Benchmarks eke out slender gains

Buying activity which took place during last leg of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water on Thursday. Markets traded choppy throughout the session as investors remained on sidelines ahead of the US job data, due tomorrow amid a long weekend. The markets are closed on Friday for Holi, followed by the regular weekend holidays.

Some support came in on the back of reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 2786.24 crore on Wednesday, as per provisional data. Sentiments also got some support after global rating agency Moody's underscored that the new ‘inflation targeting’ mechanism is a ‘credit positive’ development and it would make RBI's monetary policy tools much more effective. However, gains remained capped on report that Reserve Bank of India (RBI) has cautioned that the uncertainty surrounding global oil prices can have an adverse bearing on the inflation outlook, though it will endeavour to bring it down to the target of 4 percent by 2016-17.

On the global front, European markets were trading higher in early deals as the European Central Bank prepared to provide the finer details of its soon-to-be-launched Euro 1 trillion stimulus plan. However, Asian markets ended mostly in the red after Wall Street had continued to pull back from record highs ahead of Friday’s closely-watched US jobs data that will give further clues on how likely the Fed is to start raising rates.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 62.18 per dollar at the time of equity market closing against the Wednesday’s close of 62.24 on the Interbank Foreign Exchange. Meanwhile, shares of insurance companies advanced after the Lok Sabha passed the Insurance Laws (Amendment) Bill, 2015, that proposes to raise the foreign investment cap to 49% from 26% in the insurance sector. Additionally, Public sector oil marketing companies (PSU OMCs) advanced after the Ministry of Petroleum & Natural Gas announced that 81% active LPG consumers (11.74 crore) have joined the Direct Benefit Transfer for LPG (DBTL) scheme called PAHAL as on March 2, 2015.

On the flip side, shares of telecom companies ended lower due to investor worries that buying expensive spectrum could impact margins. India’s biggest auction of wireless radio waves started on Wednesday with phone companies making bids worth an estimated Rs 60,000 crore in all four spectrum bands that are on the block. Moreover, shares of metal companies declined across the bourses after China, the world’s largest consumer of metals, lowered its economic growth forecast for the current year.

The NSE’s 50-share broadly followed index Nifty rose by over ten points and ended near the psychological 8,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by around seventy points to finish above the psychological 29,400 mark. Broader markets, however, outperformed benchmarks and ended in the green with a gain of over half a percent. The market breadth remained in favor of decliners, as there were 1,401 shares on the gaining side against 1,461 shares on the losing side while 116 shares remain unchanged.

Finally, the BSE Sensex gained 68.22 points or 0.23% to 29448.95, while the CNX Nifty added 15.10 points or 0.17% to 8,937.75.

The BSE Sensex touched a high and a low of 29518.32 and 29162.47, respectively. The BSE Mid cap index was up by 0.74%, while Small cap index was up by 0.66%.

The top gainers on the Sensex were Sun Pharma up by 3.24%, Hindustan Unilever up by 2.49%, HDFC Bank up by 1.87%, Cipla up by 1.81% and HDFC up by 1.75%. On the flip side, Hindalco down by 3.36%, Coal India down by 2.19%, TCS down by 1.72%, Tata Steel down by 1.28% and Sesa Sterlite down by 1.08% were the top losers.

The top gaining sectoral indices on the BSE were Healthcare up by 2.54%, FMCG up by 1.07%, Bankex up by 0.56%, Auto up by 0.49% and Power up by 0.37% while Metal down by 1.92%, TECK down by 0.61%, Capital Goods down by 0.60%, IT down by 0.58% and PSU down by 0.23% were the losing indices on BSE.

Meanwhile, in a major boost to India's sovereign outlook, global rating agency Moody's underscored that the new 'inflation targeting' mechanism is a 'credit positive' development and it would make RBI's monetary policy tools much more effective. According to the agency, inflation targeting is forward looking as this would encourage a focus on future, rather than past, price trends.

Moody's underscored that quantitative inflation targeting would foster transparency and predictability in monetary policy, as capital market participants, businesses and the public understand the drivers of central bank actions and hence has termed this move as 'credit positive'. Additionally, it emphasized that increase in monetary policy transparency and effectiveness would just lessen volatility in international capital flows into India and support institutional strengthening via accountability.

Moody's, while cautioning that unchecked inflation would have a greater chance of hurting growth, added that inflation between 2011 and 2014 inflation was largely driven by food and commodity prices but it ultimately compromised growth.

However, as per the present monetary policy framework agreement between the RBI and the Government, RBI will target to lower inflation to below 6 per cent by January 2016 and further to 4 per cent with a band of (+/-) 2% in 2016-17. According to Prime Minister, Narendra Modi that the new mechanism would increase the predictability and effectiveness of RBI's monetary policy, while the effectiveness of its monetary tools would increase because 'inflation targeting' would take into account future -- rather than past-- price trends.

The CNX Nifty touched a high and low of 8,957.55 and 8,849.35 respectively.

The top gainers on Nifty were Sun Pharmaceuticals Industries up by 3.45%, Lupin up by 2.67%, Hindustan Unilever up by 2.50%, Bank of Baroda up by 2.13% and HDFC Bank up by 2.00%. On the flip side, UltraTech Cement down by 4.06%, NMDC down by 4.03%, Hindalco Industries down by 3.66%, Grasim Industries down by 2.55% and Cairn India down by 2.11% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 0.47%, UK's FTSE 100 was up by 0.22% and France's CAC was up by 0.56%.

The Asian markets ended mostly in red on Thursday, after Wall Street continued to pull back from record highs ahead of Friday’s closely-watched US jobs data. China set the lowest economic growth target in more than 15 years and flagged increasing headwinds as leaders tackle the side effects of a generation-long expansion that spurred corruption, fueled debt and hurt the environment. The goal of about 7% -- down from last year’s aspiration of about 7.5%  -- was given in Premier Li Keqiang’s work report at the annual meeting of the legislature in Beijing. Fiscal policy will remain proactive and monetary policy prudent, while the yuan exchange rate will be kept at a reasonable and balanced level. China cut its trade growth target for this year to around 6%, after it missed the goal in 2014 for the third consecutive year amid softened domestic and foreign demand. Philippines CPI rose to a seasonally adjusted annual rate of 0.1%, from 0.4% in the preceding quarter.