Markets trade slightly in green ahead of Yellen’s Jackson Hole speech

Indian equity benchmarks have started the new F&O series on positive note and are trading slightly in green as traders took some encouragement with the Reserve Bank of India (RBI) announcing a raft of measures to boost investor participation and market liquidity in both the corporate bond and currency markets. These include the staggered reduction of banks' loan exposure, increased participation by overseas investors in corporate bonds and making top-rated bonds eligible for borrowing from Reserve Bank for liquidity needs. However, gains remain capped ahead of the policy stance on interest rates from the US Federal Reserve. Investors have turned cautious ahead of a highly-anticipated speech today by Janet Yellen of the US Federal Reserve in an annual meeting of central bankers from around the world in Jackson Hole, Wyoming.

On the global front, Asian markets were exhibiting mixed trend with most of the markets remained relatively flat throughout the week ahead of Federal Reserve Chairwoman Janet Yellen's speech today. US stocks ended with marginal cut on Thursday with healthcare stocks extending previous trading session's decline.

Back home, gems and jewellary stocks were shining on report that exports of gems and jewellery grew 11.7 percent to $ 11.4 billion during the first four months of the current fiscal, driven largely by demand in India's major markets like the US. However, PSU banks too will be in action on reports that the government is drawing up a contingency plan to support state-run banks should they collapse under the burden of bad loans.

The BSE Sensex is currently trading at 27883.47, up by 47.56 points or 0.17% after trading in a range of 27853.90 and 27935.88. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.31%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.65%, Auto up by 0.65%, Oil & Gas up by 0.45%, Realty up by 0.25% and FMCG up by 0.20%, while Capital Goods down by 0.43%, IT down by 0.12%, TECK down by 0.09% and Bankex down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.59%, Cipla up by 1.49%, Mahindra & Mahindra up by 0.69%, Lupin up by 0.68% and Reliance Industries up by 0.60%. On the flip side, Adani Ports &Special down by 1.81%, Wipro down by 1.01%, Asian Paints down by 0.84%, Larsen & Toubro down by 0.61% and Bharti Airtel down by 0.19% were the top losers.

Meanwhile, domestic rating agency, Indian Credit Rating Agency (ICRA) in its latest report has estimated the Gross Domestic Product (GDP) growth to remain flat at 7.2% in the June quarter 2016 under the Gross Value Added (GVA) calculation. This growth will be lower than the GDP notched up in the March quarter at 7.4%. Further, it stated that pick-up in the industrial sector will help offset the decline in service and agriculture and allied activities which will help the economy to grow, the estimation for pick-up in industrial growth is 7.1% in June 2016, up from 6.7% a year ago.

The report anticipates real manufacturing growth to improve to 8% from 7.3% a year ago, supporting a pick-up in industrial growth. Besides, it said that growth of power generation improved sharply to 9% from 2.3% a year ago, led by a pick-up in thermal electricity generation growth which jumped to 13% from a paltry 1% in the corresponding period last fiscal year. Further, it stated that corporate earnings for Q1 suggest the full impact of increase in commodity prices is yet to be felt in the current fiscal. As a result, earnings growth has been higher than revenue growth, and is also likely to have exceeded the volume trend revealed by the index of industrial production.

The rating agency also expects the pace of growth of agriculture, forestry and fishing to ease to 2.2% from 2.6%. This is despite the boost from aggregate rise in production of rabi crops (led by wheat) even after drought-like conditions that prevailed in Q1 over most parts of the country. Service sector growth is likely to report only 8.5% growth, down from 8.8% a year ago, following the moderation in expansion of bank deposits and credit and lead indicators of trade such as air cargo traffic and railway revenue from freight.

The CNX Nifty is currently trading at 8602.95, up by 10.75 points or 0.13% after trading in a range of 8596.35 and 8622.95. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.53%, Hindalco up by 1.46%, Bharti Infratel up by 1.44%, Tata Motors - DVR up by 1.29% and Ultratech Cement up by 0.96%. On the flip side, Adani Ports &Special down by 1.57%, Indusind Bank down by 1.02%, Idea Cellular down by 0.94%, Wipro down by 0.80% and Asian Paints down by 0.77% were the top losers.

Asian markets were trading mixed; Taiwan Weighted rose 1.74 points or 0.02% to 9,117.21, FTSE Bursa Malaysia KLCI gained 1.94 points or 0.12% to 1,682.24, Shanghai Composite increased 17.41 points or 0.57% to 3,085.74 and Hang Seng was up by 124.22 points or 0.54% to 22,939.17. On the flip side, Nikkei 225 declined 161.68 points or 0.98% to 16,394.27, Jakarta Composite shed 17.05 points or 0.31% to 5,437.07 and KOSPI Index was down by 5.17 points or 0.25% to 2,037.75.