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. 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 US markets ended lackluster
session higher on Wednesday as investors continued to bet the impact of the
omicron variant of Covid-19 would not be as threatening as many previously
thought. Some of the comeback was validated by vaccine news Wednesday. Pfizer
and BioNTech said three doses of their vaccine are effective at neutralizing
the omicron variant, citing their own preliminary lab tests. They also said two
doses may still protect against severe disease. However, upside remained capped
as traders expressed some uncertainty about the near-term outlook for the markets
following recent volatility. A relatively quiet day on the US economic front
also kept some traders on the sidelines ahead of the release of reports on
weekly jobless claims, consumer prices and consumer sentiment in the coming
days. On the sectoral front, significant strength was visible among tobacco
stocks, as reflected by the 2.1 percent jump by the NYSE Arca Tobacco Index.
Oil service stocks also turned in a strong performance on the day, resulting in
a 1.7 percent gain by the Philadelphia Oil Service Index. The strength among
oil service stocks came amid a modest increased by the price of crude oil, with
crude for January delivery rising $0.31 to $72.36 a barrel.
Crude oil futures ended higher on
Wednesday after data from Energy Information Administration (EIA) showed a drop
in US crude inventories in the week ended December 3.Oil's gains were just
modest as the decline in crude stockpiles, at 240,000 barrels, was much less
than an expected drop of about 1.71 million barrels. On Tuesday, the American
Petroleum Institute (API) reported crude inventories decreased by 3.1 million
barrels in the week ending December 3. Meanwhile, Geopolitical tensions also
remained on investors' radar amid rising tensions between the United States and
Russia regarding Ukraine. Benchmark crude oil futures for January delivery rose
$0.31 or 0.4 percent to settle at $72.36 a barrel on the New York Mercantile
Exchange. Brent crude for February delivery gained $0.46 or 0.61 percent to
settle at $75.90 a barrel on London's Intercontinental Exchange.
Indian rupee ended marginally
weaker against dollar on Wednesday on account of sustained dollar demand from
importers and banks. Sentiments were impacted as Fitch Ratings 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. However, a rally in the domestic equities and
sliding crude prices in the international market restricted the rupee's fall. Meanwhile,
the Reserve Bank of India's Monetary Policy Committee held repo rate at record
low of 4 per cent and maintained accommodative policy stance to support growth
for as long as necessary. On the global front, the dollar edged lower Wednesday
amid growing risk appetite over indications that the Omicron Covid variant has
relatively mild symptoms, and thus won't derail the global economic recovery. Finally,
the rupee ended 75.50, weaker by 6 paise from its previous close of 75.44 on
Tuesday.
The FIIs as per Wednesday's data
were net sellers in both equity and debt segment. In equity segment, the gross
buying was of Rs 7268.47 crore against gross selling of Rs 9379.68 crore, while
in the debt segment, the gross purchase was of Rs 132.27 crore with gross sales
of Rs 577.60 crore. Besides, in the hybrid segment, the gross buying was of Rs
14.00 crore against gross selling of Rs 70.40 crore.
The US markets ended higher on
Wednesday amid encouraging vaccine news flow. Asian markets are trading mostly
in green on Thursday tracking overnight gains on Wall Street. Indian markets
rose sharply on Wednesday after the Reserve Bank of India left its key interest
rates unchanged. Today, domestic equities may continue their rally for a third
straight session with positive start amid receding Omicron concerns and firm
global cues. Sentiments will get a boost with Pradeep Multani, President of PHD
Chamber of Commerce and Industry's statement that the accommodative policy
stance at this juncture would not only pave the way for a double digit GDP
growth in the current year 2021-22, but will also help in creating a strong,
sustainable and vibrant economy going forward. He also said that it is
inspiring to note that the RBI has retained the projection for GDP growth at
9.5 per cent for 2021-22 despite the prevailing uncertainty caused by a new
variant of Coronavirus. Traders will be taking encouragement as India's
outbound goods shipments rose 44.24% year-on-year in the first week of
December, led by a jump in exports of petroleum products, gems and jewellery
and engineering goods. Merchandise exports were $8.5 billion during December
1-7. Traders may take note of report that Reserve Bank Governor Shaktikanta
defended the central bank's more-than-anticipated dovish stance wherein the MPC
unanimously voted to continue with an accommodative policy, saying our
overarching policy focus and priority now is supporting growth amid the threat
of a third wave of COVID-19 and the legroom a cooling inflation print offers.
Meanwhile, Telecom Minister Ashwini Vaishnaw sought suggestions from industry
stakeholders to usher in more reforms in the sector and place Indian regulatory
framework at par with the best in the world. There will be some buzz in the
infra stocks as the Union Cabinet approved the continuation of Pradhan Mantri
Awaas Yojana (Rural) for another three years to provide financial assistance
for the construction of the remaining 155.75 lakh houses under the scheme.
Power stocks will be in focus as Union power minister R K Singh approved 23 new
inter-state transmission system projects worth Rs 15,893 crore. The new
inter-state transmission system (ISTS) projects comprise 13 projects with an
estimated cost of Rs 14,766 crore to be developed under Tariff Based
Competitive Bidding (TBCB) and 10 projects with an estimated cost of Rs 1,127
crore to be developed under Regulated Tariff Mechanism (RTM). There will be
some reaction in telecom stocks as minister of state for communications
Devusinh Chauhan said India will have indigenously designed and developed 5G
network by the third quarter of 2022. Insurance industry stocks will be in
limelight as data from Irdai showed the gross direct premium written by
non-life insurance companies rose by 5.5 per cent to Rs 15,743.22 crore in
November. C. E. Info Systems (MapmyIndia) IPO will open for subscription today.
The company aims to raise up to Rs 1,040 crore by way of complete Offer for
Sale of equity shares in the price band of Rs 1,000 - Rs 1,033.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
17,469.75
|
17,357.60
|
17,533.25
|
BSE Sensex
|
58,649.68
|
58,280.41
|
58,860.79
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
ICICI
Bank
|
334.32
|
753.55
|
745.50
|
760.20
|
Tata
Motors
|
205.81
|
493.60
|
486.09
|
498.54
|
State
Bank of India
|
203.97
|
490.60
|
483.10
|
495.25
|
Hindalco
Industries
|
137.00
|
456.40
|
444.85
|
463.20
|
Oil
& Natural Gas Corporation
|
122.66
|
148.50
|
146.75
|
150.30
|
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