Benchmarks trade modestly in green; Nifty holds 8800 mark

Indian equity benchmarks continued their trade modestly in green in late morning session on account of buying in front line blue chip counters, tracking positive Asian cues and after consolidation in previous week. Traders were taking some support with a report that the government’s revenue collection during April-January, 2016-17 has shown healthy growth, indirect tax collection jumped 23.9 percent to Rs 7.03 lakh crore on the back of robust central excise mop-up, while direct tax collection rose by 10.79 percent to Rs 5.82 lakh crore. The total direct and indirect tax collections at the end of January stood at Rs 12.85 lakh crore, more than half the Rs 16.26 lakh crore target for 2016-17. Some support also came on report that after four months of intense selling, overseas investors turned net buyers in February and have so far pumped in over Rs 5,800 crore in the capital market, enthused by clarity on FPI taxation. The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (October-January). Prior to that, FPIs had invested over Rs 20,000 crore in the capital market in September 2016. The upside was however capped as the industrial production data contracted by 0.4% in December 2016 from the same period a year ago, due to a sharp decline in production of consumer goods. The cumulative IIP growth for April-December was 0.3% against 3.2% for the same period in 2015. Traders were seen piling position in Metal, IT and TECK stocks, while selling was witnessed in Realty, PSU and Consumer Durables sector stocks. In scrip specific development, Hindustan Motors was trading firm after the company informed bourses that it has executed an agreement with European auto major Peugeot SA for the sale of the Ambassador brand, including the trademarks, for a consideration of Rs 80 crore. Shalimar Paints was trading under pressure with the company registering a standalone net loss of Rs 18 lakh for the third quarter ended December 31, 2016, impacted by demonetization. The company had posted a net profit of Rs 2.05 crore in the October-December period of the last fiscal.

On the global front, Asian shares were trading in green, taking a wait-and-watch approach to a ballistic missile test by North Korea at the weekend that Pyongyang said was a success and paved the way or the use of solid fuel, nuclear weapon capable launch systems. North Korea fired a ballistic missile into the sea on Sunday morning, the first such test since President Trump was elected. Japanese Gross Domestic Product rose less-than-expected in a report, Cabinet Office said that Japan’s GDP rose to a seasonally adjusted 0.2%, from 0.3% in the preceding quarter. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,800 and 28,300 levels respectively. The market breadth on BSE was negative in the ratio of 1145:1234, while 128 scrips remained unchanged.

The BSE Sensex is currently trading at 28348.43, up by 14.18 points or 0.05% after trading in a range of 28321.93 and 28458.80. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.05%, while Small cap index was down by 0.04%.

The top gaining sectoral indices on the BSE were Metal up by 1.07%, IT up by 0.61%, TECK up by 0.46%, FMCG up by 0.36% and Power up by 0.31%, while Realty down by 0.69%, PSU down by 0.60%, Consumer Durables down by 0.34%, Capital Goods down by 0.30% and Oil & Gas down by 0.27% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.85%, Mahindra & Mahindra up by 1.15%, Infosys up by 1.14%, Power Grid up by 1.08% and Hindustan Unilever up by 1.03%.

On the flip side, Coal India down by 1.74%, SBI down by 1.18%, HDFC down by 0.98%, Hero MotoCorp down by 0.58% and Reliance Industries down by 0.51% were the top losers.

Meanwhile, in order to push credit demand in laggard segments, Reserve Bank of India governor Urjit Patel nudged banks to cut their lending rates. He said that banks have immensely benefited from the influx of low-cost deposits that has come into the system post demonetisation, as well as the previous repo rate cuts by the apex bank.

Urjit Patel also stated that the weighted average lending rate reduction has been significantly less and they feel that there is some scope for further reduction in lending rates for sectors like housing, personal etc. the reduction has been much more than for other sectors by the same bank. He also expressed his hope that there could be a cut in lending rates in some sectors where reduction has been relatively lower so far.

In its monetary policy review earlier this week, central bank retained the repo rate, at which it lends money to banks, at 6.25 per cent and the reverse repo rate at 5.75 per cent. However, between January 2015 and September 2016, RBI had reduced its repo rate by a total 1.75 percentage points. With regard to inflation, Patel said that there is no change in stance as far as retail inflation targeting is concerned.

RBI governor further said that the commentary in their monetary policy statement by the Monetary Policy Committee (MPC) was the observation that inflation ex-food and fuel has hardly bulged since September and if they want a further reduction in headline inflation it is going to be difficult. He added that so it is not a change of stance with respect to that at all, just a comment that since September CPI inflation ex-fuel and food has been difficult to bring down and going forward to go towards 4 per cent and away from 5 per cent on a durable basis requires that CPI ex-food and fuel to also come down. The MPC has been mandated to maintain retail inflation at 4 per cent (with plus/minus 2 per cent range) till 2021.

The CNX Nifty is currently trading at 8803.55, up by 10.00 points or 0.11% after trading in a range of 8786.45 and 8826.90. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.75%, Kotak Mahindra Bank up by 2.00%, Tata Steel up by 1.78%, Eicher Motors up by 1.58% and Yes Bank up by 1.52%.

On the flip side, Bank of Baroda down by 6.46%, Idea Cellular down by 3.30%, Aurobindo Pharma down by 1.88%, BHEL down by 1.84% and Coal India down by 1.63% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 1.37 points or 0.07% to 2,076.45, FTSE Bursa Malaysia KLCI increased 7.93 points or 0.47% to 1,706.87, Shanghai Composite increased 21.5 points or 0.67% to 3,218.20, Jakarta Composite increased 34.31 points or 0.64% to 5,405.98, Taiwan Weighted increased 41.19 points or 0.43% to 9,706.78, Nikkei 225 increased 93.33 points or 0.48% to 19,472.26 and Hang Seng increased 130.33 points or 0.55% to 23,705.31.