Indian equities resume declining trend; Nifty holds 9200 mark

A session after showcasing a wonderful rally, Indian equity indices faltered and failed to extend the winning momentum on Wednesday as investors turned cautious ahead of key economic data- index of industrial production (IIP) for February and consumer price index (CPI) for March-to be released later in the day. Sentiments remained downbeat over Former finance minister P Chidambaram's comment that a more realistic deadline for rolling out the goods and services tax was October 1, instead of the scheduled date of July 1. While maintaining GST would be good for the country in the long-term, the senior Congress leader cautioned the government saying that implementation of the mega tax reform could be inflationary in the short-term. He cited the preparation time needed for small and medium-scale enterprises to get on to the new tax reform structure and the time needed for activating the GSTN platform as the main reasons why he thought October was a more realistic deadline. Adding the woes, leading exporters' body EEPC India has raised a red flag against the debilitating impact of sharp rise in rupee against dollar in the last three months on exports, which may slip off from the recovery path, if the situation persists further. Since the first week of January, rupee has gained by close to six per cent, eroding significantly the exporters' margins and more importantly the competitive edge against India's trade rivals in the international markets.

On the global front, Asian equity markets made a mixed closing on Wednesday, as tensions continue to ratchet up on the Korean Peninsula following a warning from North Korea of a nuclear attack on the US. Chinese stocks edged lower, as softer producer inflation data raised questions on the sustainability of the country's economic recovery and some shares that had rallied on plans for a new economic zone lost steam. Further, Japanese market declined as rising geopolitical tensions curbed risk appetite, with exporters badly hit as the safe-haven yen spiked to a five-month high. However, a rise in oil prices on reports that Saudi Arabia wants output cuts extended for another six months, supported market sentiments. Meanwhile, European shares edged higher, as uncertainty over the forthcoming French presidential elections calmed down a little.

Back home, after getting a cautious start, the local benchmarks slipped into lower level in late morning session, tracking weak trade in other regional markets. However, the indices recover most of their losses and ended the session moderately lower. Finally, the NSE's 50-share broadly followed index - Nifty plunged by over quarter percent to settle above the crucial 9,200 support level, while Bombay Stock Exchange's Sensitive Index - Sensex took a triple digit cut and closed below the psychological 29,700 mark. The market breadth remained optimistic, as there were 1144 shares on the gaining side against 1756 shares on the losing side, while 136 shares remained unchanged.

Finally, the BSE Sensex decreased 144.87 points or 0.49% to 29643.48, while the CNX Nifty was down by 33.55 points or 0.36% to 9,203.45. 

The BSE Sensex touched a high and a low of 29838.82 and 29549.74, respectively and there were 10 stocks on gainers side as against 20 stocks on the losers side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.22%, while Small cap index was down by 0.49%.

The top gaining sectoral indices on the BSE were Realty up by 0.81%, Healthcare up by 0.62% and Telecom up by 0.40%, while Utilities down by 1.25%, Consumer Durables down by 1.01%, Power down by 0.97%, Industrials down by 0.79% and Metal down by 0.66% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.83%, Hero MotoCorp up by 0.77%, Lupin up by 0.74%, Bajaj Auto up by 0.55% and Dr. Reddy’s Lab up by 0.48%. On the flip side, Tata Steel down by 2.12%, Adani Ports & SEZ down by 2.06%, Wipro down by 1.76%, GAIL India down by 1.72% and Tata Motors down by 1.60% were the top losers.

Meanwhile, asserting government’s continued support to public sector banks (PSBs), Finance Minister Arun Jaitley has said that the Indradhanush plan which envisages Rs 70,000 crore being given from the central budget is not the last step as far as recapitalisation is concerned and the government will fully support the public sector banks, since they have a very important role to play in supporting a large number of social programmes and extending the reach of banking and supporting infrastructure in the country.

Jaitley said the government has carried out the exercise of capitalisation of PSBs to conform with regulatory capital norms as well as for driving credit growth to cater to the needs of a growing economy. As part of Indradhanush scheme, the government has decided to infuse Rs 70,000 crore from budgetary resources. The second tranche of capital that is Rs 1.10 lakh crore would come from the central government policy that equity of public sector banks could be brought down, but certainly kept at a minimum level of 52 per cent.

The finance minister while talking about the growing non-performing assets (NPAs) in the PSBs said that the problem of NPAs was due to some people not paying up the banks for the loans taken and the burden coming on to the taxpayer. These 20 to 30 large accountholders will have to realise that banks have to be repaid. If the current promoters are not in a position to repay back, then they have to develop alternate corporate strategies so that the companies pay back. He further said that once the market conditions with regard to the valuation of these banks improves, then the bank shares itself will be used for their further capitalisation.

The CNX Nifty traded in a range of 9,246.40 and 9,161.80. There were 19 stocks in green as against 32 stocks in red on the index.

The top gainers on Nifty were Bosch up by 3.75%, Bharti Infratel up by 3.32%, Sun Pharma up by 2.31%, Eicher Motors up by 1.70% and Yes Bank up by 1.19%. On the flip side, Tata Steel down by 2.16%, Gail down by 1.99%, Wipro down by 1.99%, Hindalco down by 1.99% and ZEEL down by 1.96% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 26.82 points or 0.36% to 7,392.32, Germany’s DAX increased 53.81 points or 0.44% to 12,193.16 and France’s CAC increased 24.22 points or 0.47% to 5,126.08.

Asian equity markets made a mixed closing on Wednesday, with Japanese shares ending lower as rising geopolitical tensions curbed risk appetite, with exporters badly hit as the safe-haven yen spiked to a five-month high. The dollar fell under 110 yen for the first time in five months and gold prices hit five-month highs after North Korean state media warned of a nuclear attack on the United States at any sign of American aggression. US President Donald Trump wrote on Twitter that he explained to China last week that a trade deal with the US will be far better for them if they solve the North Korean problem. Meanwhile, a rise in oil prices on reports that Saudi Arabia wants output cuts extended for another six months, supported market sentiment. Chinese stocks ended lower, as softer producer inflation data raised questions on the sustainability of the country's economic recovery and some shares that had rallied on plans for a new economic zone lost steam. China's producer price inflation cooled for the first time in seven months in March as iron ore and coal prices tumbled, pressured by fears that the country's steel production is outweighing demand and threatening a glut of the metal this year.