Benchmarks recover from day's low; bounce back into positive territory

Reversing gears, Indian benchmark indices have entered into positive territory in late morning session on emergence of buying by fund and retail investors in select stocks. Sentiments got a boost with global rating agency Moody’s Investors Service's latest report stating that low commodity prices and better FDI inflows have reduced India's vulnerability to external shocks which is 'credit positive' for India. It also said that India's external financing needs have diminished significantly over the last three years. Market participants also got some comfort with the report that the consumer sentiment in India jumped to a four-month high in March but consumers remained concerned about the current state of their finances and the wider economy. The MNI India Consumer Sentiment Indicator rose to 111.2 in March from 108.9 in February, led by optimistic expectations for future finances and business conditions.  However, investors remained worries over the report that drought in southern states has affected the cultivation of major commodities like rice, cotton and spices. Production of these commodities is likely to come down sharply if the absence of summer rains prevails. Also, Reserve Bank of India (RBI) in a report said that India`s power reforms are likely to put pressure on state governments' budgets, potentially forcing them to cut spending needed to support economic growth.

On the global front, Asian markets trading mostly in red on Friday, as losses on Wall Street and the yen’s strength weighed on investor sentiment. China’s stocks fell led by consumer and energy companies, after global equities slumped and investors speculated next week’s inflation data will make it difficult for the government to further ease monetary policy. Meanwhile, US stock indices declined on Thursday, with the technology shares particularly taking it on the chin, as investors turned to safe haven assets amid persistent worries over anemic global growth prospects.

Back home, stocks from Power, Capital Goods and Banking counters were supporting the markets’ uptrend, while those from IT, Consumer Durables and Auto counters were adding to the underlying cautious undertone. In scrip specific development, Shares of National Buildings Construction Corporation (NBCC) have surged after the company secured a total business of Rs 227 crore in March under the project management consultancy segment. On the other hand, Cairn India has dropped after its parent Cairn Energy Plc which holds a minority stake in Cairn India has decided to exit. The British oil major is eyeing to sell its 10% stake in the open market.

The market breadth on BSE was positive, out of 1975 stocks traded, 1131 stocks advanced, while 723 stocks declined on the BSE.

The BSE Sensex is currently trading at 24690.76, up by 5.34 points or 0.02% after trading in a range of 24608.51 and 24723.78. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.36%, while Small cap index up by 0.37%.

The top gaining sectoral indices on the BSE were Power up by 0.82%, Capital Goods up by 0.58%, Bankex up by 0.41%, PSU up by 0.39% and Realty up by 0.19%, while IT down by 0.68%, Consumer Durables down by 0.62%, TECK down by 0.59% and Auto down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.06%, NTPC up by 2.02%, BHEL up by 1.68%, Dr. Reddys Lab up by 1.44% and GAIL India up by 1.39%. On the flip side, Hero MotoCorp down by 2.03%, Hindustan Unilever down by 1.14%, Infosys down by 1.13%, Maruti Suzuki down by 1.06% and TCS down by 0.64% were the top losers.

Meanwhile, Rating agency, India Ratings and Research (Ind-Ra) has said that the government's move to reset interest on small savings schemes (SSS) quarterly based on the G-Sec yields is a move in the right direction and is a positive step. This new move will reduce the income expense gap of the National Small Savings Fund (NSSF), which has been rising over the years, besides aligning the return on SSS to market rate.

Rating agency further said that the interest rate on SSS in the second quarter of 2016-17 is likely to be 20-25 bps lower than that in first quarter of 2016-17 due to the decline in benchmark government securities rate in response to monetary easing.

Last month, the government had cut interest rates on all small savings schemes, including PPF, Kisan Vikas Patra (KVP) and senior citizen deposits, to make them more market aligned.  Interest rate on Public Provident Fund (PPF) scheme has been cut to 8.1 per cent for the period April 1 to June 30, from 8.7 per cent at present. Similarly, the interest rate on KVP will be reduced to 7.8 per cent from 8.7 per cent while senior citizen savings scheme of five years would earn 8.6 per cent interest compared with 9.3 per cent.

The CNX Nifty is currently trading at 7554.60, up by 8.15 points or 0.11% after trading in a range of 7526.70 and 7566.20. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Lupin up by 1.91% and NTPC up by 1.90% and Hindalco up by 1.83% and Ultratech Cement up by 1.67% and BHEL up by 1.55%. On the flip side, Hero MotoCorp down by 2.02%, Infosys down by 1.22%, Maruti Suzuki down by 1.10%, Hindustan Unilever down by 0.97% and Bharti Infratel down by 0.86% were the top losers.

Asian markets were trading mostly in red, Hang Seng was down by 0.72%, Nikkei 225 declined 0.31%, Shanghai Composite decreased by 0.9%, Jakarta Composite slips 0.49%, KOSPI Index decreased by 0.68% and FTSE Bursa Malaysia KLCI was down by 0.42%. On the flip side, Taiwan Weighted was up by 0.49%.