Sensex regains 42,000-mark after choppy start; Reliance Industries up 2% ahead of Q2 results, bank stocks slip into red

Sensex and Nifty regained after a tepid start on Friday ahead of quarterly results of index heavyweights Reliance Industries, TCS and HCL Tech.

The Sensex was up 82.67 points or 0.2 percent at 42,015.23. The Nifty too went up 9.50 points or 0.8 percent at 12,365.

The 30-share BSE index was trading 3.68 points or 0.01 percent lower at 41,928.88. Similarly, the broader NSE Nifty slipped 1.85 points or 0.01 percent to 12,353.65. In the previous session, Sensex settled at 41,932.56, up 59.83 points, or 0.14 percent. Likewise, the Nifty closed at 12,355.50, showing a gain of 12.20 points, or 0.10 percent.

IndusInd Bank, SBI, HDFC twins, Kotak Bank, Power Grid and UltraTech Cement were among the top losers in the Sensex pack, shedding up to 2.50 percent, according to a PTI report. Bharti Airtel was the top gainer in the Sensex pack, rallying up to 4 percent.

Shares of Reliance Industries (RIL), TCS and HCL Tech were trading higher ahead of their quarterly earnings, scheduled for release later in the day.

According to traders, domestic investors are awaiting key corporate results for cues amid concerns over macroeconomic issues like higher bank NPAs and a spike in retail inflation.

#CNBCTV18Market | Index losers this morning! pic.twitter.com/V5DQG6VRSB

— CNBC-TV18 (@CNBCTV18Live) January 17, 2020

Bourses in Shanghai, Tokyo and Seoul were trading on a positive note in their early sessions, while Hong Kong was in the red. Benchmarks on Wall Street ended at record highs on Thursday.

Rupee opens lower

The Indian rupee opened on a cautious note and fell 7 paise to 71.00 against the US dollar in early trade on Friday tracking weak opening in domestic equities and foreign fund outflows.

At the interbank foreign exchange, the rupee opened at 70.98 then fell to 71.00 against the dollar, showing a decline of 7 paise over its previous closing.

The Indian rupee on Thursday had closed at 70.93 against the dollar.

Forex traders said the rupee pared its early gains despite the US-China signing the phase-1 trade deal, as huge uncertainty still remains, which might make it difficult for China and the US to reach a comprehensive trade deal.

The United States on Wednesday signed the first phase of a trade deal with China, which President Donald Trump described as historic, concluding more than a year of tough negotiations between the two largest economies of the world.

Traders said rise in crude oil prices and foreign fund outflows weighed on the domestic unit.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they sold shares worth Rs 395.24 crore on Thursday, as per provisional data.

Meanwhile, Brent crude futures, the global oil benchmark, eased by 0.03 per cent to USD 64.60 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.02 per cent to 97.34.

The 10-year government bond yield was at 6.62 in the morning trade.

Meanwhile, on the global front, US President Donald Trump on Wednesday refused to roll back the massive tariff imposed on import of Chinese goods despite having succeeded to sign the first phase of a trade deal with China.

During a historic signing ceremony at the White House, Trump said he will roll back the tariffs only if the second phase of the trade deal is signed between the two economic giants.

Asian shares firm as China's GDP raises hopes of recover

Asian shares rose on Friday after global stock indexes and Wall Street posted more records, and as China’s economic growth matched expectations in spite of US trade pressures, according to Reuters.

The world’s second-largest economy grew 6.0 percent in the fourth quarter of 2019 from a year earlier, and 6.1 percent for the full year, official data showed on Friday.

While China’s growth in 2019 was the slowest pace of economic expansion in 29 years, held back by anemic domestic demand and the damaging trade war with the United States, it was in line with analyst expectations and within the government’s official target.

“This is all good news and positive for the China story. All the data coming out, from industrial production, a fixed asset to retail sales, they are all showing signs of bottoming out as the trade cycle bottoms out,” said Daniel Gerard, senior multi-asset strategist at State Street Global Markets in Hong Kong.

Recent data has pointed to an improvement in Chinese manufacturing and business confidence as trade tensions eased, but analysts are not sure if the gains can be sustained and Beijing is widely expected to roll out more stimulus measures.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 percent.

China’s blue-chip CSI300 index was 0.27 percent higher, extending a rally fuelled by hopes for improving relations with the United States that has seen it gain 9 percent since the beginning of December.

Australian shares added 0.47 percent after setting four consecutive record closing highs in previous days and Seoul’s KOSPI rose 0.12 percent. Japan’s Nikkei was up 0.49 percent after touching 15-month highs earlier in the session.

MSCI’s global share index touched new highs and was last up 0.03 percent.

But analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the U.S.-China trade truce gives way to uncertainty over the next steps in trade talks.

While a Phase 1 deal signed by China and the United States on Wednesday is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.

“The challenge from here is how long we can maintain these improvements,” said Steven Daghlian, market analyst at CommSec in Sydney.

“Speaking of the Aussie market specifically, a 6% gain in two weeks is obviously a massive challenge to replicate in the tail end of the month. You don’t really see 10, 11, 12% improvements over the course of a month without any gigantic positive catalysts.”

In the United States on Thursday, a combination of upbeat earnings from Morgan Stanley, rising US retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs.

The Phase 1 deal and the U.S. Senate’s approval of a revamp to the 26-year-old North American Free Trade Agreement also boosted investor spirits.

The Dow Jones Industrial Average rose 0.92% to 29,297.64, the S&P 500 gained 0.84 percent to 3,316.81 and the Nasdaq Composite added 1.06 percent to 9,357.13.

The US data supported the dollar, which held steady on Friday. The greenback hit eight-month highs against the yen before trimming its advance to rise 0.05% to 110.20. The euro was little changed at $1.1136.

The dollar index, which tracks the greenback against a basket of six major rivals, was a tick lower at 97.319.

The rally in equities was mirrored in US benchmark 10-year Treasury notes, which saw yields rise to 1.8266% from their close on Thursday at 1.809 percent. Yields rise as prices fall.

Commodity markets were quiet, with Brent crude futures adding just 3 cents to $64.58 per barrel. U.S. West Texas Intermediate crude futures were also 3 cents higher at $58.55 per barrel.

Gold added 0.05 percent to $1,553.35 per ounce on the spot market.

--With inputs from agencies