Markets off day’s low; yet trade dismal after railway budget announcement

After plunging to-day’s low and recovering thereafter, markets continued to trade lackluster after the presentation of Railway Budget, which acts as a precursor to the Union Budget, failed to lift the sentiment. Trade also took a hit for the worse after incremental number of market-participants trimmed their positions in view of monthly expiry in derivatives segment. Off day’s day low, both Sensex and Nifty were holding the crucial 28,800 and 8,700 levels respectively, albeit with losses of around 0.70%. Meanwhile, broader indices too succumbing to selling pressure were trading with losses of around 0.60%.

On the global front, Asian stocks were mostly higher on Thursday on upbeat corporate earnings and rising Chinese factory output after the chairwoman of the U.S. Federal Reserve said it will be patient about increasing interest rate. The preliminary version of HSBC Corp.'s purchasing managers' index showed China's manufacturing activity edged up to a four-month high in February. The index rose to 50.1 from 49.7 in January on a 100-point scale on which numbers above 50 show activity expanding. Meanwhile, European shares were holding steady in early trading on Thursday, taking a breather from their sharp two-month rally, with Allianz falling after its dividend rise disappointed.

Closer home, most of the sectoral indices on BSE succumbed to selling pressure, with exception from stocks of Realty counters, while major brunt of profit-booking was witnessed by stocks from Information Technology, Metal and Technology counters. Meanwhile, Rail-related stocks, Texmaco Rail and Engineering, Stone India and Kalindee Rail Nirman among others slid between 4-9% after the railway minister Suresh Prabhu presented the Railway Budget. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1730:953; while 111 shares remained unchanged.

The BSE Sensex is currently trading at 28808.32, down by 199.67 points or 0.69% after trading in a range of 28694.86 and 29069.13. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.60%, while Small cap index down by 0.69%.

The gaining sectoral indices on the BSE were Realty up by 0.79% while, IT down by 1.14%, Metal down by 1.09%, TECK down by 1.05%, Power down by 0.95%, Auto down by 0.89% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.27%, GAIL India up by 0.90%, HDFC up by 0.64%, Bharti Airtel up by 0.58% and ONGC up by 0.22%. On the flip side, BHEL down by 3.39%, Sun Pharma Inds. down by 2.78%, Hindalco down by 2.67%, Bajaj Auto down by 1.93% and Infosys down by 1.90% were the top losers.

Meanwhile, global rating agency Moody's, in its report clarified that fiscal policies and structural reforms will determine India's sovereign credit profile and not recent revisions to the economic growth data. Although, it acknowledged that upward revision in India's economic growth highlight strength of economy, but at the same time clarified on the little impact this had on overall assessment of the credit profile since this did not change ratios for government finances, private external leverage and bank asset quality, all of which continued to pose sovereign credit risks. India's GDP growth in the fiscal year ended March 2014 is estimated at 6.9% under the new methodology, from 5% earlier. In a report titled 'GDP Revisions underscore economic strength, but are credit neutral’, Moody's underscored that fiscal and structural reform policies would determine the extent to which accelerating growth could buttress the sovereign credit profile. It also noted that declining inflation called for a policy rate cut to boost investments. It cautioned that India's wide fiscal deficits, poor infrastructure and regulatory complexity have combined creating a mismatch between domestic demand and supply, thereby contributing to inflation and current account pressures. The global rating agency, further warned that absence of government action to reduce fiscal deficits and structural supply constraints, a pick-up in domestic demand or rebound in global commodity prices could lead to renewed inflation and current account pressures over a three to five year horizon.

Notably, these comments come on heels of another rating agency Standard & Poor's warning that India’s weak fiscal and debt indicators coupled with low income levels could “constrain” the sovereign rating.

Rating agencies are keenly awaiting the 2015-16 Budgets to assess the government's commitment to fiscal consolidation and the direction of reforms. The government expects an upgrade in sovereign ratings from the near junk levels now due to reforms unleashed and economy's potential for faster growth.

The CNX Nifty is currently trading at 8708.40, down by 58.85 points or 0.67% after trading in a range of 8673.50 and 8786.05. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were DLF up by 2.14%, NTPC up by 1.34%, Lupin up by 1.31%, NMDC up by 0.99% and HCL Tech. up by 0.84%. On the flip side, BHEL down by 3.52%, Sun Pharma Inds down by 2.86%, Hindalco down by 2.70%, Bank Of Baroda down by 2.40% and Zee Entertainment down by 1.94% were the top losers.

Asian markets were trading mostly higher; with KOSPI Index trading higher by 2.61 points or 0.13% to 1,993.08; FTSE Bursa Malaysia KLCI trading higher by 5.51 points or 0.3% to 1,821.37; Jakarta Composite trading higher by 8.83 points or 0.16% to 5,453.94; Shanghai Composite trading higher by 69.52 points or 2.15% to 3,298.36; Hang Seng trading higher by 123.78 points or 0.5% to 24,902.06; Nikkei 225 trading higher by 200.59 points or 1.08% to 18,785.79.

On the flip side, Taiwan Weighted down by 77.44 points or 0.8% to 9,622.10 and  straits Times down by 19.75 points or 0.57% to 3,421.08 were the only losers amongst Asian pack.

European markets were trading mostly higher; with UK’s FTSE 100 trading higher by 7.69 points or 0.11% to 6,943.07; France’s CAC trading higher by 8.39 points or 0.17% to 4,890.61 and  Germany’s DAX trading higher by 13.4 points or 0.12% to 11,223.67.