Indian benchmarks unable to gather stem; end on a flat note

Indian benchmark indices ended the session on a flat note, with the Nifty managing to hold on to its 9300 mark. Today's session largely remained characterized by consolidation as the aimless indices moved only sideways in a tight band amid lack of triggers. Sentiments got some support with IMF's report indicating that India's growth is expected to rebound to 7.2% in the 2017-18 fiscal and 7.7% in 2018-19. According to the report, the temporary disruptions (primarily to private consumption) caused by cash shortages accompanying the currency exchange initiative are expected to gradually dissipate in 2017 as cash shortages ease. It noted that the investment recovery is expected to remain modest and uneven across sectors as deleveraging takes place and industrial capacity utilisation picks up. Some support also came with the report that mutual fund (MF) industry's asset base crossed the Rs 19 lakh crore mark in April on the back of fresh inflows in equity, debt and money market segments. The assets under management (AUM) of the MF industry, comprising 42 players, rose to an all-time high of Rs 19.26 lakh crore at the end of April from Rs 17.55 lakh crore at the end of March 2017. However, traders turned cautious after agriculture minister Radha Mohan Singh asked chief ministers of all states and union territories to review their preparedness to mitigate possible drought in the event of a rain deficit in the upcoming monsoon season. As per the weather office's forecast issued earlier this month, the June-September monsoon rainfall this year is expected to be 96% of the long-term average, with a 5% error margin. Meanwhile, India's food safety regulator has proposed a tax on all packaged foods with high fat, sugar and salt content. The regulator also proposed strict labelling norms for such products and a bar on advertising them on children's television channels. The Food Safety and Standards Authority of India (FSSAI), however, did not specify the quantum of tax that it wants imposed.

On the global front, Asian markets ended mostly lower on Tuesday, as the French election euphoria faded and a lack of fresh catalysts kept investors on the sidelines. Japanese equities declined as the market ran out of puff after rallying to a 17-month high the previous day, while  Chinese shares ended flat in thin trading as concerns over tougher financial regulations lingered. The People's Bank of China refrained from injecting cash into markets via open market operations for the third day running, adding to concerns over policy tightening. Meanwhile, South Korean market is closed for Tuesday's presidential election, in which liberal Moon Jae-in is widely expected to win the presidency, following months of leadership vacuum since former President Park Geun-hye was removed in March on charges of bribery and abuse of power. However, European stocks marched higher in early trade, as investors appeared back in the mood to take on more risk in the wake of German's better than expected trade data.

Back home, after getting a firm start, the local benchmarks traded in tight range near neutral line throughout the session and ended the day with moderate gains. The NSE’s 50-share broadly followed index Nifty, added single digit gains to settle above the crucial 9300 support level, while Bombay Stock Exchange’s Sensitive Index or Sensex gained seven points and ended above the psychological 29900 mark. Moreover, broader markets showed some resilience by outclassing their larger peers by good margin. The market breadth remained optimistic, as there were 1469 shares on the gaining side against 1355 shares on the losing side, while 174 shares remained unchanged.

Finally, the BSE Sensex gained 7.10 points or 0.02% to 29933.25, while the CNX Nifty was up by 2.80 points or 0.03% to 9,316.85. 

The BSE Sensex touched a high and a low of 30017.82 and 29911.44, respectively and there were 13 stocks on gainers side as against 17 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.19%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.90%, Industrials up by 1.27%, Power up by 0.99%, Metal up by 0.76% and Oil & Gas up by 0.76%, while Telecom down by 0.76%, Consumer Durables down by 0.63%, Bankex down by 0.19%, Consumer Disc down by 0.14% and Healthcare down by 0.11% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.00%, Adani Ports & SEZ up by 1.56%, Wipro up by 1.21%, Axis Bank up by 1.21% and Tata Motors up by 0.82%. On the flip side, Hero MotoCorp down by 3.07%, Lupin down by 2.25%, Bharti Airtel down by 1.75%, SBI down by 0.89% and Power Grid Corporation down by 0.86% were the top losers.

Meanwhile, expressing his hopes for resolution of rising bad loans problem with the newly promulgated ordinance in banking system, Finance Minister Arun Jaitley has said that the government is open to discuss proposal to provide more funds to the banks for recapitalization, mentioning that once the health of the lenders improves, it will dilute its stake in state-run banks to 52 per cent and that money will be used to inject capital in them.

Reiterating that the problem of bad loans is limited to a certain set of accounts which are not very large in number, Finance Minister has said that they are impacting the balance sheet because of huge quantum and further added that the government is trying over the last few years to address this problem and in view of this, it has recently empowered the central bank to take certain precipitative action in relation to resolving the issue of stressed asset itself by promulgation of the Banking Regulation (Amendment) Ordinance, 2017.

The government has allocated Rs 10,000 crore of capital infusion in public sector banks (PSBs) in 2017-18, which is lower than Rs 25,000 crore set aside in the previous budget and the state-run banks will have to raise about Rs 80,000 crore of equity capital over the next two years to comply with the Basel III norms and support credit growth.

The CNX Nifty traded in a range of 9,338.95 and 9,307.70. There were 26 stocks in green as against 24 stocks in red on the index, while 1 stock remained unchanged.

The top gainers on Nifty were IOC up by 3.26%, Larsen & Toubro up by 2.07%, Adani Ports & SEZ up by 1.98%, Axis Bank up by 1.54% and Wipro up by 1.24%. On the flip side, Hero MotoCorp down by 3.56%, Indiabulls Housing Finance down by 2.95%, Lupin down by 1.94%, Bharti Airtel down by 1.59% and ZEEL down by 1.46% were the top losers.

European markets were trading in green; France’s CAC increased 23.22 points or 0.43% to 5,406.17, UK’s FTSE 100 jumped 36.96 points or 0.51% to 7,337.82 and Germany’s DAX was up by 64.44 points or 0.51% to 12,758.99.

Asian equity markets made a mixed closing on Tuesday as the French election euphoria faded and a lack of fresh catalysts kept investors on the sidelines. Chinese shares ended flat in thin trading as concerns over tougher financial regulations lingered. The People's Bank of China refrained from injecting cash into markets via open market operations for the third day running, adding to concerns over policy tightening. Japanese stocks ended down as the market ran out of steam after rallying to a 17-month high on Monday, though it was supported by the yen languishing at a near two-month low against the dollar. Meanwhile, financial markets in South Korea were closed amid the much-anticipated presidential election, with Moon Jae-in, a liberal candidate of the Democratic Party, appearing to be the front-runner.