Indian equity benchmarks ended
the day in the positive territory for the fifth straight session and settled at
record closing highs on Tuesday, with major contribution from Banking, Finance
and IT stocks. The benchmarks staged a gap up opening, as traders took
encouragement with FICCI's report stated that India could benefit from the
likely shift in global supply chains from China to other economies in the
aftermath of the COVID-19 pandemic, likely to boost sentiments in markets.
Sentiments remained positive as the Finance Ministry released the ninth
installment of Rs 6,000 crore to the states to meet GST compensation shortfall,
taking the total amount of fund released to Rs 54,000 crore. The Centre had set
up a special borrowing window in October 2020 to meet the estimated shortfall
of Rs 1.10 lakh crore in revenue arising on account of implementation of GST.
Market participants also took a note of Reserve Bank of India (RBI) paper
stating that maintaining the inflation target at 4 percent is appropriate for
India as targeting a lower rate could impart deflationary bias to the monetary
policy. It said under the current dispensation, the RBI has been mandated by
the government to maintain retail inflation at 4 percent with a margin of 2
percent on either side. However, domestic indices trimmed some of their gains
in late morning deals, as some anxiety remained among traders with the rating
agency ICRA's report that banks' gross non-performing assets (NPAs) and net
NPAs are expected to rise to 10.1-10.6 percent and 3.1-3.2 percent,
respectively by March 2021 from 7.9 percent and 2.2 percent, respectively as of
September 2020. But, local gauges regained traction to end higher, taking
support from report of UN stating that the India's economy could prove to be
the most resilient in the subregion of South and South-West Asia over the
long term, the positive but lower economic growth post COVID-19 pandemic and
the country's large market will continue to attract investments. The growth,
however, was mainly driven by India, which accounted for 77 percent of the
total inflows and received $51 billion in 2019, up 20 percent from the previous
year. Adding optimism, Union minister Nitin Gadkari said that the Micro, Small
and Medium Enterprises Ministry is contemplating fresh plans and laws to find a
solution of the receivables issue as outstanding dues are creating working
capital problem for the sector. Finally, the BSE Sensex rose 259.33 points or
0.55% to 47,613.08, while the CNX Nifty was up by 59.40 points or 0.43% to
13,932.60.
The US markets ended lower on
Tuesday as traders looked to cash in on the recent strength in the markets,
leading to the pullback by the major averages. Traders also kept an eye on the
latest developments in Washington after President Donald Trump signed a
coronavirus relief and government spending bill over the weekend. Trump has
called for the direct payments included in the bill to be increased to $2,000
from $600, and the House voted Monday to approve a measure increasing the size
of the stimulus checks. However, Senate Majority Leader Mitch McConnell,
R-Ken., blocked an effort by Senate Minority Leader Chuck Schumer, D-N.Y., to
unanimously approve the House bill. The choppy trading seen on the day
reflected light volume, as many traders remained away from their desks ahead of
the New Year's Day holiday on Friday. A lack of major US economic data also
kept some traders on the sidelines ahead of the release of reports on pending
home sales and weekly jobless claims in the coming days. Besides, networking
stocks showed a substantial move to the downside on the day, dragging the NYSE
Arca Networking Index down by 1.7 percent. The index pulled back after reaching
its best intraday level in almost twenty years.
Crude oil futures ended higher on
Tuesday amid hopes energy demand will pick up in the event of the US
policymakers deciding to provide additional stimulus to boost economic growth.
Traders were also reacting to reports saying crude oil inventories in the US
may have dropped in the week ending December 25th. Private report said oil
stockpiles may have dropped last week. The report said crude stocks likely fell
by 2.1 million barrels in the week. However, the re-imposition of movement restrictions
in the U.K. and several parts of Europe and Africa due to the spread of a new
variant of the coronavirus remains a major concern. Crude oil futures for
February rose $0.38 or 0.8 percent to settle at $48.00 a barrel on the New York
Mercantile Exchange. February Brent crude gained $0.36 or 0.7 percent to settle
at $51.26 a barrel on London's Intercontinental Exchange.
Rising for the second consecutive
day, Indian rupee ended higher against dollar on Tuesday amid weak dollar in
overseas markets. Traders were getting comfort with report of UN stating that
the India's economy could prove to be the most resilient in the subregion of
South and South-West Asia over the long term, the positive but lower economic
growth post COVID-19 pandemic and the country's large market will continue to
attract investments. The growth, however, was mainly driven by India, which
accounted for 77 percent of the total inflows and received $51 billion in 2019,
up 20 percent from the previous year. Market participants also took a note of
Reserve Bank of India (RBI) paper stating that maintaining the inflation target
at 4 percent is appropriate for India as targeting a lower rate could impart
deflationary bias to the monetary policy. On the global front, dollar
languished near a 2-1/2-year low on Tuesday as investors were encouraged to take
on more risk as U.S. lawmakers pushed forward with an enhanced COVID-19 relief
package. Finally, the rupee ended at 73.42, 7 paise stronger from its previous
close of 73.49 on Monday.
The FIIs as per Tuesday's data
were net buyer in both equity and debt segment. In equity segment, the gross
buying was of Rs 3456.25 crore against gross selling of Rs 1754.58 crore, while
in the debt segment, the gross purchase was of Rs 420.09 crore with gross sales
of Rs 311.93 crore. Besides, in the hybrid segment, the gross buying was of Rs
73.16 crore against gross selling of Rs 77.56 crore.
The US markets ended lower on
Tuesday as uncertainty about whether the US Senate would authorize additional
stimulus checks gave investors a reason to take profits. Asian markets are
trading mostly higher on Wednesday amid report that China and the European
Union are likely to clinch a deal this week. Indian markets ended higher
Tuesday led by gains in banks, financial and IT stocks. Today, the markets are
likely to make positive start tracking Asian peers. Some support will come as
the government approved the 15th tranche of electoral bonds which will be open
for sale between January 1 and January 10. Electoral bonds have been pitched as
an alternative to cash donations made to political parties as part of efforts
to bring transparency in political funding. Traders may take note of report
that foreign institutional investors (FIIs) net bought shares worth Rs 2,350
crore, whereas domestic institutional investors (DIIs) net sold shares worth Rs
2,020 crore in the Indian equity market on December 29, as per provisional data
available on the NSE. However, there may be some cautiousness as India
witnessed a slight rise in fresh Covid cases with 20,529 cases. India's
caseload now stands at 10,245,326. India had reported six cases of new
coronavirus variant. But the government on Tuesday said the existing vaccines
for Covid-19 will protect against the new variants as there is no evidence to
prove otherwise. Banking and financial stocks may remain in focus after the RBI
in a report said that India's financial sector should brace for challenging
times ahead with an increased risk of deterioration in asset quality and lower
demand for loans. The report said NBFCs or shadow banks may see a hit on their
profitability. There will be some reaction in auto component industry stocks as
ratings agency ICRA said it has revised its outlook on the auto component
industry from negative to stable, on the back of demand revival across original
equipment manufacturers (OEMs), replacements and exports.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE
Nifty
|
13,932.60
|
13,872.46
|
13,980.16
|
BSE
Sensex
|
47,613.08
|
47,411.81
|
47,764.46
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Tata
Motors
|
713.18
|
183.45
|
180.21
|
187.56
|
State
Bank of India
|
450.32
|
277.90
|
275.10
|
280.30
|
ITC
|
265.46
|
211.55
|
209.94
|
213.34
|
NTPC
|
236.47
|
98.60
|
97.35
|
100.45
|
Coal
India
|
211.46
|
135.10
|
133.26
|
138.26
|
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