India's Service Sector Activity, Global Stock Market Updates, and Top Cues in Focus Today

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On Tuesday, Indian share markets traded on a positive note throughout the day and ended higher. Benchmark indices rebounded after two sessions of sharp declines, as oil prices eased due to a lack of further escalation in Middle East tensions.

The BSE Sensex closed higher by 193 points to end the day at 40,869. Ultratech Cement and Reliance Industries were among the top gainers.

While the broader NSE Nifty ended up by 60 points to end at 12,053.

Among BSE sectoral indices, realty stocks gained the most, followed by energy stocks and metal stocks.

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Top Stocks in Action Today

Manappuram Finance share price will be in focus today as the company has received approval to raise funds through issuance of fixed rate senior unsecured notes aggregating up to US$ 300 million.

Bajaj Auto share price will also be in focus today as the company has extended strategic partnership with Gulf Oil Lubricants for three years.

The agreement has been extended with Gulf Oil to manufacture exclusive, Bajaj Genuine Engine oils for Bajaj two-wheelers. Gulf Oil is already supplying lubricants for Bajaj Auto's international markets across more than 20 countries.

Market participants will also track HDFC Bank share price as the private lender reported strong business growth in the December quarter (Q3FY20).

The bank's total advances grew by 20% year on year (YoY) to Rs 9.3 trillion in Q3FY20, driven by festive season demand. Total advances stood at Rs 7.8 trillion in Q3FY20 and at Rs 8.97 trillion in September 2019 quarter (Q2FY20).

Deposits stood at Rs 10.7 trillion as of December 31, 2019 growing by 25% compared to Rs 8.5 trillion as of December 31, 2018. The bank's current and saving account (CASA) ratio stood at around 39.5% against 40.7% in a year ago quarter.

From the Economic Space...

India's services sector activity extended its gaining momentum in the month of December, aided by faster increase in sales, output and employment.

As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index surged to 53.3 in December from 52.7 in November. Further, the Nikkei India Composite PMI Output Index, which measures both manufacturing and services also rose from 52.7 in November to 53.7 in December.

In the reported month, total sales expanded for the third consecutive month and at the quickest pace since October 2016.

Further, the upturn in total new work was achieved with the support of international markets, with services exports rising for the tenth straight month in December.

Although moderate, the pace of growth accelerated to the fastest since September.

Service providers continued to hire extra staff in December, amid reports of new business growth. Employment increased for the twenty-eighth month in succession and at a rate that, although modest, was the quickest since August.

Results Corner

In news from the telecom sector, ITI reported robust earnings with an over 12-fold jump in the consolidated net profit at Rs 1,683 million in the December 2019 quarter (Q3FY20). The state-owned telecom equipment provider had a profit of Rs 135.8 million in the year ago quarter.

The company's management said higher operational revenues and other income contributed towards the higher profit during the quarter.

The company's revenue from operations rose 47% year on year (YoY) at Rs 8,280 million, as against Rs 5,632 million in the previous year's quarter.

Meanwhile, GM Breweries' profit before tax fell 28% in Q3FY20 to Rs 186.7 million. Net profit for the quarter under review stood at Rs 139.8 million, down 16.3%, YoY. The company had logged profit of Rs 167.1 million in the year-ago quarter.

The company's total revenue from operations during the quarter fell 4.4% year-on-year (YoY) to Rs 4,292.7 million.

RBI Revises Framework for UCBs

The RBI on Monday revised the Supervisory Action Framework (SAF) for urban cooperative banks (UCBs) to ensure expeditious resolution of financial stress being faced by some of them.

The revised framework released by the RBI stipulates the thresholds for various parameters that could trigger a corrective action by the UCBs or a supervisory action by the central bank.

A UCB may be placed under supervisory action framework when its net NPAs exceed 6% of its net advances, its CRAR falls below 9%, when it incurs losses for two consecutive financial years or has accumulated losses on its balance sheet.

RBI said that the type of action would depend on the severity of stress.

Further, issue of show cause notice for cancellation of banking license may be considered by the Reserve bank when continued normal functioning of the UCB is no longer considered to be in the interest of its depositors/ public.

Global Stock Market Drivers

On Tuesday, global stock markets steadied, and oil pulled back from multi-month highs after dramatic post-new year moves, as investors judged prospects of an all-out conflict between the United States and Iran had eased.

After a strong rally, oil gave back some of its gains amid signs that Iran would be unlikely to strike against the US in a way that would disrupt supplies.

European shares rose tracking similar gains in Asian stock markets.

Meanwhile, foreign flows into Asian equities turned positive in 2019 due to diminished fears about a Sino-US trade war and a fall in US interest rates.

Data showed that overseas investors purchased a net US$ 23.5 billion worth of regional equities in 2019, the highest since 2016.

Indian equities led the region with net foreign inflows of US$ 14.7 billion last year, the highest since 2014. Taiwan and Indonesia also drew foreign funds totaling about US$ 6 billion and US$ 3.5 billion, respectively.

As per the economic schedule released by Vijay Bhambwani, here are the important events due later today:

• Germany - Factory Orders November
• USA - Non-farm Employment Change
• UK - House Price Index Dec & Labour Productivity Q3

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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