Benchmarks trim some losses; recover from day’s lows in noon trades

Profit booking seems to have stopped in the noon session, as the benchmark indices which appeared to be drifting below important psychological levels have recovered from day’s lows and are trading above the crucial 8,900 and 28,850 levels. Investors got some comfort with 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. However, some traders remained on the sidelines and refrained from any buying activity ahead of the exit poll results due tomorrow for the ongoing assembly elections. Besides, concerns have also grown over a hike in interest rates by the US Federal Reserve next week. Meanwhile, sugar stocks came under selling pressure after the report that India’s sugar output will fall 19% this season due to poor crop yields in Karnataka, Maharashtra and Andhra Pradesh. According to Indian Sugar Mills Association (ISMA), the country’ output in the 2016-17 season beginning October would be about 20.3 million tonnes, compared with 25.1 million tonnes in the earlier season. Furthermore, pharma stocks declined after US President Donald Trump's tweet about lowering drug prices. Trump said he was working on a new system to increase competition in the drugs industry and bring down prices.

On the global front, Asian markets were trading mixed on Wednesday, as investors turned cautious after Wall Street logged first consecutive sessions of declines in more than a month in anticipation that US Federal Reserve will hike interest rates next week. The Federal Reserve has a policy meeting on March 14-15 and markets have quickly ratcheted up bets of a rate hike at the meeting after recent hawkish comments by US policymakers. Moreover, Japanese market declined as stronger yen weighed on exporters' stocks. Back on street, all sectoral indices on the BSE were trading in the red with Metal index emerging as the top loser down by over one and half percent followed by Oil & Gas and Realty indices among others. In scrip specific development, Jain Irrigation Systems gained after the company secured an order worth Rs 189.02 crore for development of micro irrigation systems network.

The market breadth remained pessimistic, as there were 765 shares on the gaining side against 1720 shares on the losing side, while 131 shares remained unchanged.

The BSE Sensex is currently trading at 28860.84, down by 138.72 points or 0.48% after trading in a range of 28821.68 and 29022.32. There were 3 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.72%, while Small cap index down by 0.55%.

The top losing sectoral indices on the BSE were Metal down by 1.77%, Oil & Gas down by 1.35%, Realty down by 1.33%, Energy down by 1.11% and PSU down by 1.03%, while there were no gainers on BSE sectoral front.

The top gainers on the Sensex were Bharti Airtel up by 0.62%, Power Grid up by 0.54%, HDFC Bank up by 0.17% and HDFC up by 0.01%. On the flip side, Adani Ports & SEZ down by 1.96%, ONGC down by 1.66%, Axis Bank down by 1.65%, Mahindra & Mahindra down by 1.57% and Tata Steel down by 1.51% were the top losers.

Meanwhile, in order to boost the country’s output of oil and gas through greater foreign investment, the government has announced an open acreage licensing policy (OALP), which will allow the bidders to select areas where they want to drill. The policy will also give the operators the much needed freedom in pricing and marketing for oil and gas and shift to a revenue sharing model.

The government has planned to conduct auction of oil and gas blocks under the OALP, twice in a year. The first round of the auction is going to be held in July this year which will be India's first major exploration licensing round since 2010. OALP auction will be held under the overhauled exploration licensing policy allows pricing and marketing freedom to operators and shifts to a revenue sharing model.

The new policy which is part of the strategy to make India a business and investor friendly destination and cut import dependence will be a departure from the current licensing policy of government identifying the oil and gas blocks and then putting them on auction. In this new policy, the government will not micromanage, micro monitor with producers. It will only share revenue which will be an open and regular affair, instead will give an option to a company looking for exploring hydrocarbons to select the exploration areas on its own. This selection can be done based on the seismic and well data that the Directorate-General of Hydrocarbons has put in a National Data Repository.

At present, India is the third-largest oil consumer behind the U.S. and China whose domestic crude oil production of 36.95 million tons in 2015-16 barely met 20 per cent of its oil needs and natural gas output at 32.249 billion cubic metres, meets less than half of its needs.

The CNX Nifty is currently trading at 8906.95, down by 39.95 points or 0.45% after trading in a range of 8892.30 and 8957.05. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 0.94%, Yes Bank up by 0.94%, ACC up by 0.84%, Bharti Airtel up by 0.66% and Power Grid up by 0.51%. On the flip side, Hindalco down by 2.05%, Adani Ports & SEZ down by 1.98%, BPCL down by 1.97%, Tech Mahindra down by 1.85% and Tata Steel down by 1.78% were the top losers.

Asian markets were trading mixed, Taiwan Weighted added 0.16%, Hang Seng increased by 0.26% and KOSPI Index was tad higher by 0.09%. On the other hand, Jakarta Composite slipped 0.04%, Nikkei 225 declined by 0.61%, FTSE Bursa Malaysia KLCI was down by 0.11% and Shanghai Composite decreased by 0.19%.