Markets recover previous session losses with a gap up opening

With a gap-up opening Indian equity markets have recovered all losses of previous session and are now trading in fine fettle, with gains of over one and half percent in early deals that helped both Sensex and Nifty to reclaim crucial 23,400 and 7,100 levels respectively. Sentiment got a boost with the government's decision to stick to its projected fiscal consolidation path and reduce its net borrowing program from Rs 4.8 lakh crore in FY16 to Rs 4.25 lakh crore in FY17 would open up space for another interest rate cut by the Reserve Bank of India (RBI) to stimulate the economy. Further, support also came in with statement of government that investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 per cent to 15 per cent on par with domestic institutions. The move will enhance global competitiveness of Indian stock exchanges and accelerate adoption of best-in-class technology and global market practices. Meanwhile, Finance Minister Arun Jaitley, on the GST front, said the government would reach out to the Congress in the current session of Parliament to resolve the deadlock over the GST Bill. Besides, Oil marketing companies such as IOC, BPCL and HPCL were trading higher due to non-imposition of custom duty on crude oil imports.

In the scrip specific development, BEML was trading higher on the BSE after the company bagged order valued at Rs 900 crore for the supply of metro coaches to Kolkata East-West Metro Line.

On the global front, the US markets ended lower on Monday, despite gains in oil, and the S&P 500 and Nasdaq composite ended February with losses. Asian markets were trading mostly in green as Chinese moves to boost bank lending helped offset weak factory data, while shares in Japan fell on lower consumer spending.

Back home, all the sectoral indices on the BSE, barring Consumer Durables, were trading in green led by FMCG, IT, TECK, Bankex and Realty.  The market breadth on BSE was positive in the ratio of 1158: 261, while 54 scrips remained unchanged.

The BSE Sensex is currently trading at 23413.49, up by 411.49 points or 1.79% after trading in a range of 23133.18 and 23438.23. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.95%, while Small cap index up by 1.17%.

The top gaining sectoral indices on the BSE were FMCG up by 3.07%, IT up by 2.30%, TECK up by 1.98%, Bankex up by 1.88% and Realty up by 1.56%, while Consumer Durables down by 0.20% was the losing indices on BSE.

The top gainers on the Sensex were ITC up by 6.29%, ICICI Bank up by 4.32%, Axis Bank up by 2.97%, GAIL India up by 2.87% and Infosys up by 2.70%. On the flip side, ONGC down by 0.67%, Dr. Reddys Lab down by 0.64%, Bharti Airtel down by 0.58%, Hindustan Unilever down by 0.58% and Cipla down by 0.29% were the top losers.

Meanwhile, the government has proposed to amend the RBI Act for setting up the Monetary Policy Committee, consisting of six members and headed by Reserve Bank of India (RBI) Governor to fix the benchmark interest rates and inflation targets. Finance Minister Arun Jaitley in his Budget proposals said that 'The RBI Act 1934, is being amended to provide statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016'. He further said that a committee-based approach will add lot of value and transparency to monetary policy decisions.

As per the proposed bill the Monetary Policy Committee would determine the policy rate required to achieve the retail inflation target, set by the government and the decision of the Committee would be binding on the RBI. The inflation target would be decided by the government, in consultation with the RBI. The target in terms of the Consumer Price Index will be set once in every five years. RBI would be organising at least four meetings of the Committee in a year.

Of the six members, three will be nominated by the government while three others will be from the Reserve Bank, including the Governor. The members from the RBI side would be: Governor, Deputy Governor in charge of Monetary Policy and an officer of the RBI Bank to be nominated by the Central Board. The government-nominated members would be appointed on the recommendations made by Search-cum-Selection Committee. The search committee would consist of Cabinet Secretary (Chairperson), RBI Governor, Economic Affairs Secretary and three experts. The Monetary Policy Committee will take decision based on the majority vote. Each member will have one vote but RBI Governor will get a casting vote in case of equality of votes.

The government last year had proposed to set up the Monetary Policy Committee, which will consist of representatives from the Finance Ministry and RBI, to decide on interest rate. A draft released by the government in July last had suggested doing away with RBI Governor's veto power and proposed a 7-member panel to take rate decisions by a majority vote.

The CNX Nifty is currently trading at 7110.45, up by 123.40 points or 1.77% after trading in a range of 7035.10 and 7118.40. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were ITC up by 6.44%, ICICI Bank up by 4.13%, Infosys up by 2.97%, Axis Bank up by 2.90% and Tata Motors up by 2.69%. On the flip side, ONGC down by 0.77%, Dr. Reddys Lab down by 0.66%, Hindustan Unilever down by 0.65%, Bharti Airtel down by 0.57% and Idea Cellular down by 0.10% were the top losers.

Asian markets were trading mostly in green, Shanghai Composite increased 4.05 points or 0.15% to 2,692.03, Jakarta Composite increased 7.95 points or 0.17% to 4,778.91, FTSE Bursa Malaysia KLCI increased 8 points or 0.48% to 1,662.75, Taiwan Weighted increased 50.55 points or 0.6% to 8,461.71 and Hang Seng increased 76.82 points or 0.4% to 19,188.75.

On the flip side, Nikkei 225 decreased 109.92 points or 0.69% to 15,916.84 and KOSPI Index decreased 3.5 points or 0.18% to 1,916.66.