Post Session: Quick Review

Buying activity which took place during last leg of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water on Tuesday. Markets traded choppy for most part of the day’s trade, as traders remained concerned with slow growth of the manufacturing activity, as the yearly SBI Composite Index for March has declined below 50 and is at 49.5, compared with last month index of 51.3. Depreciation in Indian rupee too dampened sentiments. The rupee depreciated 18 paise to 66.71 against the US currency at the time of equity markets closing due to higher demand for the dollar from importers.

But domestic gauges staged a smart recovery in last leg of trade, supported by short-covering in beaten down but fundamentally strong stocks. Traders got some encouragement with rating agency ICRA projecting Indian economic growth to improve to 7.7 percent in next fiscal, led by domestic consumption demand on the back of implementation of 7th Pay Commission and OROP recommendations. In other positive news India's current account deficit (CAD) narrowed to 1.3 percent of GDP in third quarter of the fiscal as against 1.5 percent in the same period last year, mainly on account of lower trade deficit.

Global cues remained sluggish with European counters making weak start following a terror attack in Brussels, Belgium. Twin explosions rocked the main hall of Brussels Airport today killing at least one person and wounding several others. Asian markets ended mostly in red terrain. China stocks fell around one third of a percent as the market weighed new guidelines on pension products and recent comments by the central bank governor that some short-term speculative funds may be leaving the country.

Back home, sentiment remained supported by hopes the Reserve Bank of India would cut interest rates by as much as 50 basis points at its policy review on April 5, on the back of easing inflation and after the government stuck to its fiscal deficit target next year and slashed retail savings rate. Some support also came with report that foreign institutional investors were net buyers in equities worth Rs 1,396 crore on Monday, as per provisional stock exchange data.

Stocks related to defence sector remained on buyers’ radar after Defence Minister Manohar Parrikar announced on Monday the clearance of the long anticipated Defence Procurement Policy of 2016 (DPP-2016). This will replace the current DPP-2013, and govern all defence acquisitions initiated after April 2. He said the new policy would be accessible on the defence ministry's website with effect from March 28. Shares of tea companies remained in focus on expectation that tea prices are likely to surge.

The NSE’s 50-share broadly followed index -- Nifty -- rose by just over ten points to hold its psychological 7,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- surged by around fifty points to finish above the psychological 25,300 mark. Broader markets traded with traction and ended the session with a gain of around half a percent.

The market breadth remained in the favour off advances, as there were 1,353 shares on the gaining side against 1,256 shares on the losing side while 165 shares remain unchanged. (Provisional)

The BSE Sensex ended at 25330.49, up by 45.12 points or 0.18% after trading in a range of 25083.70 and 25381.33. There were 15 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.52%, while Small cap index up by 0.27%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.68%, Consumer Durables up by 1.60%, Power up by 1.23%, Capital Goods up by 1.19% and Auto up by 1.08%, while FMCG down by 1.18% and Bankex down by 0.01%, were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were BHEL up by 3.84%, Hero MotoCorp up by 3.01%, Tata Steel up by 2.89%, Mahindra & Mahindra up by 2.12% and HDFC up by 1.77%. On the flip side, Dr. Reddys Lab down by 4.10%, ITC down by 2.04%, Adani Ports &Special down by 1.76%, Hindustan Unilever down by 1.18% and Wipro down by 1.05% were the top losers. (Provisional)

Meanwhile, the yearly State Bank of India (SBI) composite index, an indicator for tracking India's manufacturing activity for March 2016 has declined below 50 and is at 49.5 (low decline), compared with last month index of 51.3 (moderate growth). However, it has registered a month-on-month surge to 54.5 in March 2016, from 49.1 in February 2016. The SBI report noted that the manufacturing activity in the country does not augur well for the economic growth in March and bank credit to domestic export sector has suffered due to fall in external demand.

Though the index 'portends' low growth, the good news is that credit off-take has increased to 11.5 percent as on March 4 compared with last year's growth of 9.8 percent on March 6, 2015. However, refinancing constitutes much of the credit growth; hence it would be difficult to say whether credit growth has picked up materially or in a sustained manner. The report further stated that the bank credit to domestic export sector has suffered due to fall in external demand as is visible in major export sectors like textile, gems and jewellery and this in turn has led to contraction in demand of credit. Furthermore, instances of dumping have made revival of certain sectors difficult, depressing the demand of credit.

According to the report, the incremental lending has been mostly to the personal loan segment, especially housing, and also Mudra. The overall credit-deposit ratio is at 77.1 as on 4 March 2016 from 76.4% a year ago and 76.6% in 20 March 2015.

As per the SBI’s composite index, a value of less than 42 means large decline while a value of 42 to 46 means moderate decline, 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 (high growth. The SBI Composite Index mirrors the credit demand in the country, and other data sets available in public domain.

The CNX Nifty ended at 7714.90, up by 10.65 points or 0.14% after trading in a range of 7643.80 and 7728.20. There were 26 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Power up by 4.48%, Bosch up by 4.25%, BHEL up by 4.24%, Vedanta up by 2.34% and Hero MotoCorp up by 2.21%. On the flip side, Dr. Reddys Lab down by 3.91%, ITC down by 2.50%, Adani Ports &Special down by 1.76%, Tech Mahindra down by 1.20% and Hindustan Unilever down by 1.08% were the top losers. (Provisional)

European markets were trading in red; Germany’s DAX declined 82.99 points or 0.83% to 9,865.65, UK’s FTSE 100 decreased 31.99 points or 0.52% to 6,152.59 and France’s CAC was up by 30.32 points or 0.68% to 4,397.48.

Asian equity markets ended mostly lower on Tuesday as hawkish comments from US Federal Reserve officials indicated that interest rate hikes could be on the way sooner rather than later. Chinese shares fell for the first time in eight days after the People's Bank of China issued a clarification, saying recent comments by Governor Zhou Xiaochuan encouraging individuals to invest personal savings in the stock market were ‘misinterpretations’. Hong Kong shares finished slightly lower with financial shares leading indexes down, in line with a sell-off in mainland China markets. However, Japanese shares rose for the first time in five days as a weaker yen boosted.