Indian equity indices end a lackluster session with modest cut; broader markets outclass blue-chips

Indian equity markets commenced the week on a sluggish note as the benchmarks showcased an unenthusiastic performance on Monday and settled marginally below the neutral line. The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over North Korea and coming French elections. Sentiments remained subdued with Reserve Bank of India's report that credit growth plunged to a whopping six-decade low of 5.08% in the financial year 2016-17, as against 10.7% a year ago. Investors also remained cautious with the private report that India's current account deficit (CAD) is expected to widen to 1.6% of GDP this year from 0.5% in 2016, owing to higher commodity prices and an expected strong domestic recovery. According to the report, stronger global demand and higher export prices are driving exports recovery, while the recovery in imports reflects higher commodity prices and likely improvement in domestic demand. Adding the woes, Revenue Secretary Hasmukh Adhia said that services sector is likely to attract a higher tax rate of 18% from the current 15% under the Goods and Services Tax (GST) regime, thus making services "slightly" more expensive.  Ha also said Tax buoyancy is likely to take a hit under the GST regime with the government predicting a very modest 8-9% growth in the indirect tax collections in the first year of GST implementation. In the previous fiscal year, indirect tax collections recorded a growth of 22%. However, downside remained capped with the report that Inflation based on the wholesale price index slipped to 5.70% in March due to easing fuel prices and cost decline of manufactured goods even as food prices hardened. Fuel and power inflation rose 18.16% in March from 21.02% last month. The WPI inflation, reflecting the annual rate of price rise, in February was 6.55%. Some support also came with the report that growth in exports of goods from India reached its peak in the last month of fiscal 2016-17 with a 27.59% increase, year-on-year, to $29.23 billion in March 2017. After two continuous years of decline, exports in April-March 2016-17 posted an increase of 4.71% to $274.64 billion compared to the previous fiscal. Meanwhile, India plans to sell stakes worth $5.4 billion in seven state-run companies during the current financial year as Asia's third-largest economy looks to fund its fiscal deficit amid ramped-up spending on rural areas and infrastructure. The part sale of government stakes in state-run and private firms is critical to meet the fiscal deficit target of 3.2% of gross domestic product in the year to March 2018. India aims to raise Rs 725 billion ($11.26 billion) through stake sale during the year.

On the global front, Asian markets ended mostly lower on Monday as worries over tensions on the Korean Peninsula persist following a failed missile launch by North Korea over the weekend. Further, already bruised by worries over upcoming French elections, global investor sentiment took a further hit on weak U.S. economic data. Though a raft of Chinese economic data earlier in the day beat market expectations, they failed to enthuse investors who had already been optimistic following a recent string of positive numbers out of the country. Similarly, strong March export figures from Singapore did little to lift the dour mood following the central bank's cautionary tone last week. Meanwhile, Chinese shares ended lower, as investors dumped stocks across the board after the country's top securities regulator vowed to 'brandish the sword' and combat market misbehaviors’. However, Japan's Nikkei index edged higher despite the strong yen weighing on exporters and weak US yields dragging down financial stocks.

Back home, after getting a cautious start, the local benchmarks slipped into lower level in late morning trade, tracking weak trade in other regional markets. Thereafter, the indices kept oscillating in a narrow range through the day's trade. Finally, the NSE's 50-share broadly followed index Nifty, suffered eleven points cut to settle below the crucial 9,150 support level, while Bombay Stock Exchange's Sensitive Index, Sensex slipped by around fifty points and closed below the psychological 29,450 mark. However, broader markets managed to outperform the larger peers as the BSE's midcap and smallcap indices settled with moderate gains. Meanwhile, shares of Tractor and construction equipment makers have came under pressure on the report that transport offices in most states refused to register these vehicles after the Supreme Court order, which stopped sales of vehicles meeting only BS-III emission standards. The order was not meant for tractors and heavy construction vehicles, which have different emission norms.

The market breadth remained optimistic, as there were 1478 shares on the gaining side against 1412 shares on the losing side, while 199 shares remained unchanged.

Finally, the BSE Sensex decreased 47.79 points or 0.16% to 29413.66, while the CNX Nifty was down by 11.50 points or 0.13% to 9,139.30. 

The BSE Sensex touched a high and a low of 29494.08 and 29363.28, 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 green; the BSE Mid cap index gained 0.25%, while Small cap index was up by 0.49%.

The top gaining sectoral indices on the BSE were Realty up by 8.82%, Oil & Gas up by 0.81%, Energy up by 0.69%, Consumer Disc up by 0.37% and Consumer Durables up by 0.25%, while Metal down by 1.09%, Telecom down by 0.66%, Power down by 0.61%, TECK down by 0.53% and PSU down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 3.64%, Reliance Industries up by 1.95%, Power Grid up by 1.30%, Dr. Reddy’s Lab up by 0.72% and Bajaj Auto up by 0.55%. On the flip side, NTPC down by 3.31%, Sun Pharma down by 2.18%, Asian Paints down by 1.81%, Coal India down by 1.77% and ONGC down by 1.08% were the top losers.

Meanwhile, the Finance Ministry has approved the employees’ provident fund (EPF) interest rate at 8.65% for the 2016-17 fiscal, which will benefit over four crore subscribers of Employees’ Provident Fund Organisation (EPFO).  According to EPFO estimates, the fund will see a surplus after providing 8.65% interest rate for the last fiscal.

As per the practice, the Central Board of Trustees’ (CBT) decision is concurred by the Finance Ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income or not. Once the Finance Ministry ratifies the rate of interest approved by the CBT, it is credited into the account of EPFO members for that particular financial year.

However, the Finance Ministry in its recommendation to the Labour Ministry has put a rider that the interest rate should not result in a deficit for the retirement fund. In December last year, a reluctant Finance Ministry had been nudging the Labour Ministry to lower the EPF rate to below 8.65% as approved by the EPFO trustees, as it wanted the interest to be aligned with the rates of small savings. Furthermore, Labour Minister Bandaru Dattatreya has been maintaining that the EPFO subscribers would be provided 8.65% rate of interest for 2016-17. Earlier, he had said that the CBT had decided to give 8.65% and added that they would have surplus of Rs 158 crore on providing 8.65%.

The CNX Nifty traded in a range of 9,160.00 and 9,120.25. There were 19 stocks in green as against 32 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 4.37%, Grasim Industries up by 2.31%, Reliance Industries up by 1.95%, Indiabulls Housing Finance up by 1.72% and Power Grid up by 1.10%. On the flip side, Bharti Infratel down by 3.22%, NTPC down by 3.01%, Bosch down by 2.64%, Sun Pharma down by 2.49% and Coal India down by 1.94% were the top losers.

European markets remained closed on account of Easter Monday.

Asian equity markets ended mostly in red on Monday as heightened worries over tensions on the Korean Peninsula and concerns about the upcoming French election offset positive GDP data from China. North Korea tested a missile which ‘blew up’ soon after launch, following a military parade over the weekend. The test came before US Vice President Mike Pence arrived in Seoul for a trip aimed at reassuring American allies in Asia. Chinese shares ended lower, as investors dumped stocks across the board after the country’s top securities regulator vowed to ‘brandish the sword’ and combat market misbehaviours. The markets were also hurt by growing worries that China's economic recovery, and thus the 'reflation trade', is ending, despite data showing the economy grew 6.9 percent in the first quarter, better than expected and the highest since July-September 2015. However, Japanese shares ended slightly higher in thin trade even as the yen benefited from soft US data and rising risk aversion in the wake of mounting geopolitical tensions. Prime Minister Shinzo Abe today urged North Korea to refrain from taking further provocative actions, comply with U.N. resolutions and abandon its nuclear missile development. Hong Kong markets were closed for Easter Monday.