Benchmarks continue weak trade ahead of RBI meet

Indian equity benchmarks trimmed their losses and continued their weak trade in late morning session as investors turned cautious ahead of Monetary Policy Committee meet later today. The rupee opened lower against the dollar on Wednesday on fresh dollar demand from banks and importers. Investors are likely to avoid taking long positions and will maintain cautious approach as the street expects the Reserve Bank of India (RBI) to maintain status quo on key interest rates at its monetary policy review meeting on April 6, 2017. The street expects no change in rates from the RBI but the commentary will be closely watched, especially after the RBI, in last meet, changed its stance from accommodative to neutral. Investors are also eying the key US payrolls report on Friday and minutes from the US Federal Reserve’s March meeting on Wednesday. Select Information Technology (IT) stocks were under pressure reacting negatively to the report that in the new guidelines issued by the US administration it has been said that companies applying for visas under the H-1B programme must provide evidence to establish that the particular position is one in a specialty occupation. Separately, tougher and more expensive visa rules announced by the UK Home Office last year are set to take effect from Thursday, affecting Indians and other nationals from outside the European Union (EU).  Investors shrugged off the report that government has achieved its upward revised tax collection target for FY17, indicating that it should be able to meet the fiscal deficit target for the year. Provisional tax collection pegged total collection at Rs 17.1 lakh crore, up 18% from a year ago. Traders were seen piling position in Realty, Consumer Durables and Metal stocks, while selling was witnessed in IT, TECK and FMCG sector stocks. In scrip specific development, Dr. Reddy’s Laboratories’ was trading in red after its API manufacturing plant at Srikakulam in state of Andhra Pradesh had been audited by the US Food and Drug Administration (USFDA), and the audit completed on April 4, 2017. The company has been issued a Form 483 with 2 observations, which it is addressing.

On the global front, Asian shares were trading mostly in green, amid concerns over North Korea’s latest ballistic missile test which landed in the Sea of Japan. Activity in Japan’s services sector expanded at the fastest pace in 19 months in March as outstanding business improved, allowing companies to charge more for their goods. The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to 52.9 in March on a seasonally adjusted basis from 51.3 in February. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,250 and 29,900 levels respectively. The market breadth on BSE was positive in the ratio of 1726:677, while 101 scrips remained unchanged.

The BSE Sensex is currently trading at 29890.44, down by 19.78 points or 0.07% after trading in a range of 29817.69 and 30007.48. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index was up by 0.88%.

The top gaining sectoral indices on the BSE were Realty up by 2.89%, Consumer Durables up by 2.09%, Metal up by 1.18%, Basic Materials up by 0.98% and Industrials up by 0.87%, while IT down by 0.59%, TECK down by 0.36% and FMCG down by 0.11% were the only losers on BSE.

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 2.82%, Tata Steel up by 2.08%, Maruti Suzuki up by 1.64%, Reliance Industries up by 1.52% and NTPC up by 1.27%.

On the flip side, HDFC down by 1.91%, Infosys down by 0.94%, Asian Paints down by 0.90%, ITC down by 0.87% and ICICI Bank down by 0.77% were the top losers.

Meanwhile, after India and Japan failed to mutually resolve the dispute over imposition of safeguard import duty on iron and steel products; the World Trade Organization (WTO) has set up a panel to resolve the dispute between the two countries. The two sides failed to resolve the issue in the bilateral consultation process and Japan sought formation of dispute resolution panel.

Japan, which is the second largest steel producer in the world, had alleged that duties imposed on steel imports by India violates WTO trade norms and dragged India to the WTO against certain measures taken by it. Japan, in its request, reiterated that India’s safeguard measures in question were inconsistent with its obligations at the WTO and since the measures will expire on March 13, 2018, it hoped the new panel would observe the time frames specifically prescribed in the WTO’s Dispute Settlement Understanding for the purpose of a prompt resolution of the dispute. India on its part had objected to Japan’s request to the World Trade WTO to put in place early time frames for a “prompt’’ resolution of its dispute against India’s penal duties on steel imports.

In September 2015, India imposed provisional safeguard duty of 20 per cent on import of certain categories of steel with a view to protect domestic producers. Later in November last year, the government slapped the final duty. The duties are being slowly tapered off but would be in place till March 2018.

The CNX Nifty is currently trading at 9237.00, down by 0.85 points or 0.01% after trading in a range of 9215.40 and 9264.95. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.02%, Adani Ports & Special Economic Zone up by 2.82%, Grasim Industries up by 2.55%, Tata Steel up by 1.99% and Bosch up by 1.83%.

On the flip side, HDFC down by 2.01%, Indiabulls Housing down by 1.29%, HCL Technologies down by 1.26%, Infosys down by 0.92% and ITC down by 0.82% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 2.39 points or 0.04% to 5,654.22, Nikkei 225 increased 22.31 points or 0.12% to 18,832.56, Shanghai Composite increased 35.6 points or 1.1% to 3,258.11 and Taiwan Weighted increased 96.21 points or 0.98% to 9,907.73.

On the other hand, Hang Seng decreased 58.95 points or 0.24% to 24,202.53, KOSPI Index decreased 4.51 points or 0.21% to 2,156.59 and FTSE Bursa Malaysia KLCI decreased 4.45 points or 0.25% to 1,742.74.