Markets struggle to hold in green; Metals outperform

After losing their initial momentum, the Indian markets are making every attempt to keep themselves in green terrain in the late morning session, though there is not much trigger on domestic front that could support the markets and there are intermittent profit booking too that is restricting the markets from moving higher. Though, there was some support from the appreciation in rupee, which recovering from its last session’s fall was showing some strength in early trade, despite weak trading in most Asian currencies. On sectoral front, while most of the indices are trading in green led by the metals, which moved higher taking cues from the global peers after China’s Caixin Services PMI improved to 52.2 in March compared to 51.2 in last month. There was some buzz in the steel stocks too on a report that a government body has issued notices to China, Japan and South Korea proposing to initiate a probe on the “dumping” of some steel products into India. The notices have been issued for hot-rolled coils of alloy and non-alloy steel, reacting to that SAIL was up by about half a percent, JSW Steel gained over one and half a percent, while Essar Steel and JSPL was up by around three percent.

The BSE Sensex is currently trading at 24886.17, up by 2.58 points or 0.01% after trading in a range of 24858.05 and 25000.65. There were 19 stocks advancing against 11 stocks declining on the index. (10:55 AM)

The broader indices too were trading in green; the BSE Mid cap index was up by 0.01%, while Small cap index gained by 0.42%.

The top gaining sectoral indices on the BSE were Metal up by 1.77%, Realty up by 0.80%, Auto up by 0.55%, Power up by 0.42%, FMCG up by 0.17% while, Bankex down by 0.32%, IT down by 0.25%, Oil & Gas down by 0.09%, Capital Goods down by 0.06%, Consumer Durables down by 0.00% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.92%, Tata Motors up by 2.01%, Bharti Airtel up by 1.98%, Maruti Suzuki up by 1.30% and Lupin up by 0.95%. On the flip side, Adani Ports &Special down by 1.61%, ICICI Bank down by 1.15%, Axis Bank down by 0.94%, Cipla down by 0.91% and Wipro down by 0.80% were the top losers.

Meanwhile, in a much anticipated move, the Reserve Bank of India (RBI) has once again cut the key lending repo rate by 25 basis points (0.25%) in its first bi-monthly policy review of the financial year 2016-17. RBI also lowered the Cash Reserve Ratio (CRR) and Marginal Standing Facility (MSF), which would collectively pump in Rs 21,000 crore into the system. While, the minimum daily maintenance of the CRR that banks have to maintain with the Central bank was reduced by 5% to 90% with effect from April 16, the Marginal Standing Facility (MSF) was reduced by 0.75% to 7.0%. After the central government’s decided to stick to fiscal discipline and bring small savings rates down, benchmarked against the yield on government bonds of like maturity and inflation behaving, more or less in line with its estimates, it was expected that the RBI will go for a rate cut.

The central bank in its assessment for the policy review said that since the sixth bi-monthly statement of February 2016, global economic activity has been quiescent. Perceptions of downside risks to recovery in some advanced economies at the beginning of 2016 have eased, while major emerging market economies (EMEs) continue to contend with weak growth and still elevated inflation amidst tighter financial conditions.

On domestic inflation front, RBI said that retail inflation dropped sharply in February after rising for six consecutive months. This favourable development was due to a larger than anticipated decline in vegetable prices, helped by prices of pulses starting to come off the surge that began in August, and effective supply management that helped limit cereal price increases.RBI said that Inflation has evolved along the projected trajectory and the target set for January 2016 was met with a marginal undershoot. Going forward, CPI inflation is expected to decelerate modestly and remain around 5 per cent during 2016-17.

Delving further into the policy stance, the apex bank said that the uneven recovery in growth in 2015-16 is likely to strengthen gradually into 2016-17, assuming a normal monsoon, the likely boost to consumption demand from the implementation of the 7th Pay Commission recommendations and OROP, and continuing monetary policy accommodation.

Talking about the global conditions, it said that global financial markets have recouped the losses suffered in the turbulence at the beginning of the year. Currencies across EMEs have also appreciated as portfolio flows returned cautiously to local debt and equity markets. However, it cautioned that the uneasy calm that prevails in financial markets could be dispelled easily by a sudden return of risk-off investor sentiment on incoming data, especially pertaining to China or to US inflation.

RBI has guided for an accommodative monetary policy stance, and retained its gross domestic product (GDP) growth estimate at 7.6% for this fiscal year. The central bank’s focus is now shifting from rate reduction to liquidity measures, which been addressed partly by lowering the minimum daily balances to be held under CRR. The government too has said that the rate cut by the RBI would provide a 'good stimulus' for the economy and encourage banks to reduce lending rates.

The CNX Nifty is currently trading at 7609.90, up by 6.70 points or 0.09% after trading in a range of 7594.20 and 7638.65. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.77%, Tata Steel up by 2.85%, Ultratech Cement up by 2.32%, Idea Cellular up by 2.10% and ACC up by 2.07%. On the flip side, Tech Mahindra down by 2.27%, Bosch down by 1.48%, Adani Ports & SEZ down by 1.39%, ICICI Bank down by 1.29% and Axis Bank down by 0.99% were the top losers.

The Asian markets were showing mixed trend, FTSE Bursa Malaysia KLCI was tad higher by 0.41 points or 0.02% to 1,718.49, KOSPI Index increased by 7.78 points or 0.4% to 1,970.52, Jakarta Composite gained 17.17 points or 0.35% to 4,875.24 and Hang Seng was higher by 19.15 points or 0.09% to 20,196.15.

On the other hand, Taiwan Weighted declined by137.91 points or 1.59% to 8,519.64, Nikkei 225 was lower by 22.63 points or 0.14% to 15,710.19 and Shanghai Composite decreased by 2.65 points or 0.09% to 3,050.42.