Benchmarks end a disappointing day with over half a percent cut

A session after showcasing a vivacious rally, Indian equity indices faltered and failed to extend the winning momentum on Thursday due to profit booking in frontline blue chip stocks amid mixed global cues. Sentiments got undermined after International Monetary Fund (IMF) stated that the government must prioritize clean-up of its banks balance sheets and tackle corporate debt overhang, additionally cautioning against the risk of potential capital outflows, IMF warned of further downward revision to global growth estimates at upcoming spring meetings, calling for policymakers to adopt a more comprehensive plan to strengthen growth prospects. However, buying in metal stocks after cabinet cleared an amendment in the new mining law pulled the benchmark indices from day’s low. Some buying was also witnessed in oil exploration majors after the government announced a new Hydrocarbon Exploration & Licencing Policy, in an effort to boost production and also to streamline several hurdles faced by oil exploration companies. Meanwhile, market participants got some comfort with Prime Minister Narendra Modi making a fresh pitch for passage of GST and other legislations in the Rajya Sabha, considering the 'conducive atmosphere' that has been prevailing in Parliament this session with cooperation from the opposition. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 462.86 crore on March 09, 2016.

On the global front, Asian markets ended mostly in green on Thursday after New Zealand surprised markets with a rate cut, keeping investors primed for more stimulus from the European Central Bank later in the day, as global policy makers step up efforts to support their wobbly economies. However, weak microeconomic data from the world’s second largest economy weighed on the sentiments. China's inflation accelerated to 2.3 percent in February, driven by a jump in food prices. Meanwhile, European stocks edged lower as participants wait to find out whether the European Central Bank (ECB) will add more stimulus for the eurozone economy.

Bach home, after getting positive start, Indian benchmarks immediately slipped into negative territory and enlarged their losses in late morning session as investors booked profits ahead of Index of Industrial Production (IIP) data for January slated to be released tomorrow. Markets remained under pressure for most part of the session weighed down by selling pressure in Capital Goods and technology stocks. Sentiments remained subdued with the report from rating agency Crisil that there are no signs of Indian economy sharply rebounding in the next financial year as the fiscal policy remains restrictive. According to that report, leverage and non-performing assets (NPAs) of banks will remain a challenge in financial year 2016-17. However, the psychological 7,450 and 24,500 levels proved as strong support levels for the key gauges as the benchmarks soon recovered from the lows and oscillated in a narrow band but failed to claw back into the green by the end. Finally the NSE’s 50-share broadly followed index Nifty, slipped by over half a percent to settle below the crucial 7,500 support level, while Bombay Stock Exchange’s Sensitive Index Sensex deposed one hundred and seventy points and closed just above the psychological 24,600 mark. On the BSE sectoral space, the high beta Capital Goods index remained the top laggard in the space and settled with over one and half a percent laceration followed by the IT and Oil & Gas pockets which went home with over a percent cuts. However, Metal pocket managed to go home with moderate gains of around half a percent. The market breadth remained pessimistic as there were 1196 shares on the gaining side against 1398 shares on the losing side while 154 shares remained unchanged.

Finally, the BSE Sensex plunged by 170.62 points or 0.69% to 24623.34, while the CNX Nifty dropped 45.65 points or 0.61% to 7,486.15. 

The BSE Sensex touched a high and a low 24817.48 and 24471.39, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.32%, while Small cap index lost 0.18%

The only gaining sectoral index on the BSE was Metal, up by 0.36%, while Capital Goods down by 1.70%, IT down by 1.33%, TECK down by 1.21%, Oil & Gas down by 1.05% and Realty down by 1.04% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 1.91%, Asian Paints up by 1.84%, Maruti Suzuki up by 1.39%, Bharti Airtel up by 1.10% and Cipla up by 0.85%. On the flip side, BHEL down by 3.07%, Reliance Industries down by 2.87%, Infosys down by 2.76%, GAIL India down by 2.50% and Larsen & Toubro down by 2.22% were the top losers.

Meanwhile, following the Budget announcement, the government in a month will be setting up a committee to review Fiscal Responsibility and Budget Management (FRBM) Act, with an aim to look into the feasibility of setting a range for fiscal deficit targets, as against the current practice of a fixed number.

Economic affairs secretary Shaktikanta Das has said that considering the fact that FRBM is under implementation for the last 10 years, time has come to review the FRBM law. In his Budget speech for 2016-17, finance Minister Arun Jaitley has said that the FRBM law would be reviewed, as it might be better to have a range of targets, enabling more flexibiliity in policy, which would give necessary policy space to the government to deal with ever-changing dynamics and that a committee would be constituted for this, while retaining the fiscal deficit target at 3.5 per cent of the gross domestic product for next financial year and 3.9 per cent of the GDP for this financial year.

Das further said that despite slowdown in the global economy, India is expected to grow at 7.6 per cent in the current fiscal, which would get better at 8 per cent and cross that mark in years to come. Additionally he said he hope the constitutional amendment on a goods and services tax will be passed by Parliament in the current session.

The CNX Nifty touched a high and low 7,547.10 and 7,447.40 respectively. 

The top gainers on Nifty were Cairn India up by 3.47%, Hindalco up by 2.96%, HDFC up by 2.51%, Asian Paints up by 2.15% and Maruti Suzuki up by 1.36%. On the flip side, Reliance Industries down by 3.12%, BHEL down by 3.07%, Infosys down by 3.04%, GAIL India down by 2.57% and Bank of Baroda down by 2.48% were the top losers.

European markets were trading in red; Germany’s DAX decreased 22.41 points or 0.23% to 9,700.68, UK’s FTSE 100 shed 18.28 points or 0.3% to 6,128.04 and France’s CAC was down by 13.34 points or 0.3% to 4,412.31.

Asian equity markets ended mixed on Thursday, as traders digested another round of Chinese data, as well as interest rate decisions from central banks in New Zealand and South Korea. The Reserve Bank of New Zealand delivered a surprise cut in interest rates, citing a weakening global outlook and tepid inflation expectations, the Bank of Korea and Malaysia's central bank left their key interest rates unchanged as expected. Chinese stocks ended lower on fading hopes of imminent stimulus measures as investors interpreted data showing consumer inflation rising faster than forecasted as being largely negative for an economy struggling to find momentum. Japanese stocks rose for the first time in four days after a bounce in oil prices overnight strengthened risk appetite, while exporters benefited from a weaker yen and expectations of further easing from the European Central Bank.