Markets manage a close of modest gains after a volatile session

Thursday, despite a good start could not much change the course of the Indian markets, as the indices after an intraday breakout slumped on profit booking making another dull day for the markets. Though, the benchmarks managed a green close but the day was marred by rounds of volatility and major indices slipped into red for couple of times as investors turned cautious ahead of election outcome next week. Also, as an HSBC survey said that Private sector activity among emerging market economies was broadly stagnant for the second successive month in April. However, there was a good news of Indian rupee strengthening past 60/dollar mark.

The global cues were sanguine and, while the US markets ended mostly higher the Asian markets too made a green closing after Fed chief Yellen’s remark that a high degree of monetary accommodation remains warranted in light of the considerable degree of slack that remains in labor markets. Further, the European markets too made a positive start ahead of a European Central Bank monetary-policy decision.

Back home, markets witnessed sudden selling in the late morning trade that not only dragged the bourses from the high points of the day, but by noon took them to the negative terrain. After that there was no major recovery attempt. Earlier, the benchmarks made a positive start and started moving higher with lower level buying after last session’s drubbing on good global cues and a report of the Europe India Chamber of Commerce (EICC) stating that there is huge potential to boost the investment flow of European companies who invested $198 billion in India between 2004 and 2013. However, after breaching the psychological levels of 22400 (Sensex) and 6680 (Nifty) selling appeared in the market on cautiousness related to the election outcome and traders opted to book profits, taking the benchmarks lower. There was buzz in the market with the arrest of Chairman and group CEO of Financial Technologies India (FTIL), Jignesh Shah and former MCX chairman Shreekant Javalgekar in NSEL fraud case. Also there was some concern on report that Economic Offences Wing (EOW) is taking a close look at the role played by brokers who sold the products. Back on street, while the broader markets made a mixed closing, realty, FMCG, healthcare and oil & gas ended in red, consumer durables , banking and auto supported the markets.

Finally, the BSE Sensex gained 20.14 points or 0.09%, to 22344.04, while the CNX Nifty was up by 7.30 points or 0.11% to 6,659.85.

The BSE Sensex touched a high and a low of 22443.13 and 22277.04, respectively. The BSE Mid cap index was down by 0.16%, while the Small cap index gained 0.17%.

The top gainers on the Sensex were BHEL up by 3.22%, Cipla up by 1.65%, Tata Motors up by 1.36%, ICICI Bank up by 1.33% and Wipro up by 1.04%. While Hero MotoCorp down by 1.36%, ITC down by 1.34%, Sun Pharma down by 1.07%, Bharti Airtel down by 0.98% and Tata Power down by 0.78% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 1.30%, Bankex up by 0.74%, Auto up by 0.58%, Capital Goods up by 0.39% and IT up by 0.24% were the top gainers, while Realty down by 0.92%, FMCG down by 0.80%, Healthcare down by 0.32%, Oil & Gas down by 0.21% and PSU down by 0.14% were the losers in the space.

Meanwhile, state-run banks are likely to get a respite with the government likely to set aside its order directing them to act as insurance brokers. Reflective of government’s softening stance over this issue, the finance ministry is mulling allowing banks to choose whether to act as brokers or pursue the existing model of insurance agent of a single insurer.

Presently, recommendations of working group are under discussion and once they are finalized, the insurance regulator may also contemplate amendments to the regulations.  Further, this issue already has been transferred to Financial Stability and Development Council (FSDC), and will be discussed upon during the next meeting.IRDA could relax the guidelines which state that, while acting as brokers, banks will have to cap business from their own group companies at 25% for both life and non-life business. At present, banks are allowed to sell products of one company from life, non-life and health insurance businesses. However, if banks act as brokers, they can sell products of all companies.

Back in December, the ministry had urged public sector banks to become insurance brokers instead of remaining corporate agents of an insurance company, a development which was in line with the budget announcement that paved the way for banks to act as insurance brokers and offer products of more than one insurance company. However, this led to complaints that the directive could pose an issue of conflict of interest for the banks which were partners in insurance joint ventures. It is post to this that a working group, including representatives of the insurance regulator IRDA, Reserve Bank of India and Indian Banks' Association (IBA) - was then set up to examine the issue.

The CNX Nifty touched a high and low of 6,688.40 and 6,638.55 respectively.

The top gainers of the Nifty were BHEL up by 3.76%, HCL Technologies up by 1.83%, Tata Motors up by 1.72%, Power Grid Corporation of India up by 1.66% and Hindalco Industries up by 1.41%. On the other hand, BPCL down by 1.85%, Hero MotoCorp down by 1.36%, ITC down by 1.34%, Lupin down by 1.18% and Bharti Airtel down by 0.96% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.59%, Germany's DAX was up by 0.49% and UK’s FTSE 100 was up by 0.40%.

The Asian markets concluded Thursday’s trade mostly in green, on upbeat Chinese trade data that suggested some signs of stabilization in the world's second-largest economy. China’s exports and imports rose marginally in April rebounding from sharp declines the month before amid a growth slowdown in the world’s second-largest economy. Exports crept up 0.9% year-on-year to $188.54 billion while imports increased 0.8% to $170.09 billion, resulting in a surplus of $18.45 billion. Indonesia’s current account deficit widened slightly in the first quarter of the year and will increase further in the second and third quarters because of seasonal factors. The central bank stated that the widest measure of the flow of goods, services and money in and out of the country posted a deficit of 2.06% of gross domestic product in the first quarter. That was marginally higher than the 1.98% deficit the previous quarter. Also, the central bank kept its key reference rate unchanged at 7.50%, as widely expected, with pressures over inflation and a widening current-account deficit easing.