Indian benchmarks continue to hold their head above water

In an extremely range-bound session of trade, Indian equity benchmarks continued to hold their head above water, on sustained buying by funds and retail investors. 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. The investment recovery is expected to remain modest and uneven across sectors as deleveraging takes place and industrial capacity utilisation picks up, it noted. Adding optimism among investors, Revenue Secretary Hasmukh Adhia has expressed his hopes of a smooth transition to the GST regime and has said that it will help domestic firms to become more competitive apart from streamlining the taxation for all business activities. However, traders remained 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. The June-September monsoon rainfall this year is expected to be 96% of the long-term average, with a 5% error margin, as per the weather office’s forecast issued earlier this month. Meanwhile, street will continue to watch out for the corporate results with as many as 44 companies announcing their March-quarter earnings today including firms like Bharti Airtel, Petronet LNG, InterGlobe Aviation and Future Retail among others.

On the global front, Asian stock markets were trading mostly lower on Tuesday, taking their cue from a flat Wall Street, while oil inched higher on expectations OPEC supply cuts will be extended. Further, Japanese equities dipped as the market ran out of puff after rallying to a 17-month high the previous day, though it was supported well by a confluence of factors like the significantly weaker yen. 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.

Back home, stocks from Metal, Realty and Capital Goods counters were supporting the markets’ uptrend, while those from Telecom, Banking and Healthcare counters were adding to the underlying cautious undertone. In scrip specific development, STI India declined after the company reported a net loss of Rs 3.29 crore for the quarter ended March 31, 2017 as compared to a net loss of Rs 16.84 crore for the same quarter in the previous year. On the other hand, JSW Steel gained after the company reported crude steel production of 12.88 lakh tonnes in April 2017 with a growth of 7% over the corresponding month in 2016.

The market breadth remained optimistic, as there were 1427 shares on the gaining side against 1043 shares on the losing side, while 136 shares remained unchanged.

The BSE Sensex is currently trading at 29942.24, up by 16.09 points or 0.05% after trading in a range of 29912.24 and 30008.35. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.30%, while Small cap index up by 0.57%.

The top gaining sectoral indices on the BSE were Metal up by 1.21%, Realty up by 1.00%, Capital Goods up by 0.94%, Power up by 0.86% and Industrials up by 0.85%, while Telecom down by 0.53%, Bankex down by 0.27% and Healthcare down by 0.17% were the few losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.31%, Axis Bank up by 0.78%, Adani Ports & Special Economic Zone up by 0.72%, Tata Motors up by 0.67% and Mahindra & Mahindra up by 0.55%. On the flip side, Hero MotoCorp down by 1.68%, Bharti Airtel down by 1.34%, ICICI Bank down by 1.10%, Sun Pharma down by 0.81% and Cipla down by 0.74% were the top losers.

Meanwhile, suggesting the removal of long-standing structural bottlenecks to enhance market efficiency in India, the International Monetary Fund (IMF) in its regional economic outlook has said that the country’s  growth is expected to rebound to 7.2 percent in the financial year 2017-18 and to further 7.7 percent in fiscal 2018-19, following disruptions caused by demonetization. It said that 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.

The report said that growth in Asia is forecast to accelerate to 5.5% in 2017 from 5.3% in 2016, with growth in China and Japan revised upward for 2017, while growth is revised downward in India due to temporary effects from the currency exchange initiative and in South Korea owing to political uncertainty. As per the report, in India, improving productivity in the agriculture sector, which is the most labour-intensive sector and employs about half of Indian workers, remains a key challenge.

The IMF also said that more needs to be done to address long-standing structural bottlenecks and enhance market efficiency, including from liberalising commodity markets to giving farmers more flexibility in the distribution and marketing of their produce, which will help raise competitiveness, efficiency, and transparency in state agriculture markets. In addition, input subsidies to farmers should be administered through direct cash transfers rather than underpricing of agricultural inputs, as such subsidies to the agriculture sector have had large negative impacts on agricultural output.

The CNX Nifty is currently trading at 9322.15, up by 8.10 points or 0.09% after trading in a range of 9307.70 and 9338.95. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.43%, IOC up by 2.18%, Hindalco up by 1.60%, HCL Tech up by 1.52% and Tata Steel up by 1.35%. On the flip side, Hero MotoCorp down by 2.17%, Indiabulls Housing down by 1.67%, Aurobindo Pharma down by 1.48%, Bharti Airtel down by 1.38% and Ambuja Cement down by 1.30% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 0.26%, Taiwan Weighted shed 0.22%, Jakarta Composite declined by 0.07%, FTSE Bursa Malaysia KLCI slipped 0.11% and Shanghai Composite was down by 0.12%. On the flip side, Hang Seng was up by 0.46%.