Benchmarks continue weak trade; Healthcare, FMCG drag

Indian equity benchmarks continued their weak trade in late morning session on account of selling in front line blue chip counters tracking feeble trend in other Asian markets. The selling was witnessed on account of geopolitical concerns as US President Donald Trump ordered a targeted military strike against an airfield in Syria from which a deadly chemical attack was launched this week. The United States launched cruise missiles potentially escalating the conflict and spooking investors globally. The rupee opened lower against dollar on account of buying of American currency by banks and importers amid subdued domestic equity markets. Sentiments also remained dampened after the Reserve Bank yesterday projected retail inflation to increase to 5% in the second half of the current fiscal citing risks of El Nino impacting the monsoon and one-off effects of the Goods and Services Tax.  RBI further said that a prominent risk could emanate from managing the implementation of the allowances recommended by the 7th Central Pay Commission (CPC). Traders were seen piling position in Telecom, Capital Goods and Oil & Gas stocks, while selling was witnessed in Healthcare, FMCG and Metal sector stocks. In scrip specific development, shares of Oil Marketing Companies (OMCs) Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) were trading in green amid reports that the state-run companies are planning to review fuel rates on a daily basis to align them with international prices. If this happens, prices at petrol pumps may change every day in line with a trend mostly seen in advanced markets. So far, OMCs review fuel prices on a fortnightly basis.

On the global front, Asian shares were trading mostly in red, after the US fired missiles into Syria in response to a chemical weapons attack. The US dollar dropped half a yen, while gold and oil prices rallied hard, though dealers said the early panic calmed when a US official called the attack a one-off. Household confidence in Japan rose more-than-expected last month. In a report, Cabinet Office said that Japanese Household Confidence rose to a seasonally adjusted annual rate of 43.9, from 43.2 in the preceding month whose figure was revised up from 43.1. 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 1418:956, while 111 scrips remained unchanged.

The BSE Sensex is currently trading at 29853.01, down by 74.33 points or 0.25% after trading in a range of 29763.02 and 29883.98. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.26%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Telecom up by 1.56%, Capital Goods up by 1.11%, Oil & Gas up by 0.75%, Industrials up by 0.67% and Realty up by 0.57%, while Healthcare down by 0.49%, FMCG down by 0.39%, Metal down by 0.23%, Consumer Durables down by 0.18% and Bankex down by 0.16% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.15%, Larsen & Toubro up by 1.88%, Tata Motors up by 0.71%, TCS up by 0.46% and GAIL India up by 0.44%.

On the flip side, Sun Pharma down by 2.21%, Adani Ports & Special Economic Zone down by 1.60%, Coal India down by 1.47%, Reliance Industries down by 1.15% and Power Grid down by 0.99% were the top losers.

Meanwhile, the six-member monetary policy committee (MPC), headed by Reserve Bank of India (RBI)  Governor Urjit Patel, has kept the policy rate under the liquidity adjustment facility (LAF) unchanged at 6.25 percent, shifting focus to ways to mop up excess cash in the banking system that threatens to stoke inflation. It revised the reverse repo rate upward by 25 basis points to 6 percent. Also, the Marginal Standing Facility (MFS) has been revised by 25 basis points to 6.5 percent. MSF is RBI's lending rate for banks against government securities.

In its first bi-monthly monetary policy review of 2017-18 RBI said that all the six members of the MPC voted in favour of the decision. RBI governor said that liquidity management has become important now to contain inflation, which faces more upside risks due to monsoon uncertainty and the impact of the Seventh Pay commission on housing allowances and the GST implementation. The RBI has projected retail inflation to average 4.5 percent in the first half of the year and 5 percent in the second half, citing risks of El Nino impacting the monsoon and one-off effects of the Goods and Services Tax (GST).

Moreover, the central bank said that Gross Domestic Product (GDP) growth will be at 7.4 percent for the current fiscal, up from 6.7 percent in 2016-17. It also said that with progressive remonetisation, the surplus liquidity in the banking system has declined from a peak of Rs 7,956 billion on January 4, to an average of Rs 6,014 billion in February and further down to Rs 4,806 billion in March. Currency in circulation expanded steadily during this period. Its impact on the liquidity overhang was, however, partly offset by a significant decline in cash balances of government up to mid-March which released liquidity into the system.

The CNX Nifty is currently trading at 9242.60, down by 19.35 points or 0.21% after trading in a range of 9212.60 and 9249.20. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corporation up by 3.10%, Bharti Airtel up by 2.27%, BPCL up by 2.23%, Larsen & Toubro up by 2.01% and Tech Mahindra up by 1.07%.

On the flip side, Sun Pharma down by 2.21%, Adani Ports & Special Economic Zone down by 1.75%, Coal India down by 1.59%, Zee Entertainment down by 1.35% and Bank of Baroda down by 1.29% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 157.03 points or 0.65% to 24,116.69, Taiwan Weighted decreased 39.11 points or 0.4% to 9,858.69, Jakarta Composite decreased 34.94 points or 0.62% to 5,645.30, FTSE Bursa Malaysia KLCI decreased 1.79 points or 0.1% to 1,737.77 and KOSPI Index decreased 1.72 points or 0.08% to 2,151.03.

On the other hand, Shanghai Composite increased 7.69 points or 0.23% to 3,288.70 and Nikkei 225 increased 111.35 points or 0.6% to 18,708.41.