Firm trade persists over Dalal Street

23 Jan 2025 Evaluate

A firm trade continued over the Dalal Street in early afternoon deals, with both Sensex and Nifty holding gains over 0.40% each, aided by positive cues from other Asian markets along with heavy buying at IT, Consumer Durables and TECK counters. Sentiments remained upbeat, as Raksha Mantri Rajnath Singh said that India is a fast-developing country, but its development needs to be inclusive, equitable, ecologically sustainable and morally desirable without compromising the planet’s health. He asserted that the country’s consumption should be need-based and not greed-based, stressing that behaviors need to change to ensure sustainability. 

On the global front, Asian markets were trading mostly in green, after South Korea's gross domestic product improved a seasonally adjusted 0.1 percent on quarter in the fourth quarter of 2024. That was unchanged from the three months prior, although it missed expectations for an increase of 0.2 percent. Real gross domestic income (GDI) increased by 0.6 percent on quarter.

The BSE Sensex is currently trading at 76717.77, up by 312.78 points or 0.41% after trading in a range of 76202.12 and 76743.54. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose by 1.87%, while Small cap index was up by 0.87%.

The top gaining sectoral indices on the BSE were IT up by 2.25%, Consumer Durables up by 2.13%, TECK up by 1.69%, Realty up by 1.47% and Basic Materials up by 1.44%, while Oil & Gas down by 0.37%, Energy down by 0.20%, Bankex down by 0.08% were the only losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 3.06%, Tech Mahindra up by 2.38%, Sun Pharma up by 2.11%, Mahindra & Mahindra up by 2.05% and Tata Motors up by 1.84%. On the flip side, Reliance Industries down by 0.63%, Kotak Mahindra Bank down by 0.43%, SBI down by 0.37%, Hindustan Unilever down by 0.36% and Axis Bank down by 0.34% were the top losers.

Meanwhile, the Confederation of Indian Industry (CII) has called for a comprehensive review of the recognition and accounting of intangible assets as India transitions towards a digital economy. According to CII, intangible assets are crucial for value creation in modern business models, especially in sectors like Software as a Service (SaaS), Platform as a Service (PaaS), blockchain platforms, and advanced manufacturing. However, the current accounting standards, particularly India’s Financial Reporting Standard Ind AS 38, which is based on IAS 38, limit recognition to only acquired intangible assets and prohibit capitalisation of internally generated intangibles.

Emphasising on sharing a comprehensive set of recommendations to harness India’s potential of Digital Economy, Chandrajit Banerjee, Director General, CII said ‘Inability to recognise internally generated intangibles means that such investments are largely excluded from the governance, financial reporting, and auditing ecosystems. Therefore, such investments are less likely to have corresponding disclosures or be included in the management discussion and analysis (MD&A), and are less likely to receive scrutiny from auditors, visibility to investors and comparability of financial statement.’

Further, Banerjee stated that there are concerns that at least some of the differences between market capitalisation and book value is due to non-recognition of internally generated assets. Among the major recommendations, the industry body added that intangible assets related to brand development, such as proprietary algorithms and user engagement, should be capitalized if they have enduring value. CII recommended that the accounting for SaaS, PaaS, and IaaS should be reviewed, allowing for the capitalization of development costs with long-term economic benefits. It said intangible assets acquired as part of a basket acquisition in pharma should be recognized based on their economic value.

The industry body said capitalisation of development costs for new automotive platforms should be allowed based on management judgment. It added that as India moves towards Net Zero, the recognition of Carbon Credits (CERs) as assets should be revisited. A more flexible approach to revaluation and measurement of intangible assets is needed, especially as the gap between market and book value grows.

The CNX Nifty is currently trading at 23258.05, up by 102.70 points or 0.44% after trading in a range of 23090.65 and 23270.80. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Wipro up by 3.49%, Ultratech Cement up by 3.03%, Tech Mahindra up by 2.33%, Mahindra & Mahindra up by 2.09% and Sun Pharma up by 2.05%. On the flip side, BPCL down by 1.57%, Reliance Industries down by 0.68%, Kotak Mahindra Bank down by 0.47%, SBI down by 0.45% and ONGC down by 0.44% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite gained 61.51 points or 0.84% to 7,318.64, Shanghai Composite strengthened 18.67 points or 0.58% to 3,232.29, Straits Times rose 19.76 points or 0.52% to 3,800.97 and Nikkei 225 surged 312.62 points or 0.78% to 39,958.87, while Hang Seng declined 128.33 points or 0.65% to 19,650.44 and KOSPI dropped 31.57 points or 1.26% to 2,515.49.

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