.77%, HDFC up by 1.64% and Kotak Mahindra Bank up by 1.60%. On the flip side, Maruti Suzuki down by 1.64%, Ultratech Cement down by 0.42%, Nestle down by 0.38% and Reliance Industries down by 0.21% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said the projected fiscal deficit of 6.9 per cent for the current financial year is a ‘responsible’ target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent. The minister also said the Rs 1 lakh crore loan for states will help in speeding up infrastructure development and capital expenditure. In her Budget speech on February 1, Sitharaman had said the revised fiscal deficit in the current financial year is estimated at 6.9 per cent of GDP as against 6.8 per cent of GDP projected in the budget estimates.

Sitharaman said ‘I don’t want anyone to think this (fiscal deficit estimate) is unusual. The pandemic was unusual and therefore 6.9 per cent is a responsible fiscal deficit. That is the kind of fiscal deficit … we have tried to do balancing between keeping up spending and being fiscally prudent’. Regarding giving Rs 1 lakh crore loan to states, she said the amount is being given to states because ‘we want to speed up infrastructure (development) and capital expenditure’. The amount is over and above what the states have been given under their borrowing limits and so it is not going to affect their borrowing limits.

She added when the states are being given the money it is more with the intention for several projects which they would want to complete. They can use this amount in total. She said ‘I thought it was the way in which we are supportive of the states, therefore we have given it. So, one it does not affect the FRBM, two, it does not give you (states) any interest burden, and three, you can use it for any project you want to do’. The Fiscal Responsibility and Budget Management (FRBM) Act provides for ensuring fiscal discipline.

The CNX Nifty traded in a range of 17,639.45 and 17,427.15 and there was 37 stocks advancing against 13 stocks declining on the index.  

The top gainers on Nifty were ONGC up by 3.63%, Tata Steel up by 2.04%, Infosys up by 1.97%, SBI Life Insurance up by 1.94% and HDFC Bank up by 1.74%. On the flip side, Maruti Suzuki down by 1.68%, Indian Oil Corporation down by 0.87%, Shree Cement down by 0.72%, Ultratech Cement down by 0.47% and Adani Ports and SEZ down by 0.43% were the top losers. 

European markets were trading mostly in green; UK’s FTSE 100 increased 8.89 points or 0.12% to 7,652.31 and Germany’s DAX increased 20.05 points or 0.13% to 15,502.06, while France’s CAC decreased 8.44 points or 0.12% to 7,122.44.

Asian markets settled mostly higher on Thursday as investors awaited the release of US consumer price data later in the day, which could provide further clues about how the US Federal Reserve will set monetary policy at its March 15-6 policy meeting. Market sentiments improved further by tracking overnight gains in Wall Street amid expectations that fears about a more aggressive hawkish cycle are a bit overdone. Japanese shares gained with technology shares, while upbeat earnings results from Honda Motors also supported sentiments. Moreover, Chinese shares rose after reports of state-backed funds intervening in the stock market.

Above views are of the author and not of the website kindly read disclaimer