Indices trade with minor gains; PSU banks slide

The benchmark indices were trading with decent gains in mid-afternoon trade, supported by firmness in IT, oil & gas and consumer durables stocks. At 14:30 IST, the barometer index, the S&P BSE Sensex, rose 80.91 points or 0.14% at 57,868.94. The Nifty 50 index gained 19.60 points or 0.11% at 17,241.

In the broader market, the S&P BSE Mid-Cap index shed 0.72% while the S&P BSE Small-Cap index fell 0.61%.

The market breadth was negative. On the BSE, 1,422 shares rose and 1,899 shares fell. A total of 96 shares were unchanged.

Global cues were mildly positive after the US central bank on Wednesday announced that it would put an end to its pandemic-era bond purchases in March and would raise the interest rates thrice in the upcoming year to battle growing inflation.

Attention now turns to policy announcements later Thursday from the European Central Bank and the Bank of England, which are also aiming to control the heated inflation.

Economy:

India has attracted highest ever annual Foreign Direct Investment, FDI inflow of 81.97 billion US dollars in the current fiscal year despite the challenges posed by Covid-19 pandemic. This was stated by Minister of State for Commerce and Industry Som Parkash in a written reply in the Lok Sabha on 15 December 2021.

The Minister said, India has received FDI inflow worth 440.27 billion US dollars in the last seven years. He said, this is nearly 58% of the FDI reported in the last 21 years. He said, India is becoming a preferred investment destination amongst global investors.

Meanwhile, the Reserve Bank of India (RBI) on 15 December 2021, said that the global economy remained hostage to heightened uncertainty, with the Omicron strain of the coronavirus, sparking fresh containment measures. The Indian economy bounced back strongly in the second quarter of 2021-22, with the gross domestic product (GDP) surpassing its pre-pandemic levels and inflation broadly aligning with the target.

Numbers to Track:

The yield on 10-year benchmark federal paper rose to 6.376% as compared with 6.364% at close in the previous trading session.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 76.0850, compared with its close of 76.32 during the previous trading session.

MCX Gold futures for 4 February 2022 settlement rose 0.60% to Rs 48,374.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, fell 0.30% to 96.22.

In the commodities market, Brent crude for February 2022 settlement rose 55 cents at $74.43 a barrel.

Buzzing Index:

The Nifty PSU Bank index fell 1.06% to 2,674.10. The index lost 4.37% in four trading sessions.

Indian Overseas Bank (IOB) (down 2.32%), Indian Bank (down 2.01%), Union Bank of India (down 1.82%), Bank of Baroda (down 1.72%) and Central Bank of India (CBI) (down 1.58%) were the top losers in the PSU Bank segment.

Global Markets:

Shares in Europe and Asia advanced on Thursday, 16 December 2021, as investors were digesting the U.S. central bank's signal on Wednesday that it would be aggressive on tapering bond purchases and sees several rate hikes in 2022.

The Fed announced on Wednesday that it would wind down its asset purchases, a process known as tapering, at a faster pace amid a continued rise in inflation. The Fed will be buying $60 billion per month of bonds starting in January, down from December's rate of $90 million, and said that it will likely continue that trajectory in the months ahead.

This sets the stage for a dramatic policy shift that will clear the way for a first interest rate hike next year. The central bank signaled on Wednesday that its members see three hikes in 2022, with two in the following year and another two in 2024. The decision to aggressively ease bond purchases follows recent inflation data showing a 6.8% surge in November.

Fed Chairman Jerome Powell said at a conference on Wednesday said that the labor market is not fully recovered, pointed to a sluggish rebound in labor force participation, but said it was still appropriate to roll back some of the Fed's pandemic-era policies.

In Asia, Japan's exports growth sped up in November, government data showed on Thursday. Exports rose 20.5% in November from a year earlier, the ninth straight month of increase. It followed a 9.4% gain in the previous month.

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