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Indian equity benchmarks staged a strong up move for second straight session on Wednesday after the Reserve Bank of India (RBI), as widely expected, held interest rates steady at all-time low and maintained its accommodative stance for as long as necessary to support growth. The benchmark indices started firm, as traders took encouragement with global rating agency S&P’s statement that the impact of the new coronavirus variant on India's economic outlook would be contained. It expects India's economy to grow 9.5% in FY22 and 7.8% in FY23. Buying further crept in as Minister of State for Finance Bhagwat Karad said public sector banks (PSBs) recovered over Rs 4.18 lakh crore in the last three financial years from incidents pertaining to frauds and defaults. Also, the amount related to frauds of Rs 1 lakh and above has declined over the period. He added that the government has taken comprehensive steps to tackle defaults and to effect recovery from defaulters.

Key indices extended gains to the day's high level in second half of the trading session, taking support from the Reserve Bank of India’s statement that retail inflation is likely to ease to around 5 per cent next fiscal on the back of government measures to ease supplies, reduction in fuel prices as well as prospects of good crops. For the current fiscal year to be ending on March 31, 2022, retail inflation is expected to be around 5.3 per cent. Traders overlooked Fitch Ratings’ report in which it has cut India's economic growth forecast to 8.4 per cent for the current fiscal year ending March 31, 2022, saying the rebound after the second wave of COVID infections has been subdued than expected. Fitch, which had previously forecast a GDP growth of 8.7 per cent in 2021-22 (April 2021 to March 2022), however, raised the economic growth projection for the next financial year (FY23) to 10.3 per cent from previously forecast 10 per cent.

On the global front, Asian markets ended mostly in green on Wednesday following the broadly positive cues from Wall Street, on rising crude oil prices and easing concerns about the impact of the coronavirus Omicron variant on global economic recovery. European markets were trading mostly in red amid rising geopolitical tensions between the United States and Russia. After a tense two-hour summit, the U.S. said it is preparing 'robust responses' over fears of a Russian invasion of Ukraine. Back home, on the sectoral front, aviation stocks were in focus as rating agency ICRA said continuing on the recovery path, domestic air passenger traffic crossed the 10-million mark in November for the first time since the pandemic hit the aviation industry in March last year but the coronavirus' new variant Omicron has the potential to spoil the party. Infrastructure industry’s stocks too were in watch as Crisil Ratings said strong order execution will swell the revenue of road engineering, procurement and construction (EPC) companies by 15 per cent this fiscal, compared to 5 per cent in the pandemic-marred last fiscal.

Finally, the BSE Sensex rose 1016.03 points or 1.76% to 58,649.68 and the CNX Nifty was up by 293.05 points or 1.71% to 17,469.75.    

The BSE Sensex touched high and low of 58,702.65 and 58,122.27, respectively and there were 28 stocks advancing against 2 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 1.39%, while Small cap index was up by 1.50%.

The top gaining sectoral indices on the BSE were Auto up by 2.24%, TECK up by 2.00%, Telecom up by 1.97%, IT up by 1.96% and Consumer Disc up by 1.90%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Bajaj Finance up by 3.67%, Maruti Suzuki up by 3.48%, SBI up by 3.11%, Bajaj Finserv up by 3.04% and Asian Paints up by 2.57%. On the flip side, Kotak Mahindra Bank down by 0.85% and Power Grid Corporation down by 0.49% were the top losers.

Meanwhile, ICRA Ratings in its latest report stated that the cost of debt-funds for the states jumped again as the weighted average cost of borrowings rose by 37 bps to a one-month high of 6.80 per cent in the auction on December 07, 2021, compared to the last week, after falling marginally for two weeks.

According to an analysis by ICRA Ratings, at the weekly auction of state development loans, six states raised just Rs 8,000 crore, which is 41 per cent lower than the indicated Rs13,600 crore, which is the sixth consecutive week of lower-than-indicated issuance.

Aditi Nayar, the chief economist at the rating agency, said the spread between the 10-year state debt and the G-secs eased to a 24 month-low of 45 bps from 51 bps last week, while the weighted average cost of their borrowings jumped by 37 bps to 6.80 per cent over the past week. She said seven of the 13 states that initially indicated their participation in the auction did not raise funds, even as Telangana borrowed Rs 500 crore more than indicated.

The CNX Nifty traded in a range of 17,484.60 and 17,308.95 and there was 45 stocks advancing against 5 stocks declining on the index.   

The top gainers on Nifty were Bajaj Finance up by 3.62%, Maruti Suzuki up by 3.19%, Hindalco up by 3.14%, SBI up by 2.92% and Bajaj Finserv up by 2.87%. On the flip side, HDFC Life Insurance down by 1.17%, Kotak Mahindra Bank down by 0.78%, Power Grid Corporation down by 0.34%, Divi's Lab down by 0.32% and Indian Oil Corporation down by 0.08% were the top losers.  

European markets were trading mostly in red; France’s CAC decreased 10.84 points or 0.15% to 7,054.55 and Germany’s DAX decreased 53.38 points or 0.34% to 15,760.56, while UK’s FTSE 100 increased 22.49 points or 0.31% to 7,362.39.

Most of the Asian markets ended in green on Wednesday, as the risk appetite in the market got spurred with the waning worries about the impact of Omicron coronavirus spread on global economy. Chinese shares advanced after the People's Bank of China trimmed RRR, alleviating fears about debt laden property giants Kaisa and Evergrand. Consumer staples rose 2.7%, while Liquor giant Kweichow Moutai, the biggest stock in the A-share market by market cap, surged 4.5% to 2,043 yuan. In the session, hot sectors such as semiconductor and new energy climbed 2.8% and 1.8%. However, Real estate developers retreated 0.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.55%. Japan’s Nikkei topped gains in the session, with major gains from technological sector.

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