Indian markets shed early gains; Consumer Durables provides the maximum impetus

Indian equity benchmarks shed some of their early gains but were trading slightly in green in the noon session on account of sustained buying in frontline counters. Sentiments got a boost after various exit polls suggested the Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) may comfortably cross the majority mark of 202 in the 403-seat UP Assembly, or come close to it. As for other states, most exit polls said the BJP was likely to retain power in Goa and wrest power from the Congress in Uttarakhand. However, gains remained capped with CRISIL’s report that a revival in private sector investment cycle is likely to be deferred to fiscal 2019 as there is ample headroom in capacity utilization, stretched balance sheets and just a moderate pick-up in demand. In the next fiscal year ending March 2018, CRISIL predicts only a mild recovery due to an absence of fiscal and monetary stimuli and unsupportive global environment. Meanwhile, several auto stocks gained traction after the report that Vehicle sales across categories registered a marginal increase at 17,19,699 units in February 2017 from 17,03,736 in the same month last year. Domestic passenger vehicle sales rose 9.01% y-o-y to 255,359 units in February, while Sales of commercial vehicles moved up 7.34% to 66,939 units in February. On the other hand, shares of gold loan companies like Manappuram Finance dropped after the Reserve Bank of India (RBI) said NBFCs cannot lend more than Rs 20,000 in cash against gold. Earlier, NBFCs were allowed to disburse high value loans of Rs 1 lakh and above against gold only through cheque.

On the global front, Asian markets were trading mixed on Friday as investors turned cautious ahead of the closely-watched U.S. non-farm payrolls report due later in the day. South Korea's Kospi edged higher after the constitutional Court decided to remove the country's president for the first time in history. Meanwhile, crude prices inched up on Friday after dropping to their lowest in more than three months the session before, pressured by concerns that a global supply glut is proving stubbornly persistent.

Back home, stocks from Consumer Durables, Capital Goods and Telecom counters were supporting the markets’ uptrend, while those from Oil & Gas, Power and Energy counters were adding to the underlying cautious undertone. In scrip specific development, Rane Holdings surged after the company received its board’s approval to set up a wholly owned subsidiary (WOS) in Germany under the name and style of Rane Holdings Europe GmbH. Moreover, Oil India gained after the company signed a MoU with the University of Houston in a bid to augment its reserves base and maximize recovery from its ageing oilfields. 

The market breadth remained optimistic, as there were 1258 shares on the gaining side against 1126 shares on the losing side, while 163 shares remained unchanged.

The BSE Sensex is currently trading at 28962.26, up by 33.13 points or 0.11% after trading in a range of 28942.52 and 29076.63. There were 13 stocks advancing against 15 stocks declining on the index, while 2 stocks remained unchanged.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.05%, while Small cap index up by 0.29%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.63%, Capital Goods up by 0.48%, Telecom up by 0.45%, IT up by 0.44% and TECK up by 0.42%, while Oil & Gas down by 0.51%, Utilities down by 0.50%, Power down by 0.46%, Energy down by 0.41% and PSU down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.22%, Infosys up by 0.88%, Larsen & Toubro up by 0.69%, TCS up by 0.67% and HDFC up by 0.42%. On the flip side, Power Grid down by 1.93%, GAIL India down by 0.63%, ICICI Bank down by 0.46%, ONGC down by 0.42% and Axis Bank down by 0.40% were the top losers.

Meanwhile, credit rating agency, Crisil in its latest annual India outlook report has said that the Indian economy is likely to see a mild recovery due to pent-up consumption demand after demonetization and expects the GDP growth to rise to 7.4 per cent, up 30 basis points in FY18. The agency also said that the economy is witnessing a series of resets in growth expectations, ecosystems and in industries which is likely to have more long-term benefits than short term. It said that ample headroom in capacity utilization, stretched balance sheets, and just a moderate pick-up in demand will mean revival in the private sector investment cycle would get deferred to fiscal 2019.

The rating agency further said that the decline in interest rates over the past two years is salutary, it won't be enough to revive the investment cycle till other factors, such as demand and deleveraging, also turn conducive and therefore the government and public sector will have to continue to do the heavy-lifting next fiscal as well, especially on the infrastructure side, to ensure growth stays the course. In banking sector, the agency sees lower slippages of NPAs. Besides, it sees signs of turnaround in some commodity-linked sectors (especially metals) and in mid- sized EPC segment.

In outlook series report called ‘Colors of Growth’, Crisil however stated that the credit quality of corporates is showing signs of gradual recovery driven by firm commodity prices, stable macros and lower interest costs, which will help to boost their revenue growth to a five-year high of 8-9 per cent in fiscal 2018, while operating profit margins are likely to remain range-bound as higher commodity prices will take a toll on end-user sectors.

The CNX Nifty is currently trading at 8933.25, up by 6.25 points or 0.07% after trading in a range of 8927.85 and 8975.70. There were 25 stocks advancing against 25 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Hero MotoCorp up by 0.91%, Infosys up by 0.91%, Ultratech Cement up by 0.91%, Bharti Infratel up by 0.87% and Larsen & Toubro up by 0.68%. On the flip side, Power Grid down by 1.98%, Tech Mahindra down by 1.83%, BPCL down by 1.25%, Hindalco down by 0.79% and Grasim Industries down by 0.79% were the top losers.

The Asian markets were showing mixed trend, KOSPI Index increased by 0.32%, Nikkei 225 surged by 1.49% and Hang Seng was up slightly by 0.17%.

 On the other hand, Taiwan Weighted declined by 0.32%, Jakarta Composite was lower by 0.34%, FTSE Bursa Malaysia KLCI decreased by 0.12% and Shanghai Composite was tad lower by 0.02%.