Benchmarks snap four-day losing streak; Sensex regains 25300 level

After registering losses for four consecutive sessions, Indian benchmark indices managed a modestly positive close on Tuesday, as investors accumulated quality stocks at attractive levels. Though, the session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band amid lack of triggers. Sentiments got some support after March-quarter earnings mostly meeting street’s estimates despite a slowdown in global growth and tepid demand. Strength in European markets too aided sentiments. Some support came in with the report from private forecasting agency Skymet raising India's monsoon forecast to 109% of the long period average from 105% on the back of a waning El Nino. The agency also said that conditions are favourable for timely monsoon in Kerala. However, fears of an interest rate hike by the US Federal Reserve in June along with decline in crude oil prices and weakness in rupee capped the upside gains. Indian rupee slid for the ninth day as it depreciated 14 paise more to trade at over two and half month low of 67.63 against the dollar at the time of equity markets closing, hit by sustained foreign fund outflows.  Investors also remained concerned with SBI report stating that Credit growth in the country is unlikely to revive ‘materially’ in near term as demand conditions are still acting as a laggard. The yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. The monthly index, however, jumped to 50.3 in May from 46.5 in April due to increase in commercial vehicle and consumer durables sales. 

On the global front, Asian markets ended in red on Tuesday as investors turned jittery after San Francisco Fed President John Williams said the US central bank will likely tighten policy a bit more quickly in 2017 than this year, by perhaps one or two more rate hikes. Shares of oil-linked companies slumped as crude dipped for a second day after a pledge from Iranian officials to keep up production did little to dispel worries about global oversupply. Markets participants were also eyeing the start of a Group of Seven summit in Japan on Thursday, as US President Barack Obama and other leaders from the club of rich nations meet for annual talks largely focused on the sputtering global economy. Meanwhile, European shares rose, shrugging off losses at the start of trading as firmer financial stocks lifted the region’s equity markets.

Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained on sidelines ahead of the May F&O expiry due on Thursday. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges traded on a lackluster note for most part of the morning trades. Second half of the session saw the key gauges capitalize on the momentum further and spurted to session’s highest levels in dying moments. Finally the NSE’s 50-share broadly followed index Nifty, climbed by over quarter percent and settled below the crucial 7750 support level, while Bombay Stock Exchange’s sensitive index Sensex amassed seventy points and closed above the psychological 25,300 mark. On the BSE sectoral space, the Auto and Bankex counters remained the top gainer in the space with around quarter percent gains followed by the FMCG and Metal pocket which gained modestly.  On the flipside, Oil & Gas counter languished at the bottom of the table with cut of over a percent, while the Information Technology (IT), PSU and Capital Goods sectors settled with moderate cuts.  The market breadth remained pessimistic as there were 902 shares on the gaining side against 1606 shares on the losing side while 184 shares remained unchanged.

Finally, the BSE Sensex gained 75.11 points or 0.30% to 25305.47, while the CNX Nifty rose 17.80 points or 0.23% to 7,748.85.

The BSE Sensex touched a high and a low 25688.46 and 25351.62, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.16%, while Small cap index declined by 0.65%.

The top gaining sectoral indices on the BSE were Auto up by 0.32%, Bankex up by 0.28%, FMCG up by 0.18% and Metal up by 0.18%, while Oil & Gas down by 1.01%, TECK down by 0.40%, IT down by 0.32%, PSU down by 0.31% and Capital Goods down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.03%, Tata Motors up by 1.70%, ICICI Bank up by 1.56%, HDFC up by 1.33% and Tata Steel up by 1.28%. On the flip side, Sun Pharma down by 1.47%, Bajaj Auto down by 1.33%, TCS down by 0.97%, BHEL down by 0.84% and ONGC down by 0.79% were the top losers.

Meanwhile, Reserve Bank of India (RBI) deputy governor SS Mundra has said that the RBI is examining the possibility of issuing regulatory directions on limiting the liability of customers on fraudulent transactions arising out of cards and electronic banking deals. Mundra said that ‘We are discussing this and once we finalise, the limit will be announced. We expect to finalise it very shortly and added that the idea is that the liability for the customer should not go beyond a point’.

Further, Mundra said that it is essential to have a robust mechanism in order to prevent incidents of frauds in mobile Net banking and the electronic fund transfer so as to retain customers' confidence in these delivery channels.  At present, a customer’s liability in the event of any unauthorised transaction is the lesser of actual loss at the time of notifying the bank, balance available for withdrawal, withdrawal limit set by the customer for a transaction or Rs10, 000.  Mundra pointed out that there has been increasingly large number of cases of mis-selling of third party products to customers by banks, particularly insurance products, including bundling of third-party products with loans. He warned that 'RBI is seized of this issue and may take a strict action, including heavy penalties, if the banking industry continues to follow such unethical and unaccepted practices of mis-selling of third-party products'.

He advised banks to put in place a system of periodic inspections of the sale of third-party products by either own staffs or by direct selling agents (DSAs). Furthermore, he said that with the increase in online transactions, there has been a rise in complaints related to electronic banking transactions, unauthorised fund transfers, fraudulent withdrawals from ATMs using duplicate cards and phising e-mails, among others.

Emphasizing customer awareness for safe usage of these channels should be an important item on the agenda of the bank, the deputy governor said that if customers don't get confidence in the channels and decide to withdraw from them, then it can have only two outcome - either customer would migrate or customer would come back to the traditional channel which would mean higher operating cost for the banking system.

The CNX Nifty touched a high and low 7,761.55 and 7,715.80 respectively. 

The top gainers on Nifty were Grasim Industries up by 2.37%, NTPC up by 1.95%, ACC up by 1.91%, Tata Motors up by 1.90% and ICICI Bank up by 1.85%. On the flip side, Aurobindo Pharma down by 3.92%, Idea Cellular down by 3.13%, BPCL down by 2.59%, Bajaj Auto down by 1.77% and Sun Pharma down by 1.59% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 40.56 points or 0.66% to 6,176.99, France’s CAC surged 56.43 points or 1.3% to 4,381.53 and Germany’s DAX was up by 85.32 points or 0.87% to 9,927.61.

Asian equity markets ended mostly lower on Tuesday as prices of oil and other commodities fell, while investors continued to struggle with uncertainty over the timing of the next US interest-rate increase. Japanese stocks fell for a second day, led by electric-appliance makers and car builders, as the yen held gains against the dollar, damping the outlook for export earnings. China’s stocks fell for the first time in three days, led by commodity producers, amid speculation raw-material prices will extend declines as a faltering economic rebound curbs demand.