Late hour recovery helps the market to post decent gains

Indian markets witnessed a volatile trade on Wednesday when major averages after making a gap-down start and remaining weak for most part of the day, gathered momentum in the final hours to post gains of over half a percent. Earlier, the start was sluggish tracking the weak global cues and lacking any support from domestic front. Traders remained concerned with comments from Chief economic adviser Arvind Subramanian, who in an effort to put some pressure off the RBI, said that we should not peg all the hopes on a rate cut by the Reserve Bank of India to cure the economy from all that plagues it. However, markets got some support with Finance Minister Arun Jaitley’s statement that Indian economy is improving, also the Moody's Investors Service stated that though the prolonged decline in oil prices and weaker expansion in Chinese economy have dimmed growth prospects of several economies, but it does not signal a threat of global recession. It said that the positive impact of lower commodity prices on global growth helps mitigate the negative effect from the financial market turbulence. The Indian rupee too made a good bounce back against US dollar and supported the equity markets.

The global cues remained mixed and after a weak closing of the US markets, the Asian markets followed the trend on worries emanating from China and decline in crude oil prices. Chinese exports tanked by more than a quarter in February, the sharpest fall since May 2009, stoking further worries about the world economy and a supply glut. Traders in the region also remained cautious ahead of the release of China’s February CPI and PPI data on Thursday. The European markets made a strong start after the Brent crude prices rose to nearly $40 per barrel as traders expected defaults to trigger a drop in production; however, they gave up early gains and entered the red terrain ahead of the European Central Bank’s monetary policy decision on Thursday.

Back home, markets that looked weak in the morning after a flat closing in the last session, made a good comeback in the late hour of trade, following strong cues from the European markets, though the bourses came off the intraday low levels in the very noon deals, paring all their losses but remained rangebound, with intermittent attempt to enter the green. Later there was good bounce back in the banking stocks that took the bourses higher. Gains in some market heavyweights too supported the recovery. Reliance Industries gained over a  percent after market regulator Sebi disposed off insider trading charges against Reliance Petroinvestments (RPIL), a subsidiary of the company in IPCL shares in 2007. On the sectoral front barring metal and consumer durables all indices made a positive close on BSE. Metal stocks, which had gained during last session, fell due to heavy profit booking by investors. On the other hand, the realty stocks kept flying high since morning, as Rajya Sabha was likely to pass the Real Estate Bill later in the day. The bill seeks to regulate a sector that lacks clarity and is riddled with legal disputes between consumers and developers and will bring about much needed transparency in the sector.

Finally, the BSE Sensex gained 134.73 points or 0.55% to 24,793.96, while the CNX Nifty ended higher by 46.50 points or 0.62% to 7,531.80.

The BSE Sensex traded in a range of 24451.60 and 24820.76. There were 20 stocks on gainers side against 10 stocks on the losers side on the index.

The broader indices too managed a positive close; the BSE Mid cap index was up by 0.94%, while Small cap index ended higher by 0.04%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.63%, Realty up by 1.51%, Power up by 1.42%, Auto up by 1.25%, Bankex up by 0.85%, while Metal down by 0.80%, Consumer Durables down by 0.78% and FMCG down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 4.00%, Larsen & Toubro up by 2.16%, ONGC up by 1.58%, Hindustan Unilever up by 1.58% and Mahindra & Mahindra up by 1.50%. On the flip side, HDFC down by 1.40%, Coal India down by 0.63%, NTPC down by 0.59%, Adani Ports &Special down by 0.55% and Wipro down by 0.52% were the top losers.

Meanwhile, amid mounting expectation of a rate cut by the Reserve Bank of India (RBI) after the government in its Budget 2016-17 stuck to its fiscal deficit targets for the current and coming financial years, Chief Economic Advisor Arvind Subramanian has said that rate cut is one useful input in kick-starting the economy, but is not the only panacea for the problems plaguing the economy. He stated that “I think no one policy lever is a panacea for us. You have to work on all fronts”.

Subramanian has stressed on the need to have strategies to protect against future financial crises, though said that there is a remote likelihood of that now. He further said that the fact that there are so many vulnerabilities around the world, there is a very small probability that India could have a very major financial crisis.

RBI has been under intense pressure over the past week to cut interest rates after the government stuck to its fiscal deficit targets for the current and the next financial years. A rate cut is expected in the April review. Reviving growth continues to be a priority for the policymakers and traditionally, an easy money policy is seen as a tool to achieve the end.

Since January 2015, the RBI has cut its key rates by a cumulative 1.25 per cent, when with the ebbing of inflation worries, it switched to an accommodative stance. Last rate cut by RBI was on September 29, 2015 by 50 bps from 7.25 per cent to 6.75 per cent with immediate effect in its fourth Bi-monthly Monetary Policy Statement, 2015-16.

The CNX before closing traded in a range of 7424.30 and 7539.00. There were 35 stocks on gainers side against 15 stocks on decliners’ side on the index.

The top gainers on Nifty were Yes Bank up by 4.09%, Tech Mahindra up by 3.41%, Maruti Suzuki up by 3.29%, Grasim Industries up by 2.91% and Bosch up by 2.82%. On the flip side, Vedanta down by 2.77%, BPCL down by 2.63%, Hindalco down by 2.47%, HDFC down by 1.55% and Adani Ports &Special down by 0.99% were the top losers.

European markets giving up their early gains were trading in red; Germany’s DAX declined by 86.11 points or 0.88% to 9,692.82, UK’s FTSE 100 was down by 56.96 points or 0.92% to 6,125.44 and France’s CAC decreased by 38.27 points or 0.86% to 4,404.02.

Asian markets ended mostly lower on Wednesday, as weaker-than-expected trade figures from the world's second-biggest economy revived concerns about global growth. Japanese shares fell to a more than one-week low as a stronger yen continued to undermine sentiment and pressure exporters. Hong Kong stocks slipped, dragged down by resources and energy shares as a renewed tumble in commodity prices prompted investors to take profits from a recent rally. The overnight sharp slide in oil from recent lows also proved worrisome for investors although they showed some stability in Asian trade.