Benchmarks continue to hold their head above water

Indian equity benchmarks paired some early gains and were trading in a narrow range with a positive bias in late morning session as investors and traders adopting a cautious approach on the start of the new F&O series amid weak global cues.  Sentiments got some support with UN report for the Asia-Pacific that indicate Indian economy is projected to expand by 7.6 percent in 2016-17 and accelerate to 7.8 percent in 2017-18, mainly on the back of domestic consumption demand aided by steady employment and a relatively low inflation. Some support also came with the report that foreign portfolio investors (FPIs) bought shares worth a net Rs 120.63 crore on April 28, 2016. However, gains remained capped with the report that the country's current account deficit is likely to widen modestly to $25 billion in the current fiscal from $20 billion last year on rising demand for gold and sluggishness in exports. Furthermore, investors remained cautious with government’s statement that implementation of new pay scales recommended by the 7th Pay Commission is estimated to put an additional burden of Rs 1.02 lakh crore, or 0.7 percent of GDP, on the exchequer in 2016-17. The burden on pay head would increase by Rs 39,100 crore to about Rs 2.83 lakh crore in the current fiscal.

On the global front, Asian stock markets edged lower on Friday, after Wall Street slid and Japan's central bank surprised markets by putting off possible additional stimulus. Overnight, the US markets witnessed a sharp sell-off in the last session, with the Nasdaq pulling back to its lowest closing level in a month. Investors turned jittery after economic growth in the US slowed by even more than economists had anticipated in the first quarter. The report said gross domestic product rose by 0.5 per cent in the first quarter compared to the 1.4 per cent increase in the fourth quarter. Back home, stocks from Metal, Oil & Gas and PSU counters were supporting the markets’ uptrend, while those from Auto, Teck and Realty counters were adding to the underlying cautious undertone. In scrip specific development, SQS India BFSI has rallied after the company reported nearly seven-fold jump in consolidated net profit at Rs 10.60 crore for the fourth quarter ended March 2016 (Q4FY16). On the flip side, shares of Idea Cellular have declined after the company reported 39% drop in net profit to Rs 575.6 crore in the quarter ended March compared to Rs 941.8 crore in the same quarter last year because of increase in finance costs.

The market breadth on BSE was positive, out of 2027 stocks traded, 1184 stocks advanced, while 723 stocks declined on the BSE.

The BSE Sensex is currently trading at 25608.34, up by 5.24 points or 0.02% after trading in a range of 25529.59 and 25755.43. 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 0.04%, while Small cap index up by 0.12%.

The top gaining sectoral indices on the BSE were Metal up by 0.74%, Oil & Gas up by 0.44%, PSU up by 0.38%, Power up by 0.34% and FMCG up by 0.01%, while Auto down by 0.42%, TECK down by 0.29%, Realty down by 0.25%, Consumer Durables down by 0.17% and IT down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.30%, Cipla up by 1.69%, Axis Bank up by 1.13%, ONGC up by 1.08% and Tata Steel up by 0.95%. On the flip side, ICICI Bank down by 1.37%, Mahindra & Mahindra down by 1.24%, Bharti Airtel down by 1.17%, Asian Paints down by 0.81% and Tata Motors down by 0.58% were the top losers.

Meanwhile, United Nations in its Economic and Social Survey for Asia and the Pacific-2016 report has projected a positive near term growth outlook for India and stated that the urban household spending is expected to drive the momentum amid domestic consumption demand aided by steady employment and a relatively low inflation. The report has projected that in the year 2016-17 the Indian economy is likely to expand by 7.6 per cent and further accelerate to 7.8 per cent in 2017-18.

The report stated that the fixed investment conditions are seen to be improving because of lower borrowing costs and a more enabling business environment brought about by a better World Bank ranking on ease of doing business. It linked the overall strength of domestic demand to progress made in implementing structural reforms and how rapidly large-scale stalled infrastructure projects are unlocked.

The report further highlighted that though some progress has been made in reforming the fiscal policy such as the rationalisation of fuel price subsidies, but implementation of the Goods and Services Tax remains an important reform that is being held up due to political deadlock.

The UNESCAP report also pointed to the challenges such as high levels of stressed assets in the banking sector and a fragile business confidence that could constrain investment growth. It linked the overall strength of domestic demand to progress made in implementing structural reforms and how rapidly large-scale stalled infrastructure projects are unlocked.

The CNX Nifty is currently trading at 7847.95, up by 0.70 points or 0.01% after trading in a range of 7821.80 and 7889.05. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.39%, Zee Entertainment up by 1.67%, Tata Power up by 1.66%, Cipla up by 1.50% and Ambuja Cement up by 1.27%. On the flip side, HCL Tech down by 4.58%, Idea Cellular down by 3.91%, ICICI Bank down by 1.40%, Mahindra & Mahindra down by 1.38% and Bharti Airtel down by 1.31% were the top losers.

Asian markets were trading in red, Hang Seng was down by 1.37%, Taiwan Weighted down by 1.17%, Jakarta Composite down by 0.37%, KOSPI Index down by 0.49%, Shanghai Composite down by 0.31% and FTSE Bursa Malaysia KLCI was down by 0.35%.