Benchmarks make cautious start ahead of Fed outcome

Indian equity benchmarks have made a cautious start on Wednesday ahead of the Fed rate-setting decision later in the day. Also, traders remained concerned with the Retail or CPI inflation rising to 3.65 percent in February, as compared to 3.17 per cent in January and 5.26 per cent a year ago, mainly on account of surge in price of food items. Meanwhile, Chief Economic Advisor Arvind Subramanian has said that demonetisation can be called successful only if the amount of currency in circulation comes down over time and there is an increase in tax compliance.

On the global front, most of the Asian counters were trading in red at this point of time following the decline in US markets overnight, with some of the indices trading lower by about half a percent ahead of an expected interest-rate hike by Federal Reserve policy makers. The US markets turned lower in the last session ahead of Wednesday's interest rate decision from the Federal Reserve.

Back home, the PSU oil marketing companies like HPCL and BPCL were trading higher, as the international crude oil prices slid to the lowest since late November after OPEC reported a rise in global crude inventories and raised its forecast of production in 2017 from outside the group. The broader indices were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1,201 shares on the gaining side against 759 shares on the losing side while 98 shares remain unchanged.

The BSE Sensex is currently trading at 29478.12, up by 35.49 points or 0.12% after trading in a range of 29405.23 and 29490.03. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.57%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Energy up by 0.78%, Consumer Durables up by 0.76%, Oil & Gas up by 0.61%, Auto up by 0.58% and Healthcare up by 0.48%, while IT down by 1.10%, TECK down by 0.84%, Utilities down by 0.04%, Power down by 0.02% and Capital Goods down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 1.48%, Reliance Industries up by 1.29%, SBI up by 0.93%, ITC up by 0.80% and Cipla was up by 0.74%. On the flip side, TCS down by 1.54%, Infosys down by 1.40%, Hindustan Unilever down by 0.91%, Bharti Airtel down by 0.71% and Wipro was down by 0.69% were the top losers.

Meanwhile, with the completion of demonetisation process, Chief Economic Advisor (CEA) Arvind Subramanian has said that note ban can be called successful only if the amount of currency in circulation comes down over time and there is an increase in tax compliance. He said that before demonetisation, the cash to GDP ratio was something like 12 percent, and added that if not ban is to be considered successful then this ratio should come down. Underlining that there are cost and benefits of the note ban move, he said that the cash circulation in the economy is easily measurable. Though, the Reserve Bank of India has remonetised only below 70 percent of the cancelled money, it has lifted all the curbs on withdrawals from March 13, 2017.

CEA also said that the note ban move to be called a success, the number of taxpayers needs to go up. He also warned that the general culture of non-compliance and illicit money creation should also improve through demonetisation, which was trying to signal a regime shift that in future this behaviour will be less tolerated.

The CEA further said that while the progress of digitisation can and will be monitored to show the success of the move, sufficient attention should also be given to see how the 35 million people who neither own a smartphone nor a feature phone are taking to the digital process. But he also added that the country is a cash-based economy and digitisation should not be imposed on people.

The CNX Nifty is currently trading at 9098.75, up by 11.75 points or 0.13% after trading in a range of 9076.25 and 9099.65. There were 31 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 3.83%, Bank of Baroda up by 1.96%, Aurobindo Pharma up by 1.68%, Adani Ports up by 1.36% and Reliance Industries was up by 1.23%. On the flip side, TCS down by 1.75%, Infosys down by 1.20%, HCL Tech down by 0.94%, Hindustan Unilever down by 0.85% and Bharti Airtel was down by 0.71% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 47.26 points or 0.24% to 19,562.24, Hang Seng slipped 12.92 points or 0.05% to 23,815.03, FTSE Bursa Malaysia KLCI declined 5.8 points or 0.34% to 1,716.67, Taiwan Weighted dipped 5.18 points or 0.05% to 9,739.03 and KOSPI Index was down by 2.28 points or 0.11% to 2,131.50.

On the flip side, Shanghai Composite gained 2.64 points or 0.08% to 3,241.97 and Jakarta Composite was up by 5.01 points or 0.09% to 5,436.60.