Markets despite sluggisness maintain gains in early noon session

Indian equity benchmarks despite showing some sluggishness in early noon session on account of profit booking at higher levels were maintaining their gains. Sentiments remained cautious ahead of IIP and inflation data to be released later in the day. However, there was some support with global ratings agency Crisil report that India’s economy will grow at 7.9 percent in the current financial year compared with 7.6 percent in fiscal 2016, if the country receives normal monsoon, it will boost agriculture growth and lift rural demand. The rating agency also expects the Reserve Bank of India to continue its accommodative monetary stance and cut the repo rate by another 25 bps this fiscal. In scrip specific development, Ashok Leyland was trading higher after company bagged orders for nearly 3600 Buses from various STUs in the current fiscal. These orders would be executed in the current financial year which would help Ashok Leyland in furthering its leadership position in buses.

On the global front, Japanese stocks led gains in Asian markets on Tuesday as investors remained hopeful about the prospects of more stimulus following a stronger-than-expected election victory by the country's ruling coalition.

The BSE Sensex is currently trading at 27706.86, up by 80.17 points or 0.29% after trading in a range of 27667.81 and 27760.81. 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 0.55%, while Small cap index added 0.14%.

The top gaining sectoral indices on the BSE were Metal up by 1.60%, Oil & Gas up by 1.43%, Bankex up by 0.83%, Realty up by 0.82% and Consumer Durables up by 0.80%, while Capital Goods down by 0.45%, IT down by 0.25%, TECK down by 0.12% and FMCG down by 0.08% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.15%, ICICI Bank up by 2.08%, Maruti Suzuki up by 2.06%, ONGC up by 1.53% and Axis Bank up by 1.50%. On the flip side, Cipla down by 1.00%, Asian Paints down by 0.91%, Coal India down by 0.90%, Sun Pharma Inds. down by 0.76% and Dr. Reddys Lab down by 0.58% were the top losers.

Meanwhile, Credit rating agency Moody’s in its latest report Sovereigns - Brexit and Asia Pacific: Limited Direct Credit Impact; Some Sovereigns Exposed to Market Volatility’, has said that in India the room for fiscal policy easing is constrained by high debt burden, but it also said that Britain's exit from the European Union will not have any significant credit impact on the Asia Pacific region and the sovereigns’ exposure to external financing is limited for India.

Moody’s in its report said that over the coming months, announcements related to Brexit could trigger financial market volatility in Asia Pacific sovereigns. It added that a shift in portfolio and/or banking flows that resulted in tighter financing conditions in some Asia Pacific markets would hurt growth, especially in countries where fiscal and monetary policy space is constrained.

Furthermore, Moody’s said that where there is room for monetary and/or fiscal policy easing, the domestic authorities may take actions that would partially offset the negative shocks. It added that unless currencies depreciate significantly and stoke inflationary pressures, moderate inflation provides space to lower policy interest rates and ease domestic financing conditions.

The rating agency in its report cited that India’s exports to UK were 0.4 per cent of the GDP in 2015 while shipments to European Union make up for 1.7 per cent. It said that India’s GDP growth is likely to face challenge in next two years, due to sluggish global demand, high leverage in some corporate sectors and impaired credit supply.

The CNX Nifty is currently trading at 8491.40, up by 23.50 points or 0.28% after trading in a range of 8479.20 and 8503.45. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.92%, Grasim Industries up by 2.30%, Tata Steel up by 2.25%, ICICI Bank up by 2.24% and Maruti Suzuki up by 2.08%. On the flip side, BHEL down by 1.44%, Tata Power down by 1.28%, Aurobindo Pharma down by 1.26%, Cipla down by 1.12% and Coal India down by 1.12% were the top losers.

The Asian markets were trading mostly in green, KOSPI Index increased 2.69 points or 0.14% to 1,991.23, Shanghai Composite increased 16.82 points or 0.56% to 3,011.74, Jakarta Composite increased 36.63 points or 0.72% to 5,105.65, Taiwan Weighted increased 54.99 points or 0.63% to 8,841.46, Hang Seng increased 182.44 points or 0.87% to 21,062.94 and Nikkei 225 increased 386.94 points or 2.46% to 16,095.76.

On the other hand, FTSE Bursa Malaysia KLCI decreased 5.04 points or 0.3% to 1,648.83.