Key indices close flat with positive bias amid high volatility
The BSE Mid cap index rose 0.98%, while Small cap index was up by 0.74%
Indian equity benchmarks erased most of their initial gains and closed flat with a positive bias on Tuesday amid high volatility and tepid cues from global markets. The benchmarks had a gap-up opening, with report that a day after surging past the 150,000-mark, India's count of active cases has dropped to 148,882. On Monday, the country registered 10,792 fresh Covid-19 cases, taking its the caseload tally to 11,015,863. Traders took encouragement as India Ratings and Research has revised its outlook on the overall banking sector to stable for the fiscal 2021-2022 (FY22) from negative even as it sees higher stress emerging in the retail loan segment going ahead. For public sector banks (PSBs), the outlook has been revised to stable from negative and for private banks. Some support also came with domestic rating agency Icra stating that the monthly collections, including overdues in its rated retail loan pools originated largely by NBFCs and HFCs, have reached pre-moratorium levels as of December 2020. However, it said for its rated microfinance players, collections are yet to reach the pre-moratorium levels.
However, key gauges trimmed most of their gains in final hour of trading session, as investment through participatory notes (P-notes) in the Indian capital market dipped marginally to Rs 84,976 crore as on January 31 after hitting 31-month high value at the end of the preceding month. At December-end, the investment through such instruments had risen to a 31-month high of Rs 87,132 crore, reflecting the bullish stance of FPIs. Separately, pitching for a status quo on rates at the last meeting of the Monetary Policy Committee (MPC), RBI Governor Shaktikanta Das has opined that the growth momentum needs to be strengthened for a sustained revival of the economy and for a quick return of the level of output to the pre-COVID trajectory.
On the global front, Asian markets ended mostly higher on Tuesday, as prospects of more U.S. fiscal stimulus offset lingering concerns over an uptick in bond yields and worries over higher inflation affecting valuations. Investors watched closely for any changes to the U.S. Federal Reserve's dovish outlook from Chairman Jerome Powell when he speaks before the Senate Banking Committee later in the day. Besides, a central bank survey showed that consumer confidence in South Korea improved in January, with a sentiment index score of 97.4 - up from 95.4 in December. European markets were trading lower official figures showed the U.K.'s unemployment rose to 5.1 percent in the three months to December, a five-year high. Back home, on the sectoral front, stocks related to real estate sector were in focus as ICRA in its latest report stated that residential real estate is witnessing a K-shaped recovery on account of accelerated consolidation, where access to credit and demand consolidation has helped large players grow handsomely even as their smaller sized rivals struggle.
Finally, the BSE Sensex rose 7.09 points or 0.01% to 49,751.41, while the CNX Nifty was up by 32.10 points or 0.22% to 14,707.80.
The BSE Sensex touched high and low of 50,327.31 and 49,659.85, respectively and there were 20 stocks advancing against 10 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 0.98%, while Small cap index was up by 0.74%.
The gaining sectoral indices on the BSE were Metal up by 3.71%, Realty up by 2.89%, Basic Materials up by 2.16%, Oil & Gas up by 2.02% and Capital Goods up by 2.00%, while Bankex down by 0.54% and Finance down by 0.30% were the few losing indices on BSE.
The top gainers on the Sensex were ONGC up by 5.55%, Indusind Bank up by 2.65%, Larsen & Toubro up by 2.35%, Ultratech Cement up by 1.68% and SBI up by 1.57%. On the flip side, Kotak Mahindra Bank down by 3.87%, Maruti Suzuki down by 1.66%, Bajaj Auto down by 1.36%, HDFC Bank down by 1.26% and HCL Technologies down by 1.02% were the top losers.
Meanwhile, Domestic rating agency ICRA in its latest report has said that residential real estate is witnessing a K-shaped recovery on account of accelerated consolidation, where access to credit and demand consolidation has helped large players grow handsomely even as their smaller sized rivals struggle. The smaller sized real estate companies' woes will ‘weigh heavily’ on the sector as a whole and such players hold an 80 percent market share. It also pointed out that the large, listed players almost doubled their market share in the current year to above 21 percent in the first nine months of the financial year 2021 (FY21) as against the financial year 2020 (FY20).
According to the report, a 'K-shaped recovery' is representative of inherent inequalities, where the rich get richer, even as the marginalised slide down. It said the phrase has been used a lot by observers in the aftermath of the pandemic, which has hurt the most for the poor and migrant populations. It also said home-buyers had been leaning towards developers with an established track record of on-time and quality project completion even prior to the onset of the pandemic. It added that this had resulted in large, listed players reporting healthy sales and collections in recent years, despite the prevailing liquidity crisis and unfavourable supply-demand dynamics.
For the broader market, the agency said COVID-19 triggered one of the worst demand crashes in recorded history, with housing sales volumes witnessing a Y decline of 62 per cent during Q1FY21 across the top eight cities of the country, which came down to 24 per cent by Q3. It noted that overall operating cash flows for most developers, including the listed players, are expected to witness moderation in the current financial year, resulting in increased reliance on available liquidity and/or refinancing to meet committed outflows.
The CNX Nifty traded in a range of 14,854.50 and 14,651.85 and there were 34 stocks advancing against 16 stocks declining on the index.
The top gainers on Nifty were Tata Steel up by 7.24%, Tata Motors up by 6.63%, Hindalco up by 5.71%, ONGC up by 5.69% and UPL up by 4.98%. On the flip side, Kotak Mahindra Bank down by 3.89%, Adani Ports & SEZ down by 1.68 %, Maruti Suzuki down by 1.57%, Bajaj Auto down by 1.50% and Divis Lab down by 1.31% were the top losers.
European markets were trading lower; UK’s FTSE 100 decreased 52.72 points or 0.8% to 6,559.52, France’s CAC decreased 41.92 points or 0.73% to 5,725.52 and Germany’s DAX decreased 274.03 points or 1.96% to 13,676.01.
Asian markets ended mostly higher on Tuesday as optimism of more US fiscal stimulus boosted hopes for a faster economic recovery globally, but prospects of rising inflation and valuation concerns put some pressure on market sentiment. Investors will be watching for any changes to the US Federal Reserve’s dovish outlook from Chairman Jerome Powell when he speaks before the Senate Banking Committee later in the day. Chinese shares ended marginally lower as policy tightening concerns persisted. China's central bank PCOB said it would prioritize policy stability and avoid making sudden shifts, while providing the support needed for a continued economic recovery in 2021. Meanwhile, Japanese market was closed on account of Emperor's Birthday.
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