Fatigued markets settle with modest gain ahead of April F&O expiry

Wednesday’s trading session was of consolidation and the Indian benchmark indices appeared a bit fatigued remaining in tight range throughout the day. Nevertheless, the benchmarks managed to extend the winning momentum for the second consecutive day of trade, as local sentiments continued to show signs of improvement. There was some support with the SASCOF indication that Central, western and north western parts of India are likely to get above normal rainfall, while most of the remaining parts of the country, barring some exceptions, are set to get normal rainfall. SASCOF predicted development of weak positive Indian Ocean Dipole (IOD) conditions, which favours good monsoon rainfall, in early part of monsoon season. Further, Niti Aayog vice-chairman Arvind Panagariya said that the economy is expected to grow over 8 per cent this fiscal with the forecast of above-normal monsoon raising hopes of the agriculture sector's revival after two successive drought years. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 512.22 crore on April 26, 2016. However, investors remained cautious ahead of US and Japanese central bank policy decisions, while private sector lender Axis Bank fell on expectations of more bad loans in the current financial year. Meanwhile, shares of oil companies gained after crude oil prices hit 2016 highs on Tuesday, while telecom stocks surged amid reports that Reliance Jio may delay its launch of 4G service, while Moody's report on the Bharti-Videocon deal also boosted sentiment.

On the global front, most of Asian markets ended the session on weak note on Wednesday as the yen strengthened and weak earnings results from iPhone maker Apple put pressure on technology stocks. A sharp overnight rally in oil prices and positive industrial profits data out of China failed to lift investor sentiment ahead of key central bank decisions from the U.S. Federal Reserve and the Bank of Japan. Further, European stocks too slipped in early trade, weighed down by some weak corporate earnings, while the Greek market underperformed after euro zone officials delayed a meeting on the country’s bailout. Greece’s benchmark ATG equity index fell 4 per cent, making it the worst-performing market in the region. Furthermore, the screen trading for U.S. stock-index futures indicated a lower opening on Wall Street, with the Dow and S&P futures both down around 0.3 percent.

Back home, after getting weak start, Indian frontline equity indices traded in the tight range around the neutral line for most part of the session, as investors remained cautious ahead of the outcome of the US Fed meet later today and the expiry of April derivative contracts on Thursday, however hefty buying in several frontline counters helped the indices to end the session on positive note. Eventually the NSE’s 50-share broadly followed index Nifty, got buttressed by close to a quarter percent to settle above the crucial 7,950 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over fifty points and closed above the psychological 25,850 mark. Moreover, the broader markets too showed some resilience and settled on a positive note. On the BSE sectoral space, Oil & Gas counter remained the top gainer in the space with over a percent gains, followed by the FMCG, TECK and IT indices which ended with gains of over half a percent. On the flipside, the Banking, Power and Realty sectors languished at the bottom of the table with losses of 0.87%, 0.50% and 0.36% respectively. The market breadth remained weak as there were 1277 shares on the gaining side against 1294 shares on the losing side, while 188 shares remained unchanged.

Finally, the BSE Sensex gained 56.82 points or 0.22% to 26064.12, while the CNX Nifty rose 17.25 points or 0.22% to 7,979.90.

The BSE Sensex touched a high and a low 26092.93 and 25885.24, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.13%, while Small cap index gained by 0.28%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.23%, FMCG up by 1.02%, TECK up by 0.72%, IT up by 0.44% and PSU up by 0.39%, while Bankex down by 0.87%, Power down by 0.50%, Realty down by 0.36% and Capital Goods down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 5.09%, Bharti Airtel up by 3.54%, ONGC up by 3.41%, GAIL India up by 2.64% and Mahindra & Mahindra up by 2.20%. On the flip side, ICICI Bank down by 3.66%, Axis Bank down by 3.11%, SBI down by 2.17%, BHEL down by 0.89% and Tata Steel down by 0.50% were the top losers.

Meanwhile, rating agency Moody’s Investors Service has said that implementation of the Goods and Services Tax (GST) and bridging large infrastructure deficit are a difficult task before the Indian government. However, Moody’s is positive that easing of constraints on investment coupled with RBI’s inflation targeting and ongoing efforts to clean up bank balance sheets could propel growth.

Moody’s Investors Service  in its report stated that “Our positive outlook on India’s rating is based on our expectation of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balance sheets”. Moody’s Investors Service has further said that a history of double-digit inflation, elevated government debt, weak infrastructure and a complex regulatory regime have constrained India’s credit profile.

Indirect tax reform GST is currently stuck in the Rajya Sabha where the ruling NDA does not enjoy a majority. A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.

Besides, the government is working on steps to modernise India’s infrastructure and is looking for avenues to fund development. It has set up a maiden sovereign wealth fund, NIIF, and is scouting for investors to buy 51 per cent stake in it. The government holds 49 per cent in NIIF.

The CNX Nifty touched a high and low 7,726.85 and 7,670.60 respectively. 

The top gainers on Nifty were Adani Ports & Special up by 5.37%, Bharti Airtel up by 3.76%, ONGC up by 3.48%, Bharti Infratel up by 3.42% and GAIL India up by 2.66%. On the flip side, ICICI Bank down by 3.42%, Axis Bank down by 3.32%, SBI down by 2.44%, Ultratech Cement down by 2.08% and Tata Power down by 1.81% were the top losers.

European markets were trading mostly in green; France’s CAC increased 8.32 points or 0.18% to 4,541.50 and Germany’s DAX was up by 27.57 points or 0.27% to 10,287.16, while UK’s FTSE 100 was down by 6.14 points or 0.1% to 6,278.38.

Asian equity markets ended mostly lower on Wednesday as the yen strengthened and weak earnings results from iPhone maker Apple put pressure on technology stocks. A sharp overnight rally in oil prices and positive industrial profits data out of China failed to lift investor sentiment ahead of key central bank decisions from the US Federal Reserve and the Bank of Japan. The Federal Reserve's two-day policy meeting ends later today, with investors mainly looking for guidance on the outlook for interest rates. Rate decisions from the Reserve Bank of New Zealand and the Bank of Japan are due on Thursday. Chinese shares ended lower even as positive industrial profits data boosted hopes the economic recovery is gaining momentum. Profits of China's major industrial firms climbed an annual 11.1% in March, up from a 4.8% rise in the Jan-Feb period. Japanese shares ended lower with a strengthening yen, disappointing earnings and anxiety ahead of the BOJ verdict weighing on markets.