Bourses continue to show steady trade holding most of the early gains

Indian benchmarks showing a steady trend are holding most of their gains in the early afternoon session. While the Asian markets are still showing a mixed trend, the local traders have overlooked the surge in WPI inflation numbers, which came at a 3 year high. The wholesale price inflation rose a more-than-expected 6.55 per cent year-on-year in February, compared with a 0.85 per cent fall a year ago and a provisional 5.25 per cent in January, mainly on rise in fuel and food prices. Traders are rejoicing the BJP's landslide victory in UP and Uttarakhand and a better than expected industrial output numbers. The victory in state elections has given a fillip to the government’s reform agenda, triggering fresh buying. Both the Sensex and Nifty were up by over one and half a percent, traders were also getting some support with rupees strength, with the domestic currency trading near one year high. Meanwhile, Chief Economic Adviser Arvind Subramanian has said that if the Western economies become more protectionist, it can have a 'big impact' on the domestic economy. He said that if the world was to become protectionist, our exports cannot grow at 25 per cent, which means our growth will suffer quite a bit. Back on street, all the sectoral indices barring telecom were trading in green led by capital goods, realty, banking and finance.

In scrip specific development, ICICI Bank was higher by around 6 percent after the Tea Board appointed the bank as the new settlement banker for holding pan-India auctions after a search for nearly four months.

The BSE Sensex is currently trading at 29412.50, up by 466.27 points or 1.61% after trading in a range of 29356.05 and 29561.93. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices too were trading in green; the BSE Mid cap index was up by 1.47%, while Small cap index was higher by 1.13%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.86%, Realty up by 2.40%, Bankex up by 2.10%, Industrials up by 1.82%, Basic Materials up by 1.80%, while Telecom down by 0.45% was the lone losing index on BSE.

The top gainers on the Sensex were ICICI Bank up by 5.71%, Larsen & Toubro up by 4.34%, Asian Paints up by 3.60%, HDFC up by 3.32% and Adani Ports &Special up by 2.87%. On the flip side, Coal India down by 5.97%, Bharti Airtel down by 1.18%, GAIL India down by 0.36%, Sun Pharma Inds. down by 0.26% and Lupin down by 0.11% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), in its preliminary assessment report on ‘Macroeconomic Impact of Demonetisation’ has said that the overall, demonetisation has had some negative macroeconomic impact, which however has been transient as remonetisation has moved at an accelerated pace. It said that the demonetisation led to a sharp immediate pick up in digital payments, but the pace of growth moderated somewhat in February 2017. It also said that it is necessary to ensure that digital payments are safe and secure and a need to constantly review and ramp up security features of digital payments to maintain and enhance trust of its users, especially, given the low levels of literacy in India

RBI though said that the report which has been prepared by the staff of Monetary Policy Department (MPD) with contributions from other departments and should not necessarily be interpreted as its official views.  Regarding inflation, the RBI warned that the unfavourable base effects may push inflation up in February but the base effects will remain neutral in March 2017. It has also said that the surplus liquidity with banks may decline going forward as the remonetisation process moves further which may also lead to some fall in bank deposits. The report further said the overall business climate should improve with the medium-term positive effects of demonetisation starting to gain traction.

The central bank in its assessment report said that as the impact of the liquidity shock was assessed to largely dissipate by mid-February, growth was estimated to bounce back in 2017-18. With rapid remonetisation, pent up demand was likely to boost consumption demand. After demonetisation, some workers were reported to have received wage payments in advance, but in the form of credit to bank deposits. Since the propensity to consume is high for the working class population, their consumption was expected to increase with the improving access to cash. Accordingly, consumption demand was expected to get a boost in 2017-18 as compared with the second half of 2016-17.

The CNX Nifty is currently trading at 9077.50, up by 142.95 points or 1.60% after trading in a range of 9060.50 and 9122.75. There were 44 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 5.80%, Larsen & Toubro up by 4.46%, Asian Paints up by 3.61%, Ultratech Cement up by 3.52% and Yes Bank up by 3.27%. On the flip side, Coal India down by 5.93%, Bharti Airtel down by 1.44%, Bosch down by 0.38%, Sun Pharma Inds. down by 0.26% and Lupin down by 0.24% were the top losers.

The Asian markets were trading mixed, FTSE Bursa Malaysia KLCI was up by1.13 points or 0.07% to 1,723.05, Shanghai Composite gained 2.3 points or 0.07% to 3,239.33, KOSPI Index was higher by 16.19 points or 0.76% to 2,133.78, Jakarta Composite increased by 33.28 points or 0.62% to 5,442.65 and Taiwan Weighted surged by 46.87 points or 0.48% to 9,744.21

On the other hand, Hang Seng declined by 36.59 points or 0.15% to 23,793.08 and Nikkei 225 was lower by 24.25 points or 0.12% to 19,609.50.