Benchmarks trade on lackluster note slightly in green

Indian equity benchmarks added gains and started trading their lackluster trade slightly in green ahead of Monetary Policy Committee (MPC) rate decision. The stock markets are likely to tread with caution in today’s session and market participants would closely watch out for Reserve Bank of India’s policy decision. Falling inflation and the government’s fiscal prudence in Budget might propel the Reserve Bank of India (RBI) to cut the key repo or lending rate today. Rate sensitive stocks such as Auto, Banking and Real Estate are likely to remain in focus. Traders were taking some support from a private report stating that the global economic order is expected to shift from advanced to emerging economies over the next few decades, and by 2040 India could edge past the US to become the world's second largest economy in purchasing power parity (PPP) terms. Separately, appreciating the central bank’s role in the wake of demonetisation and global phenomena such as Brexit and the US elections, NITI Aayog Vice Chairman Arvind Panagariya said that Reserve Bank of India (RBI) played an admirable role in bringing incredible stability to the rupee. He added that those who have been critical of demonetisation don’t understand what a gigantic task it was to remonetise the economy.

Traders were seen piling position in Consumer Durables, Auto and Realty stocks, while selling was witnessed in FMCG and Bankex sector stocks. In scrip specific development, United Breweries (Holdings) (UBHL) was trading under pressure after in a major jolt to liquor baron Vijay Mallya, the Karnataka High Court ordered the winding up of (UBHL), the parent company of UB Group, for recovering dues payable by the UBHL-promoted defunct Kingfisher Airlines. Titan Company was trading in green on the back of strong numbers declared by it for the quarter ended December 2016. The company has reported 13 percent jump in its Q3 (Oct-Dec) net profit at Rs 255.7 crore against Rs 226.2 crore, posted in the same quarter last fiscal.

On the global front, Asian shares were trading mostly in red, with pressure on oil prices hitting energy shares. A summary of opinions from January 30-31 meeting showed that Bank of Japan board members saw improvements in exports, consumer spending and capital expenditure but warned that it may take time for inflation expectations to pick up. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,750 and 28,300 levels respectively. The market breadth on BSE was positive in the ratio of 1405:897, while 129 scrips remained unchanged.

The BSE Sensex is currently trading at 28341.70, up by 6.54 points or 0.02% after trading in a range of 28305.91 and 28391.64. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.45%, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.13%, Auto up by 0.79%, Realty up by 0.78%, Metal up by 0.67% and Oil & Gas up by 0.49%, while FMCG down by 0.55% and Bankex down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.51%, Wipro up by 1.33%, Tata Motors up by 1.31%, Mahindra & Mahindra up by 1.20% and GAIL India up by 1.10%.

On the flip side, Axis Bank down by 1.83%, ITC down by 1.19%, Infosys down by 0.88%, Dr. Reddy’s Lab down by 0.71% and ICICI Bank down by 0.49% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has said that a series of consultations on the issue of demonitisation were held between the government and top Reserve Bank of India (RBI) officials since February, 2016. He also said that only after that the central bank Board took a formal decision and conveyed it to the government, which then took the final call to go ahead with the move.

The Minister has stated that 8 out of 10 directors of the RBI board were present at the November 8 meeting which made an independent final recommendation with regard to note ban to the government.  He also said that in the month of May 2016, the board had decided to approve the design of the new notes and taken the decision with regard to the high-denomination currency which was required to be printed as a replacement currency itself.

Jaitley further said that thereafter a series of meetings used to be held periodically, where the senior officers in the RBI as also in the government were in consultation. He also said that because the decision had to be kept in utmost secrecy, it is for this particular reason that these were not put into public domain. FM noted that RBI had started printing the new currency notes in advance and had adequate currency available but it was the process of recalibration of ATMs that took time. He added that recalibration could not be done in advance for reasons of secrecy.

On the overall impact of demonetization as assessed by government, Jaitley said that remonetisation was at a fast pace and steps were being taken by the government to make sure that the hardship caused to the people is the least. And that is why a series of steps were announced including relaxation in terms of dealing with old currency so that some of the sectors do not suffer at all. He also said that the government has been making an analysis and the government is conscious of the fact that there are in the medium term and long term several advantages in term of expansion of the formal sector of the economy itself.

The CNX Nifty is currently trading at 8779.25, up by 10.95 points or 0.12% after trading in a range of 8765.85 and 8782.85. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 2.66%, ACC up by 2.32%, Bharti Infratel up by 2.09%, Hindalco up by 1.96% and Grasim Industries up by 1.78%.

On the flip side, Axis Bank down by 2.00%, ITC down by 1.23%, Dr. Reddy’s Lab down by 0.75%, Infosys down by 0.67% and Hindustan Unilever down by 0.64% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 31.47 points or 0.58% to 5,350.01, KOSPI Index decreased 15.75 points or 0.76% to 2,059.46, Hang Seng decreased 10.9 points or 0.05% to 23,320.67, Shanghai Composite decreased 8.47 points or 0.27% to 3,144.62 and FTSE Bursa Malaysia KLCI decreased 1.16 points or 0.07% to 1,687.68.

On the other hand, Taiwan Weighted increased 0.03 points or 0% to 9,554.59 and Nikkei 225 increased 46.13 points or 0.24% to 18,956.91.