Markets trade in a tight range after a flat start

Indian markets tailing the somberness in the global markets have made a mildly soft start, though the decline is only modest in the first hour of trade but the bourses are not buzzing and trading in a tight range. Markets were not falling further, supported by Prime Minister Narendra Modi’s statement that his government has been able to tame inflation which had gone out of control before 2014 and no political party could raise the issue during the polls in five states. PM cited examples of how different organisations around the world including the World Bank, IMF and others have appreciated the demonetisation move. Back on street, the strength in rupee too was supporting the local markets, the domestic currency continuing its strong rally, edged up to a fresh four-month high. On sectoral front, healthcare and banking stocks were supporting the markets, while metal and energy stocks were putting pressure in early deals.

The pharma stocks have recovered from their early lows and were factoring in some positive for the sector after US President Donald Trump tweeted about lowering drug prices. Trump said he was working on a new system to increase competition in the drugs industry and bring down prices.

The BSE Sensex is currently trading at 28990.86, down by 8.70 points or 0.03% after trading in a range of 28969.19 and 29022.32. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were outperforming the benchmarks and trading in green; the BSE Mid cap index was up by 0.05%, while Small cap index up by 0.26%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.74%, Bankex up by 0.31%, Utilities up by 0.23%, FMCG up by 0.16% and Consumer Disc up by 0.03%, while Metal down by 0.96%, Energy down by 0.48%, IT down by 0.35%, Oil & Gas down by 0.33% andTECK down by 0.31% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.51%, Sun Pharma up by 1.21%, Cipla up by 0.71%, HDFC up by 0.65% and Asian Paints up by 0.60%. On the flip side, Infosys down by 0.82%, Mahindra & Mahindra down by 0.76%, Reliance Industries down by 0.61%, Wipro down by 0.59% and Tata Steel down by 0.56% were the top losers.

Meanwhile, global ratings agency, Fitch Ratings in its latest report has raised the forecast for India’s GDP growth in the current financial year 2016-17 to 7.1% from earlier 6.9%, after the government’s official data showed there was hardly any impact on the economy from demonetisation of high value currency notes. The projection of growth for this fiscal is in line with the estimates of CSO and global think-tank OECD. It also said that the economy will grow 7.7% in the next two financial years and estimated retail price inflation to rise to 4.6 per cent in 2017-18 and 5% in 2018-19, from 3.4% in the current year.

Though, the ratings agency expressed surprise at the official Indian statistician's latest projection of 7% GDP growth in the third quarter ended December, saying it contradicted data on real services activity hit by demonetisation. It further said that this number looks somewhat surprising as real activity data released since demonetisation pointed to weak consumption and services activity because these transactions are cash-intensive. By contrast, official data suggest that private consumption was strong in October-December (though services output growth moderated quite substantially). It also said that one reason for this discrepancy could be the inability of the official data to capture the negative effect of demonetisation on the informal sector.

Forecasting robust growth rates for India in the next two fiscal, Fitch said that gradual implementation of the structural reform agenda is expected to contribute to higher growth, as will higher real disposable income, supported by an almost 24 per cent hike in civil servants' wages at the state level. It said macroeconomic policy support to growth may gradually fade. It added that there may still be some positive impact from the previous accommodative monetary policy stance, but the Reserve Bank of India signalled in its February meeting that its interest rate easing cycle had come to an end.

The CNX Nifty is currently trading at 8950.90, up by 4.00 points or 0.04% after trading in a range of 8940.85 and 8957.05. There were 26 stocks advancing against 24 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Kotak Mahindra Bank up by 1.93%, ACC up by 1.36%, GAIL India up by 1.29%, Sun Pharma up by 1.20% and Ambuja Cement up by 0.96%. On the flip side, Hindalco down by 1.56%, HCL Tech down by 0.93%, Infosys down by 0.86%, Wipro down by 0.85% and Idea Cellular down by 0.64% were the top losers.

The Asian markets were trading mixed, Shanghai Composite was up by 1.34 points or 0.04% to 3,243.75, Jakarta Composite gained 2.12 points or 0.04% to 5,404.73, Taiwan Weighted added 21.26 points or 0.22% to 9,759.33 and Hang Seng increased by 118.93 points or 0.5% to 23,800.00.

On the other hand, Nikkei 225 declined by 106.73 points or 0.55% to 19,237.42, FTSE Bursa Malaysia KLCI was down by 1.64 points or 0.09% to 1,727.02 and KOSPI Index was tad lower by 0.52 points or 0.02% to 2,094.05.