Indian equity benchmarks ended near day’s high points on Tuesday. After a strong start, markets remained higher in the first half of the session, taking support with Finance Minister Nirmala Sitharaman’s statement that the fiscal measures taken by the government have resulted in positive growth of 0.4 per cent in the third quarter of the current financial year. The minister further said that the gradual unlocking of the economy has eased supply-side disruptions enabling inflation to decline from 7.6 per cent in October, 2020 to 4.1 per cent in January 2021, mainly on account of decline in food inflation. She added that the economy is estimated to contract by 8 per cent during 2020-21 due to the impact of the COVID-19 pandemic.
Markets turned negative during the second half of the session, as the coronavirus cases in India jumped to 11,244,624 with 15,353 new infections reported across the country, according to Worldometer. The death toll, meanwhile, reached 157,966 with 76 fatalities in the last 24 hours. But, in the last hour of the trading session, markets added notable gains to end the day on a higher note, after Ministry of Finance, Department of Expenditure has released the 19th weekly installment of Rs 2,104 crore to the States. Out of this, an amount of Rs 2,103.95 crore has been released to 7 States and an amount of Rs. 0.05 crore has been released to the Union Territory of Puducherry.
Domestic sentiments were positive with Chief Economist of the IMF Gita Gopinath’s statement that India has been at the forefront in fighting the coronavirus pandemic and ‘really stands out’ in terms of its vaccine policy. She noted that India has been providing vaccines through grants to several of its neighbour countries, including Bangladesh, Nepal and Myanmar, and through commercial arrangements as well. Traders also got relief, amid reports that banks have written off bad loans to the tune of Rs 1.15 lakh crore during the first three-quarters of the current fiscal. Minister of State for Finance Anurag Singh Thakur said in a written reply to the Lok Sabha that as per RBI guidelines and policy approved by bank Boards, non-performing loans, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off.
On the global front, European markets were trading mostly in green even after the Bank of England (BOE) governor warned on the prospect of rising inflation. Asian markets ended mostly higher on Tuesday, after Japan's gross domestic product climbed an annualized 11.7 percent in the fourth quarter of 2020. That missed expectations for an increase of 12.8 percent following the 22.9 percent surge in the three months prior. On a quarterly basis, gross domestic product gained 2.8 percent - again missing forecasts for 3.0 percent and down from 5.3 percent in the previous three months.
The BSE Sensex ended at 51025.48, up by 584.41 points or 1.16% after trading in a range of 50396.10 and 51111.94. There were 19 stocks advancing against 11 stocks declining on the index. (Provisional)
The broader indices ended in red; the BSE Mid cap index was down by 0.66%, while Small cap index was down by 0.41%. (Provisional)
The top gaining sectoral indices on the BSE were Bankex up by 1.87%, IT up by 0.89%, TECK up by 0.65%, Consumer Durables up by 0.33% and FMCG up by 0.08%, while Metal down by 2.24%, Oil & Gas down by 2.02%, Utilities down by 1.85%, PSU down by 1.60% and Realty down by 1.22% were the top losing indices on BSE. (Provisional)
The top gainers on the Sensex were Kotak Mahindra Bank up by 3.35%, HDFC Bank up by 2.85%, ICICI Bank up by 2.80%, HDFC up by 2.68% and Tech Mahindra up by 2.04%. On the flip side, Power Grid down by 1.97%, ONGC down by 1.23%, NTPC down by 1.00%, Dr. Reddy’s Lab down by 0.95% and Bharti Airtel down by 0.77% were the top losers. (Provisional)
Meanwhile, in order to meet the GST compensation shortfall, the Ministry of Finance, Department of Expenditure has released the 19th weekly instalment of Rs 2,104 crore to the States. Out of this, an amount of Rs 2,103.95 crore has been released to 7 States and an amount of Rs. 0.05 crore has been released to the Union Territory of Puducherry.
Till now, 96 percent of the total estimated GST compensation shortfall has been released to the States & UTs with Legislative Assembly. Out of this, an amount of Rs 97,242.03 crore has been released to the States and an amount of Rs 8,861.97 crore has been released to the 3 UTs with Legislative Assembly.
The amount released this week was the 19th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 5.8594%. So far, an amount of Rs 1,06,104 crore has been borrowed by the Central Government through the special borrowing window at an weighted average interest rate of 4.8842%.
In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government of India has also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have given their preference for Option-I.
The CNX Nifty ended at 15098.40, up by 142.20 points or 0.95% after trading in a range of 14925.45 and 15126.85. There were 26 stocks advancing against 23 stocks declining, while 1 stock remained unchanged on the index. (Provisional)
The top gainers on Nifty were SBI Life Insurance up by 5.14%, Kotak Mahindra Bank up by 3.29%, HDFC Bank up by 2.83%, ICICI Bank up by 2.80% and HDFC up by 2.67%. On the flip side, BPCL down by 4.46%, Tata Steel down by 4.14%, GAIL India down by 3.31%, Indian Oil Corp. down by 2.94% and Power Grid down by 1.89% were the top losers. (Provisional)
European markets were trading mostly in green, UK’s FTSE 100 increased 8.44 points or 0.13% to 6,727.57 and France’s CAC was up by 5.18 points or 0.09% to 5,908.17. On the flip side, Germany’s DAX was down by 10.99 points or 0.08% to 14,369.92.
Asian markets ended mostly higher on Tuesday amid hopes for faster global economic recovery from the corona virus pandemic after expected passage of the US stimulus package, but worries about high inflation kept the market sentiments still under pressure. Japanese shares ended sharply higher as the yen retreated against the US dollar after the release of weak GDP and household spending data. Japan's GDP climbed an annualized 11.7% in the fourth quarter of 2020, missed expectations for an increase of 12.8% following the 22.9% surge in the three months prior. While, the average of household spending in Japan was down 6.1% year-on-year in January, missed expectations for a decline of 2.1% following the 0.6% contraction in December. However, Chinese shares slumped as investors struggled with signs that top financial regulators will take more action to curb debt levels and prevent asset bubbles from forming.
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