Sensex ends flat, Nifty holds 8,100; Winter session begins

The market pared all its gains to settle the day flat on Wednesday amid discussion on PM Narendra Modi’s demonetization move as the winter session of Parliament kicked off.

The S&P BSE Sensex ended down 6 points at 26,298 and the Nifty50 settled 3 points higher at 8,111. In the broader market, BSE Midcap and Smallcap closed 0.56-0.05% higher each. 

The benchmark indices rallied in intraday deals amid gains in IT stocks thanks to weaker rupee, while cooling retail inflation bolstering the chances of a rate cut next month, also lifted the sentiment. 

Market breadth turned negative with 1,547 losers and 1,055 gainers on the BSE.

"The Market rebounded as investors used the advantage of a drop in valuation while the selling at higher levels pulled back the market to close flat. The winter session of parliament and the US fiscal policies will dictate the market direction in the long-term. Besides, the moderation in CPI inflation may provide RBI with a window of opportunity to carry out a rate cut," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

 

Winter Session of Parliament begins

The discussion in Parliament on PM Narendra Modi’s demonetisation drive remained in focus as investors continued to estimate the impact of the move on the economy. 

"The market continues to grapple with the impact of demonetisation. In weeks ahead, we will get a clearer picture on how different sectors react to the withdrawal of high currency notes. The common consensus is that the whole economy will be hit by this monetary shock," said Jay Shankar, chief India economist & director, Religare Capital Market.

"The stabilisation we see today is a reaction to the broader global sentiment, but the recovery is likely to be temporary and we can expect some volatility shortly," he added.

Retail inflation cools off

Consumer prices rose by an annual 4.20% in October in their slowest pace in 14 months, data released after market hours on Tuesday showed, increasing the odds of another rate cut after a 25 basis point reduction last month.

But some analysts reckon an impending interest rate increase in the United States could force a status quo until February.

Buzzing stocks

Asian Paints which had lost over 20% in the previous few sessions gained 5% and was the top gainer on both the headline indices. 

IT exporters which gain most of their revenue from exports to the US also emerged as the top gainers on expectation that the weak rupee would boost revenues. Tata-group company TCS was up 3% while Infosys added nearly 2%. 

Auto, financials and consumer durables stocks which had lost ground in the previous sessions on worries of demand slowdown post the demonetisation by the government staged a recovery on short covering and value buying at lower levels.

Shares of Tata Global Beverages, which co-owns and runs Starbucks coffee stores across India, rose as much as 7.1%. The scrip ended up 3%.

The company on Tuesday announced the removal of Cyrus Mistry as its chairman, the first Tata group company to depose him since his removal last month from the helm of parent holding company Tata Sons.

Snapping four-session long losing streak, JM Financialshares rose over 5% in intraday deals after the company’s subsidiary JM Financial Products acquired over 1.9 million sharesin India Home Loan (IHL), translating into over 17% in the firm. The scrip had lost nearly 23% in the last four sessions.

Global markets

A pause in both the sell-off in global bonds and sharp rise in the dollar following Donald Trump's election victory, together with Wall Street's record high overnight helped Asian shares steady on Wednesday.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, bouncing back from a four-month low touched earlier this week.

Japan's Nikkei rose 1.1% to nine-month high thanks to the dollar's strength against the yen. However, China’s Shanghai Composite and Hong Kong’s Hang Seng index bucked the trend to settle the day in red. 

European shares, meanwhile, rose in early deals on Wednesday, underpinned by a rally among commodity-related stocks as well as gains in companies such as Wire Card and Bouygues.

The STOXX 600 index climbed 0.6%, on track for its third straight session of gains. A 5.2% fall in Bayer, however, weighed on Germany's DAX index, which traded flat and underperformed the broader European market.

(With inputs from agencies)