Benchmarks pare some early losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices have gained momentum however were still trading below the neutral line on persistent profit-booking by funds and retail investors, following losses in IT stocks, after TCS reported a 27 per cent dip in its March quarter net profit at Rs 3,858.2 crore. Sentiments remained dampened as global rating agency Standard and Poor's stated that a policy logjam and “red tape” have hindered investments in India. Besides, traders turned cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 214 crore on April 16, 2015. At present, Sensex and Nifty were trading below the crucial 28,600 and 8,700 levels respectively, with loss of over 0.30%. The midcap and smallcap indices were also having a bad session of trade in line with the overall markets. However, losses remained capped with Reserve Bank of India Governor Raghuram Rajan’s statement that on some issues the government and the central bank were “trying to persuade one another” but on many others the two sides are on the same page. Some support also came with Finance Minister Arun Jaitley’s statement that India has the potential to achieve 9-10% growth rate which could be its “new normal”.

On global front, Asian shares were trading firm shrugging of overnight weakness in US stock markets which ended marginally lower amid discouraging economic data. Chinese shares drove an advance in emerging-market equities, with indexes in Hong Kong and Shanghai extending gains at seven-year highs. Back home, Indian rupee lost seven paise at 62.37 against the US dollar in early trade due to fresh demand for the American currency from importers.

Back on street, stocks from Metal, Oil & Gas and PSU counters were supporting the markets’ uptrend, while those from Banking, information technology (IT) and Consumer Durables counters were adding to the underlying cautious undertone. In scrip specific development, shares of Jindal Saw have surged after the company approved a proposal for entering into a contract worth up to Rs 10,000 crore with group firm JSW Steel, from which it purchases raw material. On the flip side, shares of TCS have declined after the company reported a net profit of Rs 3,858 crore for the March quarter, down 27% year-on-year (y-o-y) and 29% quarter-on-quarter (q-o-q).

The market breadth on BSE was negative, out of 2306 stocks traded, 811 stocks advanced, while 1413 stocks declined on the BSE.

The BSE Sensex is currently trading at 28567.28, down by 98.76 points or 0.34% after trading in a range of 28515.30 and 28696.19. There were 14 stocks advancing against 16 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 0.38%.

The gaining sectoral indices on the BSE were Metal up by 1.18%, Oil & Gas up by 0.55%, PSU up by 0.38%, Realty up by 0.25% and FMCG up by 0.15% while, IT down by 1.88%, TECK down by 1.68%, Bankex down by 0.66%, Consumer Durables down by 0.50% and Auto down by 0.39% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 2.35%, Tata Steel up by 2.21%, Hindalco up by 1.82%, Reliance Industries up by 1.36% and Hindustan Unilever up by 0.98%. On the flip side, TCS down by 3.80%, Wipro down by 1.94%, Bajaj Auto down by 1.52%, Sun Pharma Inds. down by 1.44% and Bharti Airtel down by 1.34% were the top losers.

Meanwhile, the global rating agency Standard and Poor's (S&P) after making rating outlook upgrade for India has raised concern over policy logjam and red tape, which have hindered investments in India. In a study, it said investment growth was weakening in the country and earnings growth of companies was flat. There had been a logjam in policy making by the previous government and signs of revival were not apparent.

In its recent study on the economies of India, China and Indonesia, the agency said that despite the recent upward revision to its gross domestic product growth data, India's weak investment (and relatively flat earnings) is clearly apparent in the micro data.

In its study it revealed that earnings growth in companies among the sectors studied had lagged investment and debt almost every year since 2008, which implies that there was a gridlock in policymaking after the global financial crisis that led to dormant assets and stagnant earnings; that is, investment projects were not brought to fruition.

Earlier, while upgrading the outlook of India’s sovereign rating it has said that its outlook revision indicates that it believe the current government's strong mandate will enable it to implement many of its administrative, fiscal and economic reforms. S&P cited India's external position and its improving current account balance as other positive factors. S&P had cut India’s “BBB-minus” rating to “negative” in April 2012, leaving it on the verge of a “junk” rating.

The CNX Nifty is currently trading at 8656.40, down by 50.30 points or 0.58% after trading in a range of 8638.25 and 8699.85. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Sesa Sterlite up by 2.40%, Tata Steel up by 2.04%, Hindalco up by 1.90%, Reliance Industries up by 1.44% and BPCL up by 1.29%. On the flip side, TCS down by 3.87%, Lupin down by 3.71%, Indusind Bank down by 3.03%, Tech Mahindra down by 2.64% and ACC down by 2.38% were the top losers.

Asian markets were trading mostly in the green; FTSE Bursa Malaysia KLCI rose 0.02%, Jakarta Composite increased 0.02%, KOSPI Index gained 0.1%, Shanghai Composite surged 2.06% and Hang Seng was up by 0.51%. On the flip side, Nikkei 225 decreased 1.13%, Taiwan Weighted declined 0.63% and Straits Times was down by 0.30%.