Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued their firm trade in late morning session on account of buying in frontline blue chip counters. The Federal Reserve increased its benchmark interest rate a quarter point amid rising confidence that the economy is poised for more robust growth. The rupee opened higher against dollar on Thursday after the US Federal Reserve raised interest rates for the second time in three months. The expectation of rate hike was already factored in by markets. Foreign Portfolio Investors stood net buyers in domestic equity markets on Wednesday as they bought shares worth Rs 4309.49 crore with gross purchases and gross sales of Rs 10,237.09 crore and Rs 5,927.60 crore, respectively. Traders were taking support on report that India’s merchandise exports registered double-digit growth in February for the first time since the Narendra Modi government took office, on the back of a 47% rise in engineering goods and improved international demand. Exports swelled by 17.48% in February to $24.5 billion but a steeper increase in imports at 21% widened the trade deficit to $8.8 billion from $6.5 billion in the year-ago period.

Some support also came after global credit rating agency Moody’s Investor’s Service statement that the recent state election results will facilitate reforms by the BJP led Indian government. Moody’s said the 2017 state election results demonstrate broad-based popular support for the Indian government’s policy agenda and will facilitate the implementation of further reforms, a credit positive for the sovereign. Also, the International Monetary Fund (IMF) enlightened that India’s economic growth is expected to pick up once the effects of cash shortages linked to the currency exchange initiative fade. IMF in its note highlighted that further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans. Traders were seen piling position in Metal, Basic Materials and Consumer Durables stocks, while selling was witnessed in Telecom sector stocks. In scrip specific development, HCL Technologies was trading in green after the company announced that the board will meet next week to consider stock buyback, joining the growing roster of IT companies that have opted for the route to make use of huge piles of cash lying idle with them.

On the global front, Asian shares were trading in green, following indications of a measured response from the Federal Reserve in countering inflation. The Bank of Japan kept monetary policy steady in the wake of the US Federal Reserve’s second interest rate hike in three months, underscoring the diverging policy paths of major global central banks. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,100 and 29,500 levels respectively. The market breadth on BSE was positive in the ratio of 1629:676, while 138 scrips remained unchanged.

The BSE Sensex is currently trading at 29566.01, up by 167.90 points or 0.57% after trading in a range of 29482.83 and 29614.79. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.06%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were Metal up by 2.10%, Basic Materials up by 1.48%, Consumer Durables up by 1.42%, Industrials up by 1.31% and Capital Goods up by 1.26%, while Telecom down by 0.18% was the only loser on BSE.

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 3.11%, Tata Steel up by 3.02%, Asian Paints up by 1.79%, Larsen & Toubro up by 1.47% and NTPC up by 1.29%.

On the flip side, Bharti Airtel down by 0.87%, Hero MotoCorp down by 0.63%, Reliance Industries down by 0.34%, ICICI Bank down by 0.14% and SBI down by 0.07% were the top losers.

Meanwhile, after hitting a 43-month low in the month of December, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) has surged to Rs 1.75 lakh crore at the end of January. According to Securities and Exchange Board of India (SEBI) data, total value of P-note investments in Indian markets including equity, debt and derivatives, at January-end, has climbed to Rs 1,75,088 crore, from Rs 1,57,306 crore at the end of December.

Of the total, P-note holdings in equities at January-end were at Rs 108,576 crore, while in debts and derivatives were at Rs 10,733 crore and Rs 55,779 crore respectively. The quantum of FPI investments via P-notes increased to 7.1 percent in January, from 6.7 percent in the preceding month. However, in December, investment through P-notes was the lowest since July 2013, when the aggregate value of such investment stood at Rs 148,188 crore. Investment through the route had been declining since September last year when it was at Rs 212,509 crore. It fell to Rs 199,987 crore at October-end and further to Rs 179,648 crore in November.

Markets regulator SEBI had said that steps taken by it on P-notes are 'sufficient enough' to address the concerns of Special Investigation Team (SIT) on black money, but the regulator is open to further suggestions. It had asserted that consistent tightening of norms has made these instruments less attractive. P-notes are typical instruments issued by registered FPIs to overseas investors who wish to participate in Indian markets without registering themselves directly in the country to save time. But they still need to go through a proper due diligence process.

The CNX Nifty is currently trading at 9141.90, up by 57.10 points or 0.63% after trading in a range of 9128.55 and 9152.90. There were 44 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Adani Ports & Special Economic Zone up by 3.14%, Tata Steel up by 2.93%, Hindalco up by 2.20%, Asian Paints up by 1.83% and Tata Motors - DVR up by 1.69%.

On the flip side, Bharti Airtel down by 0.88%, Hero MotoCorp down by 0.60%, Idea Cellular down by 0.40%, Reliance Industries down by 0.38% and ICICI Bank down by 0.14% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 12.85 points or 0.6% to 2,145.85, FTSE Bursa Malaysia KLCI increased 15.27 points or 0.89% to 1,732.63, Shanghai Composite increased 23.36 points or 0.72% to 3,265.12, Nikkei 225 increased 30.83 points or 0.16% to 19,608.21, Jakarta Composite increased 53.68 points or 0.99% to 5,486.06, Taiwan Weighted increased 80.25 points or 0.82% to 9,820.56 and Hang Seng increased 313.74 points or 1.32% to 24,106.59.