Benchmarks trade in fine fettle in early deals

Indian equity benchmarks are trading in fine fettle in early deals on Friday with frontline gauges recapturing their crucial 8,250 (Nifty) and 27,300 (Sensex) bastions. Sentiments turned up-beat as investors remained hopeful of Reserve Bank of India (RBI) slashing the key policy rate to fuel investments and propel growth. Some support also came in with an UN report, saying that Indian economy is likely to clock 8.1 percent growth in the current financial year, spurred by strong consumer spending amid low inflation, infrastructure projects and government’s reform measures. Finance Minister Arun Jaitley too has said that the economy was in a recovery mode with inflation and fiscal deficit under control and despondency giving way to a positive environment.

On the global front, the US markets rallied in last session with S&P 500 surging to a new record closing high, while the Dow reached its best levels since early March. Traders took cues from the drop in bond yields. Most of the Asian equity indices were trading in red terrain at this point of time.

Back home, on the sectoral front, auto, consumer durables and infrastructure witnessed the maximum gain in trade, while Metal remained the lone loser on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1213 shares on the gaining side against 511 shares on the losing side while 71 shares remain unchanged.

The BSE Sensex is currently trading at 27300.08, up by 94.02 points or 0.35% after trading in a range of 27159.76 and 27379.57. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.64%, while Small cap index gained 0.89%.

The major gaining sectoral indices on the BSE were Auto up by 0.98%, Consumer Durables up by 0.82%, INFRA up by 0.71%, Capital Goods up by 0.71% and FMCG up by 0.67%, while Metal down by 0.60% was the lone losing index on BSE.

The top gainers on the Sensex were SBI up by 1.71%, Axis Bank up by 1.58%, Mahindra & Mahindra up by 1.37%, Tata Motors up by 1.28% and HDFC up by 1.01%. On the flip side, Hindalco down by 1.16%, Cipla down by 0.91%, Dr. Reddys Lab down by 0.85%, Tata Steel down by 0.85% and GAIL India down by 0.60% were the top losers.

Meanwhile, in the first major downgrade for Indian markets in the past one year, global brokerage HSBC changed its stance on the foreign darling country to 'underweight” from “overweight” on the expectations of corporate earnings remaining muted, monsoon turning weak and growing odds against further rate cuts. It asserted that were little room for further rate cuts and firmly established El Nino conditions were negative for India's rural, agricultural economy. It also noted the incremental potential for more equity outflows as foreign positions looked stretched.

Notably, downgrade comes at a time when Indian markets were facing irk from foreign investors on concerns related to the controversial MAT levy and delay in the ambitious indirect tax (GST) and land reforms.

The global brokerage in its research report termed India as the second most expensive and one of the most over-owned markets in Asia, after a strong rally on the back of reform optimism generated by the Modi government over the past one year. At the same time, HSBC upgraded its stance on markets like The Philippines and Hong Kong “neutral” from “underweight”.

Further, it also highlighted that down-rating was largely in absence of any recovery in India's capex cycle' and further China's policy stimulus which is likely to boost commodity prices also is negative for India.

According to EPFR data, India was the most over-owned equity market in Asia by mutual funds.  And since other markets had become more interesting, India could be used as a funding market. 30 share benchmark index BSE's Sensex, which had peaked above 30,000-points within months of the new government led by Prime Minister Narendra Modi taking over reins last May, has dropped more than 3,000 points from the high. Its gain in the past one year has more than halved to just about 2,000 points.

The CNX Nifty is currently trading at 8260.10, up by 35.90 points or 0.44% after trading in a range of 8212.20 and 8279.20. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.59%, Lupin up by 2.15%, Indusind Bank up by 2.06%, Axis Bank up by 1.76% and Asian Paints up by 1.70%. On the flip side, PNB down by 1.29%, Hindalco down by 1.24%, Cipla down by 1.17%, NMDC down by 1.09% and Dr. Reddys Lab down by 0.90% were the top losers.

Asian markets were trading mostly in the red; Shanghai Composite declined 63.09 points or 1.44% to 4,315.22, Jakarta Composite decreased 26.95 points or 0.51% to 5,219.18, Taiwan Weighted slipped 25.54 points or 0.27% to 9,585.29, KOSPI Index shed 8.38 points or 0.4% to 2,111.95, Straits Times dipped 4.21 points or 0.12% to 3,451.57 and FTSE Bursa Malaysia KLCI was down by 2.33 points or 0.13% to 1,805.22.

On the flip side, Nikkei 225 increased 95.1 points or 0.49% to 19,665.34 and Hang Seng was up by 133.2 points or 0.49% to 27,419.75.