Benchmarks make cautious start on Wednesday

Indian equity benchmarks have made a cautious start and are trading marginally in red in early deals on Wednesday, as traders remained concerned about IMF trimming India’s annual growth forecast by 0.4 percentage points to 7.2 percent for 2017, citing the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent demonetization move. However, losses remained capped with good monsoon expectation, as the Indian Meteorological Department (IMD) has said that the country would receive 'normal' monsoon this year, with a fair distribution of rainfall across major parts of country.

On the global front, Asian markets were trading mostly in red at this point of time, tailing the decline in the US markets. Uncertainty coupled with weaker-than expected results have pushed some investors away from riskier assets. The Japanese market too was marginally in red despite weakness in yen. The US markets despite coming off the day’s low ended in red in the last session.

Back home, stocks related to banking counter remained under pressure, as the Reserve Bank of India (RBI) has released a series of guidelines with a view to tighten norms concerning recognition of and provisioning for bad assets at banks. However, Tata Consultancy Services (TCS) edged higher despite missing estimates on both the profit and revenue front with negative growth in the BFSI and retail segments. The company’s net profit for the Q4 fell 2.5% sequentially to Rs 6,608 crore, while revenues declined 0.3% to Rs 29,642 crore. It’s for the second consecutive quarter that it has underperformed Infosys.  

The BSE Sensex is currently trading at 29300.74, down by 18.36 points or 0.06% after trading in a range of 29241.48 and 29373.55. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading marginally in green; the BSE Mid cap index gained 0.06%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Power up by 0.78%, Utilities up by 0.66%, IT up by 0.35%, TECK up by 0.30% and FMCG was up by 0.27%, while Oil & Gas down by 0.66%, Bankex down by 0.54%, Metal down by 0.43%, Energy down by 0.38% and PSU was down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.36%, NTPC up by 1.11%, Adani Ports &Special up by 1.09%, Sun Pharma up by 1.04% and TCS was up by 0.45%. On the flip side, Axis Bank down by 1.81%, GAIL India down by 0.86%, ONGC down by 0.83%, Tata Steel down by 0.63% and ICICI Bank was down by 0.58% were the top losers.

Meanwhile, easing concerns over farm and economic growth in the country, the India Meteorological Department (IMD), the country's national weather forecaster, has said that India would receive 'normal' monsoon, with a fair distribution of rainfall across major parts of country. It added that seasonal monsoon rainfall is likely to be 96% of the long period average (LPA), which is at the lower end of the normal range (96-104%), with a model error of plus or minus 5 percent. Though, it did not give the probability of below normal rainfall. Besides, the last year monsoon rainfall was 97%.

IMD has assured that India is in for a normal monsoon season this year which will be good for agriculture and the economy of the country. It further added that the chances of an El Nino (which negatively affects monsoon rainfall in India) developing later in the year had fallen from over 50% to about 40% in April. Additionally, an Ocean Dipole (IOD) development over the equatorial Indian Ocean could have a positive impact on rainfall in India. Thus, there is a 38% probability of going beyond 96% and moving towards near normal (100%).

El Nino is a complex set of weather cycles that occur over the Pacific Ocean and affect climate patterns worldwide. The El Nino is characterised by warm surface temperatures over the Eastern Pacific Ocean, which results in heavy rain in South America and drier conditions over South and South East Asia and Australia. As per the IMD parameter rainfall less than 90% of the LPA is considered as deficient, between 90-96% below normal, between 96-104% normal, 104-110% above normal and above 110% of LPA is considered as excess.

Meanwhile, IMD will issue the update forecasts in early June, 2017 as a part of the second stage long range forecast of monsoon rainfall. Along with the update forecast, separate forecasts for the monthly (July and August) rainfall over the country as a whole and seasonal (June-September) rainfall over various geographical regions of India will also be issued.

The CNX Nifty is currently trading at 9089.80, down by 15.35 points or 0.17% after trading in a range of 9079.50 and 9120.50. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Power Grid up by 1.43%, HCL Tech up by 1.27%, Tata Power up by 1.26%, Bharti Infratel up by 1.22% and Adani Ports was up by 1.08%. On the flip side, Axis Bank down by 2.03%, Indiabulls Housing down by 1.94%, BPCL down by 1.53%, Bank of Baroda down by 1.05% and ONGC was down by 0.91% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 144.64 points or 0.6% to 23,779.90, Taiwan Weighted shed 83.19 points or 0.85% to 9,663.37, Shanghai Composite dropped 33.15 points or 1.04% to 3,163.57, KOSPI Index fell 11.47 points or 0.53% to 2,136.99 and FTSE Bursa Malaysia KLCI was down by 1.38 points or 0.08% to 1,739.22.

On the flip side, Nikkei 225 increased 5.37 points or 0.03% to 18,423.96 and Jakarta Composite was up by 29.03 points or 0.52% to 5,606.52.