Domestic markets trade in fine fettle in early deals

Indian equity benchmarks after a firm opening are trading in fine fettle in early deals, with key gauges recapturing their crucial 27,800 (Sensex) and 8,550 (Nifty) bastions. Sentiments remained optimistic with Finance Minister Arun Jaitley urging the Rajya Sabha to pass the GST bill expeditiously, to enable states get a share of the Service Tax which is not shared under the provisions of 14th Finance Commission. Traders also took some encouragement with report that foreign institutional investors remained net buyers in equities worth Rs 550 crore on Tuesday, as per provisional stock exchange data. However, gains remained capped with the International Monetary Fund (IMF) lowering India’s economic growth projections by 0.1 percentage point to 7.4 per cent each for the current financial year and 2017-18, due to a slower investment revival than expected earlier. It has also lowered global economic growth by 0.1 percentage points each for 2016 and 2017 to 3.1 per cent and 3.4 per cent respectively, on Brexit impact.

On the global front, Asian shares retreated on Wednesday and were trading mostly in red, at this point of time after US markets ended flat in overnight trades. Further, the cut in global growth forecast by the International Monetary Fund also dampened sentiment.

Back home, stocks related to infra counter remained on buyers’ radar, as National Highways Authority of India - the highways regulator, is planning to bid out 30,000 km of projects over the next 2-3 years, including several green field projects. However, telecom stocks remained under pressure, with department of telecommunications (DoT) starting sending out notices to the country’s top six mobile operators, who have been charged by the Comptroller and Auditor General of under-reporting their adjusted gross revenue by Rs 46,045.75 crore for the period 2006-07 to 2009-10, due to which the government suffered a loss of Rs 12,488.93 crore by way of revenue share license fee and spectrum usage charge. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 1,130 shares on the gaining side against 493 shares on the losing side while 83 shares remain unchanged.

The BSE Sensex is currently trading at 27865.80, up by 78.18 points or 0.28% after trading in a range of 27759.71 and 27908.22. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index gained 0.39%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.86%, Realty up by 0.79%, Power up by 0.69%, Utilities up by 0.65% and Auto up by 0.54%, while IT down b 0.58%, TECK down by 0.49%, Telecom down by 0.31% and Consumer Durables down by 0.19% were the few losing indices on the BSE sectoral front.

The top gainers on the Sensex were HDFC Bank up by 1.52%, Power Grid Corpn. up by 1.38%, Hero MotoCorp up by 1.26%, Dr. Reddys Lab up by 1.10% and GAIL India up by 1.01%. On the flip side, Wipro down by 4.62%, ICICI Bank down by 0.93%, Infosys down by 0.61%, Tata Steel down by 0.50% and Adani Ports &Special down by 0.45% were the top losers.

Meanwhile, Raising concern over more sluggish investment recovery, the International Monetary Fund (IMF) has marginally lowered India’s growth forecast to 7.4 per cent for 2016 and 2017, a drop of 0.1 per cent from its previous forecast of 7.5 per cent released in April, though it retained its tag for India as the world's fastest-growing major economy and described India as a 'bright spot' against the backdrop of a gloomy global economy. It pared global growth by an identical amount while declaring Brexit as a “spanner” in the global economic recovery.

The global lending agency in its latest World Economic Outlook (WEO) update said that in India, economic activity remains buoyant, but the growth forecast for 2016-17 was trimmed slightly, reflecting a more sluggish investment recovery. India’s economy grew 7.6 per cent last fiscal and the government is hoping for 8 per cent growth this fiscal year on the back of a good monsoon though private investments and demand are yet to bounce back.
Talking about the global economy, the report forecast it to grow by 3.1% in 2016 compared with 3.2% estimated in the April WEO, with Brexit responsible for the reduction. China's forecast has been retained at 6.6% and 6.2% for 2016 and 2017, respectively. The outlook worsens for advanced economies while it remains broadly unchanged for emerging markets and developing economies.

IMF in its report cautioned that 'the real effects of Brexit will play out gradually over time, adding elements of economic and political uncertainty that could be resolved only after many months' and this uncertainty could cause markets to react more negatively to financial shocks. The report further stated that the outcome of the UK vote to leave European Union (EU), which surprised global financial markets, implies the materialisation of an important downside risk for the world economy.
The CNX Nifty is currently trading at 8554.70, up by 26.15 points or 0.31% after trading in a range of 8512.55 and 8559.50. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.85%, HDFC Bank up by 1.61%, Power Grid up by 1.35%, Hero MotoCorp up by 1.18% and Bosch up by 1.11%. On the flip side, Wipro down by 4.58%, HCL Tech. down by 1.50%, ICICI Bank down by 0.95%, Infosys down by 0.63% and Bharti Infratel down by 0.52% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 109.06 points or 0.65% to 16,614.25, Taiwan Weighted shed 51.32 points or 0.57% to 8,983.55, FTSE Bursa Malaysia KLCI dipped 6.07 points or 0.36% to 1,664.48, KOSPI Index slipped 3.89 points or 0.19% to 2,013.00 and Shanghai Composite was down by 0.73 points or 0.02% to 3,035.87. On the flip side, Jakarta Composite increased 40.96 points or 0.79% to 5,213.79 and Hang Seng was up by 165.47 points or 0.76% to 21,838.67.