Markets trade flat with positive bias; recovery emerges at lower level

Local equity markets were trading flat, but with a bit of positive bias as some recovery crept in at lower level, which propelled market-participants to engage in bargain buying activities. Caution ahead of F&O expiry later this week and not so -encouraging Q4 earnings so far amid absence of positive catalyst, mainly dragged the bourses lower. However, recovery which crept in at day’s low point, took Sensex and Nifty higher above psychologically crucial 27,150 and 8,200 levels respectively. Meanwhile, broader indices outperforming larger counter parts were trading with gains of over half a percent.

On the global front, Asian stocks pulled back from a seven-year peak scaled on Tuesday as sentiment gave way to caution ahead of the Federal Reserve's two-day policy meeting scheduled to start later in the day. Street expects no change in policy stance from the two-day Federal Open Market Committee meeting, with recent domestic data weaker than forecast and a strong dollar crimping exports.

Closer home, most of the sectoral indices on BSE were trading into positive territory, out of all, maximum buying was witnessed by stocks from Auto, Banking and Power counters. Meanwhile, sugar stocks were also trading up on reports suggesting a revival package soon by government in order to lift the beleaguered industry from the doldrums. Besides, banking stocks which took a sharp hit in previous session too recovered in today’s trading session. Additionally, shares of upstream oil exploration firms advanced. On the flip side, stocks from FMCG, IT and TECK counters were the top losers of the session. IT pack declined as Infosys extended its slide in volatile trade. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1177:839; while 30 shares remained unchanged.

The BSE Sensex is currently trading at 27185.48, up by 8.49 points or 0.03% after trading in a range of 27113.03 and 27365.72. There were 14 stocks advancing against 16 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 gained 0.50%.

The top gaining sectoral indices on the BSE were Auto up by 1.54%, Bankex up by 1.44%, Power up by 0.89%, Realty up by 0.72%, PSU up by 0.39% while, FMCG down by 0.82%, IT down by 0.70%, TECK down by 0.70%, Consumer Durables down by 0.38%, Capital Goods down by 0.18% were the losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 4.68%, Maruti Suzuki up by 3.01%, BHEL up by 2.29%, Axis Bank up by 1.84% and NTPC up by 1.82%. On the flip side, Hindustan Unilever down by 1.38%, ITC down by 1.28%, Infosys down by 1.21%, Coal India down by 1.11% and Larsen & Toubro down by 1.04% were the top losers.

Meanwhile, domestic rating agency India Ratings, for FY16 has projected a 7.7 percent growth in gross domestic product (GDP). Though, the numbers are slightly lower than the official growth forecast at 7.9 percent, but it has said that the gradual economic recovery will be driven by a further pick up in private consumption demand.

As per the rating agency, the consumption demand is expected to expand 8.1% in FY16, compared to FY15: 7.1% and FY14: 6.2%. It has also said that the significant moderation in inflation and inflationary expectations is likely to boost consumer sentiments, albeit gradually. The share of private consumption demand in GDP is around 60%. Even investment and government expenditure would provide adequate support to consumption-led GDP growth.

India Ratings further expects both wholesale price index (WPI) and consumer price index (CPI) based inflation to moderate to 2.4% and 5.6%, respectively, in FY16. Retail and WPI inflation declined to 5.2% and negative 2.3% in March 2015, respectively. It expects RBI to cut the repo rate by another 50bp by FYE16. Although the unseasonal rains in March 2015 and less-than-normal monsoon in 2015 can up the risk of food inflation, the rating agency believes that a soft global commodity/crude prices, low growth in the minimum support price of food grains in FY16, low pricing power of the manufacturing sector and effective government intervention in the food market would keep the inflation within the glide path of RBI.  It thus expects the average 10-year G-sec yield to trade in the range of 7.2%-7.3% by FYE16 and the RBI adding $74.2 billion to the forex reserves this fiscal, putting pressure on the rupee to rise. However, it expects the rupee in the 61-64 band against the greenback.

The report expects the benefits of lower oil prices which saved a whopping $60 billion in import bill last fiscal, will continue this fiscal as well. As a result, current account deficit for FY16 could come in at $22.5 billion or 1 percent of GDP, down from Rs $ 23.1 billion in FY15 or 1.1 percent of GDP.

The CNX Nifty is currently trading at 8221.60, up by 7.80 points or 0.09% after trading in a range of 8185.15 and 8264.25. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 4.61%, BPCL up by 3.40%, Maruti Suzuki up by 3.05%, Tech Mahindra up by 2.58% and BHEL up by 2.47%. On the flip side, HCL Tech. down by 1.56%, ITC down by 1.42%, Zee Entertainment down by 1.31%, Infosys down by 1.26% and Larsen & Toubro down by 1.22% were the top losers.

Asian markets were trading mostly lower; Hang Seng were trading lower by 121.14 points or 0.43% to 28,312.45; Shanghai Composite trading lower by 61.92 points or 1.37% to 4,465.47; Jakarta Composite trading lower by 58.01 points or 1.11% to 5,187.44; Straits Times trading lower by 20.05 points or 0.57% to 3,495.80; Taiwan Weighted trading lower by 16.29 points or 0.16% to 9,956.83; KOSPI Index trading lower by 9.87 points or 0.46% to 2,147.67; FTSE Bursa Malaysia KLCI trading lower by 6.36 points or 0.34% to 1,853.22. On the flip side, Nikkei 225 up by 75.63 points or 0.38% to 20,058.95 was the only loser amongst Asian pack.