Benchmarks extend winning streak for third straight session

After remaining on subdued note for most part of the session, Indian benchmark indices entered into positive territory in the dying hours of trade and managed to extend the winning momentum for the third consecutive day, as hopes of aggressive rate cuts by central bank offset both profit-taking and global uncertainty after two explosions tore through Brussels airport on Tuesday morning killing 13 people. Sentiments got some support with the report that India's current account deficit, the excess of imports over exports, fell further to 1.3% of the gross domestic product due to benefits of lower commodity prices, but the fall in remittances from overseas Indians restricted the improvement in balance of payments (BoP). Market participants turned optimistic 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. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,396 crore on March 21, 2016.  However, market participants remained cautious with the report indicating more than 72 per cent of the country has received excess rainfall in March in a phenomenon of unseasonal rains that led to crop losses.  According to the India Meteorological Department (IMD), from March 1 to 18, of the 36 sub-divisions, 26 received excess rainfall. Besides, the report that manufacturing activity in the country does not augur well for the economic growth in March and bank credit to domestic export sector suffered due to fall in external demand, also weighed on the sentiment. The yearly SBI Composite Index for March declined below 50 at 49.5, compared with last month index of 51.3.

On the global front, Asian equity markets ended mostly in red as hawkish comments from US Federal Reserve officials indicated that interest rate hikes could be on the way sooner rather than later. Chinese stocks slipped, 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. Furthermore, European shares fell sharply in early trade, with travel and leisure stocks leading the market lower after explosions in Brussels killed several people. Explosions tore through the departure hall of Brussels airport, and a separate blast hit a metro station in the capital shortly afterwards.

Back home, the benchmark got off to a pessimistic start following the Asian peers as sentiments got pressured after hawkish comments from US Federal Reserve officials clouded the country's monetary policy outlook. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in noon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. However, the psychological 7,650 and 25,100 levels proved as strong support levels for the key gauges as the benchmarks soon recovered from the lows. Sustained buying across the board helped the indices climb above the neutral line making it a hat-trick of positive close. Eventually the NSE’s 50-share broadly followed index - Nifty garnered over one tens of a percentage gain to settle above the crucial 7,700 levels, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated forty five points and closed above the psychological 25,300 mark. Moreover, the broader markets too showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin.

On the BSE sectoral space, Realty counter remained the top gainer in the space with over two percent gains, followed by the Consumer Durables, Power and Capital Goods indices which ended with gains of over a percent. Meanwhile, shares of companies engaged in business related to defence sector rallied after Defence Minister Manohar Parrikar announced on Monday the clearance of the long anticipated Defence Procurement Policy of 2016 (DPP-2016), while some buying was also witnessed in sugar stocks on the report that the government has permitted export of additional 723 tonne of raw cane sugar to the US under the tariff rate quota. On the flipside, the FMCG and Banking sectors languished at the bottom of the table with losses of 1.18% and 0.01% respectively. The market breadth remained optimistic as there were 1341 shares on the gaining side against 1257 shares on the losing side while 176 shares remained unchanged.

Finally, the BSE Sensex gained 45.12 points or 0.18% to 25330.49, while the CNX Nifty rose 10.65 points or 0.14% to 7,714.90.

The BSE Sensex touched a high and a low 25381.33 and 25083.70, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.52%, while Small cap index gained by 0.27%

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.

The top gainers on the Sensex were BHEL up by 4.29%, Hero MotoCorp up by 2.28%, Tata Steel up by 2.16%, Mahindra & Mahindra up by 2.09% and HDFC up by 1.77%. On the flip side, Dr. Reddys Lab down by 3.78%, ITC down by 2.04%, Adani Ports &Special down by 1.83%, Hindustan Unilever down by 1.02% and Coal India down by 0.77% were the top losers.

Meanwhile, rating agency ICRA has projected Indian economic growth to improve to 7.7 percent in the fiscal year 2016-17, led by domestic consumption demand post the implementation of 7th Pay Commission and One Rank One Pension (OROP) recommendations for the defence services as well as a potential upturn in rural demand presuming a normal monsoon.

The agency, in its Macroeconomic Update, said that although the fresh project pipeline appears robust, commencement of work will lag announcements, given moderate capacity utilisation in some sectors. As regards project activity, it said announcements of new project in October-December quarter of current fiscal stood at Rs 1.2 lakh crore, concentrated in electricity, machinery, transport equipment, transport services and miscellaneous services.

ICRA further said a sizeable portion of the planned rise of Rs 1.2 lakh crore in Plan expenditure in 2016-17 is to be funded through extra-budgetary sources, progress on which will influence the pace of infrastructure augmentation and economic growth. Last month, the Economic Survey had predicted real GDP growth for 2016-17 to be in the 7-7.75% range.

The CNX Nifty touched a high and low 7,728.20 and 7,643.80 respectively. 

The top gainers on Nifty were Tata Power up by 4.40%, BHEL up by 4.14%, Bosch up by 4.13%, Vedanta up by 3.09% and Tata Steel up by 2.72%. On the flip side, Dr. Reddys Lab down by 4.15%, ITC down by 2.55%, Tech Mahindra down by 1.63%, Adani Ports &Special down by 1.52% and Hindustan Unilever down by 1.49% were the top losers.

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.