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Bulls made a strong comeback on Dalal Street as Indian equity markets snapped the two-day losing streak and ended higher with gains of over three percent on Tuesday, led by buying across the sectors amid easing Ukraine Russia-tensions. Report stated that some Russian troops in military districts adjacent to Ukraine are returning to their bases after completing drills, a move that could de-escalate frictions between Moscow and the West. Markets started trade on a positive note but soon pared some of their opening gains, as traders got anxious with data showing that retail inflation soared to a seven-month high of 6.01 per cent in January, breaching the upper tolerance level of the Reserve Bank, driven by rising prices certain food items. The inflation in the food basket was 5.43 per cent in January 2022 as against 4.05 per cent in the preceding month.

But, key gauges regained traction in the afternoon session, taking support from report that in an effort to tame food inflation, the government has reduced import duty on lentils to nil for Australia and Canada origins and cut it to 22%, from 30%, for those originating in the US. Buying further crept in with a report stated that India and the UAE are likely to sign a free trade agreement (FTA) on February 18, under which both the countries could give duty-free access to a number of products from different sectors. Additional support also came after India’s overall exports (Merchandise and Services combined) in January 2022 are estimated to be $61.41 billion, exhibiting a positive growth of 36.76 per cent over the same period last year and a positive growth of 38.90 per cent over January 2020. Traders also took note of report stated that the outstanding portfolio of the microfinance industry registered a 2 per cent quarter-and-quarter growth to around Rs 2,26,000 crore as of September 2021. The same stood at Rs 2,22,060 crore during the three months ended June 2021.

On the global front, European markets were trading higher as official data showed that the unemployment rate in the U.K. steadied at 4.1 percent in December, matching economists' expectations despite the emergence of the Omicron variant of the coronavirus. Asian markets ended mixed following the negative cues from Wall Street, as rising geopolitical tensions between Russia and Ukraine triggered a sell-off in global equities, even though crude oil prices is limiting the downside. A surge in global oil prices also exacerbated concerns about inflation and aggressive monetary policy tightening in the U.S. and elsewhere. Back home, on the setctoral front, coal industry’s stocks were in focus as the government said India's coal output registered an increase of 6.13 per cent to 79.60 million tonnes in January. India's coal output stood at 75 million tonnes (MT) in January 2020. Stocks related to auto industry were in action as Secretary in the Heavy Industry Ministry Arun Goel stated that the Production Linked Incentives Scheme for the automobile and auto components sector will lead to creation of 7.5 lakh additional jobs and incremental production worth Rs 2,31,500 crore over the next five years.

Finally, the BSE Sensex rose 1736.21 points or 3.08% to 58,142.05 and the CNX Nifty was up by 509.65 points or 3.03% to 17,352.45.   

The BSE Sensex touched high and low of 58,211.38 and 56,438.47, respectively. All the 30 stocks are advancing on the index.

The broader indices ended in green; the BSE Mid cap index rose 2.68%, while Small cap index was up by 1.97%.

The top gaining sectoral indices on the BSE were Auto up by 3.87%, Bankex up by 3.46%, Consumer Discretionary up by 3.35%, Telecom up by 3.16% and TECK up by 3.13%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Bajaj Finance up by 5.13%, SBI up by 4.55%, Bajaj Finserv up by 4.37%, Larsen & Toubro up by 4.34% and Titan Company up by 4.02%, while there were no losers on the Sensex.

Meanwhile, breaching the upper tolerance level of the Reserve Bank of India (RBI), retail inflation soared to a seven-month high of 6.01 per cent in January 2022, driven by rising prices certain food items. The Consumer Price Index (CPI) in December 2021 has been revised upwards to 5.66 per cent from 5.59 per cent. In the year-ago month of January 2021, the retail inflation stood at 4.06 per cent. The previous high was 6.26 per cent in June 2021. The RBI, which mainly factors in the CPI-based inflation, has been tasked by the government to keep the inflation at 4 per cent, with margin of 2 per cent on either side.

The National Statistical Office (NSO) under Ministry of Statistics and Programme Implementation in its data has showed that the Rural CPI (General) in January 2022 stood at 6.12 per cent as against 5.36 per cent in December. The Urban CPI (General) stood at 5.91 per cent in January as against 5.90 per cent in December. The index value for Rural, Urban and Combined CPI (General) stood at 166.4, 165.0 and 165.7 respectively, in January 2022.

As per the data released by the NSO, the inflation in the food basket was 5.43 per cent in January 2022 as against 4.05 per cent in the preceding month. The rate of price rise in ‘cereals and products’ quickened to 3.39 per cent during the month as against 2.62 per cent in December. Likewise, the retail inflation in ‘meat and fish’ category accelerated to 5.47 per cent from 4.58 per cent. In vegetables, the inflation moved up to 5.19 per cent against a deceleration of (-) 2.99 per cent in December. However, price rise of ‘oil and fats’ softened during the month with an inflation print at 18.70 per cent. Fuel and light segment too witnessed a softening of inflation at 9.32 per cent against 10.95 per cent.

The Price data are collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster. During the month of January 2022, NSO collected prices from 99.7% villages and 98.2% urban Markets while the Market-wise prices reported therein were 89.3% for rural and 93.3% for urban.

The CNX Nifty traded in a range of 17,375.00 and 16,839.25 and there were 48 stocks advancing against 2 stocks declining on the index.  

The top gainers on Nifty were Tata Motors up by 6.69%, Bajaj Finance up by 5.59%, Eicher Motors up by 5.45%, Shree Cement up by 5.30% and Hero MotoCorp up by 4.78%. On the flip side, Cipla down by 3.56% and ONGC down by 1.02% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 32.03 points or 0.43% to 7,563.62, France’s CAC increased 85.52 points or 1.25% to 6,937.72 and Germany’s DAX increased 164.31 points or 1.09% to 15,278.28.

Asian markets ended mixed with cautious trading on Tuesday amid Russia-Ukraine tensions, while concerns over worsening inflation and aggressive Fed rate hikes also pressurising sentiments. Japanese shares declined following the negative cues from Wall Street overnight and as investors shrugged off data showing the Japanese economy returned to growth at the end of 2021. However, Chinese shares gained after the country's central bank PBoC stepped up support for its slowing economy by pumping in cash via policy loans for a second straight month.

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