Benchmarks reverse gears; slip into negative territory

Reversing gears, Indian benchmark indices have now slipped into negative territory as participants took some profit off the table in recent out-performers. Besides, weak trend in other Asian markets following the US Federal Reserve keeping its interest rates steady, also dampened the sentiments. Off day’s lows, both Sensex and Nifty were trading below the psychological 28,100 and 8,700 levels respectively, with loss of around quarter percent. However, the broader markets outperformed benchmark indices, as investors turned their focus on fundamentally sound mid-cap and small-cap stocks as valuations in large-cap stocks seem stretched after yesterday’s rally. Inventors got some comfort from the budget, where there was no hike in STT and the long-term capital gains rules were untouched. Finance Minister Arun Jaitley though maintained fiscal prudence in the Budget, the foreign investors may have some renewed interest as the Finance Minister tweaked the domestic transfer pricing rules and exempted some FPIs from indirect transfer provision. He also further clarified the GAAR rules. Some support also came from Niti Aayog vice-chairman Arvind Panagariya’s statement hoping that the economic growth in the next fiscal year would be in the range of 7-7.5 percent.

On the global front, Asian markets were trading mostly in red on Thursday after the Fed kept its key lending rate on hold as expected at its latest policy meeting. However, the Fed reiterated its intention to lift rates gradually as the labour market tightens, acknowledging rising confidence among U.S. consumers and businesses. Investors will now be looking towards Friday’s jobs report after the uncertainty created during Donald Trump’s first two weeks in office, brought equity indices down from record highs. Japan and Hong Kong led losses among Asian equity markets. Tensions between Iran and the US, over a ballistic missile test by Tehran this week and even the tenor of President Donald Trump's phone calls with world leaders weigh on sentiments.

Back home, stocks from Consumer Durables, IT and Oil & Gas counters were supporting the markets, while those from Metal, Auto and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, SML Isuzu gained after the company reported 19.6% jump in January sales. SML sold 1,002 vehicles during January 2017 against 838 vehicles sold in January 2016. Furthermore, Cummins India rose after the company reported 11.29% rise in its net profit at Rs 198.09 crore for the quarter ended December 31, 2016, as compared to Rs 177.99 crore for the same quarter in the previous year.

The market breadth remained optimistic, as there were 1303 shares on the gaining side against 1119 shares on the losing side, while 107 shares remained unchanged.

The BSE Sensex is currently trading at 28097.37, down by 44.27 points or 0.16% after trading in a range of 28073.80 and 28194.00. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.39%, while Small cap index up by 0.28%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.12%, TECK up by 1.00%, IT up by 0.99%, Oil & Gas up by 0.69% and FMCG up by 0.45%, while Metal down by 1.16%, Auto down by 1.09%, Capital Goods down by 0.71%, Realty down by 0.59% and Banking down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.43%, NTPC up by 2.20%, Axis Bank up by 1.62%, Infosys up by 1.42% and ITC up by 1.21%. On the flip side, Tata Motors down by 2.16%, Mahindra & Mahindra down by 1.92%, HDFC down by 1.62%, GAIL India down by 1.32% and Tata Steel down by 1.02% were the top losers.

Meanwhile, Reserve Bank of India has warned the public against use of virtual currencies such as Bitcoins, pointing out that it has not authorised trading or usage of virtual currencies. In a latest statement, the central bank said that “it has not given any licence/authorisation to any entity/company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader etc. dealing with virtual currencies will be doing so at their own risk.”

It has also drawn attention to a December 2013 notification cautioning the investors against the same and has stated that those investing in such virtual currencies are exposing themselves to potential financial, operational, legal, customer protection and security related risks.

In order to create awareness among investors, RBI in December 2013 had issued a notification stating that the virtual currencies stored in e- wallets are prone to losses arising out of hacking and there is no established regulatory framework for recourse to customer problems or disputes. Further, central bank had also flagged issues surrounding valuation and said that those who trade on unregulated platforms face legal and financial risks.

The CNX Nifty is currently trading at 8693.90, down by 22.50 points or 0.26% after trading in a range of 8686.25 and 8727.00. There were 18 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 2.84%, Bharti Airtel up by 2.51%, NTPC up by 2.17%, Axis Bank up by 1.79% and BPCL up by 1.69%. On the flip side, Hindalco down by 3.29%, Mahindra & Mahindra down by 2.48%, Indusind Bank down by 2.44%, Bosch down by 2.23% and Tata Motors down by 2.09% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted slipped 0.2%, Hang Seng decreased 0.7%, Nikkei 225 declined 1.38% and KOSPI Index was down by 0.51%. On the flip side, FTSE Bursa Malaysia KLCI increased 0.27% and Jakarta Composite was up by 0.28%.