Benchmarks end at fresh record closing highs on Monday

Rising for the fifth day in a row, Indian equity benchmarks ended at fresh record closing highs on Monday, fuelled by the strong performance of information technology (IT) stocks, particularly Wipro and HCL Technologies. Markets started the week on an upbeat note and stayed in green for whole day as traders took support with commerce and industry minister Piyush Goyal’s statement that there is great excitement about India globally and the country stands at a crucial juncture, ready to catapult into a $35-trillion economy in the next 24 years, marking an era of unprecedented growth. Some support also came with private report stating that India is expected to clock a GDP growth in the range of 6.9-7.2 per cent in the current financial year on the back of improving economic fundamentals. Traders also took a note of SBI Research's report stating that retail inflation in India is unlikely to come down much but is expected to hold at nearly the same level in the January-March 2024 quarter. Once the CPI comes under control for fruits, vegetables, spices, and cereals, headline inflation is expected to drastically reduce to come near the mid-point of the RBI inflation target of 4 per cent.

Key gauges continued their upward movement in late afternoon deals, as sentiments were further supported by the United States Trade Representative Katherine Tai’s statement that India and the United States have agreed to bolster trade ties and deepen cooperation in areas such as critical minerals. Sentiments remained positive amid a private report stating that net inflows into exchange traded funds (ETFs) tracking Indian stocks hit a record high in 2023, with investors may continue to buy into the world's fastest-growing major economy even as keenly watched general elections loom. Traders paid no heed towards data showing that inflation based on wholesale price index (WPI) surged to a nine-month high of 0.73 percent in December 2023 as against 0.26 percent in November 2023, due to increase in prices of electricity, machinery & equipment, pharmaceuticals, medicinal chemical & botanical products and electrical equipment.

On the global front, European markets were trading lower after data showed the German economy contracted in the whole year of 2023. Gross domestic product shrank 0.3 percent sequentially, in contrast to the 1.8 percent expansion seen in 2022. This was the first decline since 2020. Asian markets settled mostly higher on Monday ahead of a busy week of corporate earnings, economic releases and speeches by central bank officials at the Davos World Economic Forum meeting 2024.

Finally, the BSE Sensex rose 759.49 points or 1.05% to 73,327.94 and the CNX Nifty was up by 202.90 points or 0.93% to 22,097.45.     

The BSE Sensex touched high and low of 73,402.16 and 72,909.00, respectively. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.67%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were PSU up by 1.84%, TECK up by 1.79%, IT up by 1.79%, Oil & Gas up by 1.70% and Energy up by 1.66%, while Metal down by 0.23% and Basic Materials down by 0.10% were the only losing indices on BSE.

The top gainers on the Sensex were Wipro up by 6.25%, HCL Technologies up by 2.90%, Infosys up by 2.47%, Bharti Airtel up by 2.39% and Tech Mahindra up by 2.34%. On the flip side, Bajaj Finance down by 2.34%, Bajaj Finserv down by 1.17%, Larsen & Toubro down by 0.66%, Tata Motors down by 0.48% and Tata Steel down by 0.26% were the top losers.

Meanwhile, Reserve Bank of India Governor Shaktikanta Das has credited timely and proactive policy and regulatory measures by the central bank in the past four-five years for the ‘gradual and consistent turnaround’ in the banking system. He said the country's banking sector was beset with a host of issues with record high bad loans as of March 2018, gross Non-Performing Assets (NPAs) were around 11 per cent and returns on assets and equity were in the negative. He noted that eleven banks were under prompt corrective action as of June 2018 but today none. 

The RBI governor stated that all key indicators of banks -- capital adequacy, asset quality, and profitability have improved in the past four years. He also said that credit growth is now broad-based and backed by strong fundamentals of banks and also non-banks. He said ‘on the whole, our banking sector has emerged stronger from the unprecedented challenges of recent years’. The return on assets and return on equity have gone up 119 bps and 1,131 bps, respectively and the liquidity coverage ratio was at a comfortable 135.4, much above the minimum stipulation of 100. Following the IL&FS crisis, the RBI heightened its focus to foster macro-financial stability through a series of conventional and non-conventional measures.

He further said ‘when the pandemic struck, our response was swift and decisive and a slew of measures such as targeted term repo operations up to Rs 1,00,000 crore, reduction in the cash reserve ratio by 1 percentage point and enhancement of access to marginal standing facility by banks, was announced on March 27, 2020’. All supervised entities were advised in March 2020 to activate their existing operational and business continuity plans and manage the risks posed by the pandemic. On the monetary policy front, he said the repo rate was slashed 115 bps between March and May 2020 and liquidity enhancing measures equivalent to 8.7 per cent of GDP were announced.

The CNX Nifty traded in a range of 22,115.55 and 21,963.55. There were 35 stocks advancing against 15 stocks declining on the index.   

The top gainers on Nifty were Wipro up by 6.37%, ONGC up by 4.30%, HCL Technologies up by 3.06%, Infosys up by 2.43% and HDFC Bank up by 2.35%. On the flip side, HDFC Life Insurance down by 3.55%, Bajaj Finance down by 2.40%, Bajaj Finserv down by 1.20%, Hindalco down by 1.19% and Eicher Motors down by 1.16% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 19.17 points or 0.25% to 7,605.76, France’s CAC fell 19.56 points or 0.26% to 7,445.58 and Germany’s DAX lost 49.31 points or 0.3% to 16,655.25.

Asian markets settled mostly higher on Monday. Japan's Nikkei share average rose to a 34-year peak, with financials and shippers leading the surge. Chinese shares gained marginally after the People's Bank of China boosted liquidity in the banking system through reverse repos and medium-term lending facility. Investors are awaiting Q4 GDP data due this week. However, Hong Kong shares slipped on lingering worries about China’s economy and after the Chinese central bank held off cutting short-term interest rates.