Benchmarks trim gains; trade continues in green

After getting a gap-up start, Indian equities trimmed gains but continued to trade in green in the late morning session on sustained buying by funds and retail investors on growth-oriented proposals in the Budget. The Sentiment got bolstered as the Union Budget tabled by Finance Minister Arun Jaitley reduced corporate tax and announced a timeline to implement the General Sales Tax. The Budget laid thrust on infrastructure growth and also plans to bring down the fiscal deficit to 3% in three years. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 614.03 crore on February 28, 2015. However, traders turned cautious after Indian manufacturing activity expanded at its slowest pace in five months in February as a slowdown in new orders dragged on overall output. The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January.

On global front, Asian stocks edged higher as a weekend interest rate cut by the Chinese central bank lifted sentiment following the release of lackluster U.S. growth data. China on Saturday stepped up its easing tempo and cut its lending and deposit rates as the world's second largest economy tries to ward off deflation. Back home, Indian rupee lost 8 paise to Rs 61.91 against the dollar in early trade due to appreciation of the US currency overseas.

Back on street, stocks from Capital Goods, Banking and Infrastructure counters were supporting the markets’ uptrend, while those from FMCG, Consumer Durables and IT counters were adding to the underlying cautious undertone. In scrip specific development, Shares of Eicher Motors were surged after the company announced robust sales in February for its motorcycle division Royal Enfield. Total motorcycle sales increased 49% to 30,240 units in February 2015 compared with 20,343 units in the corresponding month last year. On the other hand, shares of ITC extending its previous day’s 8% fall, after the Finance Minister Arun Jaitley proposed raising taxes on cigarettes. In his budget proposals, Jaitley raised excise duty on cigarettes by 25% for cigarettes of length not exceeding 65 mm, and by 15% for cigarettes of other lengths.

The market breadth on BSE was positive, out of 2202 stocks traded, 1265 stocks advanced, while 839 stocks declined on the BSE. 

The BSE Sensex is currently trading at 29489.95, up by 128.45 points or 0.44% after trading in a range of 29414.54 and 29576.32. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59%, while Small cap index up by 0.62%.

The gaining sectoral indices on the BSE were Capital Goods up by 2.52%, Bankex up by 1.64%, INFRA up by 0.87%, Power up by 0.61% and PSU up by 0.60% while, FMCG down by 1.64%, Consumer Durables down by 1.12%, IT down by 0.45%, TECK down by 0.32% and Metal down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.84%, Larsen & Toubro up by 3.51%, HDFC Bank up by 2.30%, Maruti Suzuki up by 2.05% and BHEL up by 2.04%. On the flip side, ITC down by 3.42%, GAIL India down by 1.70%, Coal India down by 0.95%, Reliance Industries down by 0.84% and Tata Steel down by 0.75% were the top losers.

Meanwhile, it’s going to be double whammy for the Indian aviation sector, while the Union Budget of 2015-16 has made the air travel costlier by proposing hike in service tax from 12.36 per cent to 14 per cent for travel by air in first and business class; however it will be applicable only for tickets purchased in India. The price of aviation turbine fuel (ATF) has been hiked by steep 8.2 per cent for airlines, hit hard by fuel costs. However, the rate hike follows seven consecutive monthly cuts since August. ATF price had been cut by Rs 23,648.73 or 33 per cent in seven reductions since August 2014. Jet fuel, which constitutes over 40 per cent of an airline’s operating costs are surely going to increase the financial burden of cash-strapped carriers.

Meanwhile Air India has been allocated Rs 2,500 crore as equity infusion during the year in the budget. As part of a turnaround and financial restructuring plan approved by the government in 2012, Air India will get equity infusion of Rs 30,000 crore till 2021.

In other budgetary allocation for the sector, Airports Authority of India has been provided with Rs 80 crore out of which Rs 22 crore has been allocated for Pakyong airport project in Sikkim. Also, the civil aviation regulator ‘Directorate General of Civil Aviation’ has been allocated Rs 50 crore to carry out its plan schemes under the overall budget of Rs 5,360.95 for the Civil Aviation Ministry and the Bureau of Civil Aviation Security has been allocated Rs 40 crore.

The CNX Nifty is currently trading at 8951.30, up by 49.45 points or 0.56% after trading in a range of 8923.30 and 8972.35. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were BPCL up by 3.97%, Axis Bank up by 3.84%, Larsen & Toubro up by 3.46%, ACC up by 3.44% and Ultratech Cement up by 3.23%. On the flip side, ITC down by 3.42%, Jindal Steel & Power down by 2.07%, GAIL India down by 1.58%, Coal India down by 0.91% and Tata Steel down by 0.69% were the top losers.

Asian markets were trading mostly in the green; KOSPI Index rose 0.48%, Shanghai Composite increased 0.29%, Jakarta Composite gained 0.40%, Nikkei 225 jumped 0.19% and Hang Seng was up by 0.25%. On the flip side, Taiwan Weighted decreased 0.31%, Straits Times slipped 0.17% and FTSE Bursa Malaysia KLCI was down by 0.19%.