Indian bourses continue firm trade led by Metal and Realty

Indian equity markets continued to trade firm in afternoon session on sustained fund inflows, largely driven by forecast of a normal monsoon. Sentiments remained positive with Prime Minister Narendra Modi setting up a task force under the chairmanship of the Vice Chairman of NITI Aayog Dr Arvind Panagriya, with an aim to create policies on employment based on credible data. The Prime Minister has directed that this task be expedited so that policies on employment can be formulated with a proper appreciation of impacts, based on credible data. Besides, strong regional markets, tracking a record high close on MSCI's global stocks benchmark following strong gains in oil prices, also helped the domestic sentiment. Meanwhile, the rupee recovered 20 paise to 64.42 against the US dollar in early trade on increased selling of the American currency by exporters and banks amid a higher opening in the domestic equity market. In scrip specific development, Prakash Industries was up by over two and half percent after reducing its debt by around Rs 67 crore on account of conversion of Foreign Currency Convertible Bonds (FCCB).

On the global front, Asian markets were trading mostly in green on a rebound in crude oil prices overnight, despite the mixed lead from Wall Street. Back home, the BSE Sensex is currently trading at 30348.47, up by 100.30 points or 0.33% after trading in a range of 30296.32 and 30366.43. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.44%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Metal up by 1.16%, Realty up by 1.12%, Basic Materials up by 1.06%, Consumer Disc up by 1.02% and Auto up by 0.80%, while Telecom down by 0.78%, Power down by 0.57%, Utilities down by 0.30% and Capital Goods down by 0.09% were the losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 2.57%, Bajaj Auto up by 2.06%, SBI up by 1.32%, ITC up by 1.11% and Axis Bank up by 1.08%. On the flip side, Bharti Airtel down by 1.62%, Hindustan Unilever down by 0.91%, GAIL India down by 0.77%, Dr. Reddys Lab down by 0.73% and Power Grid down by 0.48% were the top losers.

Meanwhile, the credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a stable outlook on the auto sector for the current financial year. This is mainly driven by moderate annual volume growth of 6-9% for passenger vehicle (PV) segment, despite an expected slowdown in the commercial vehicle (CV) segment. The report has said that growth in the PV segment is likely to be driven by utility vehicles (15-20%), the car segment (3-5%), while the van segment is expected to remain tepid at up to 2%. It also said that the slowdown in the CV segment is expected to be on account of a 9-12% decline in medium and heavy commercial vehicles (MHCVs), partially offset by a 6-9% growth in light commercial vehicles (LCVs).

The report further stated that MHCVs volumes would decline in FY18 due to inconsistent Index of Industrial Production (IIP) trend, coupled with the depletion of replacement demand. However, it also noted that LCV volumes are likely to continue to be supported by demand for last mile transportation, arising from a substantial increase in the online retail sales. In addition, it also expects that domestic scooter volume growth to remain close to the 2016-17 level at 15-18% and lower than the previous years due to the base effect.

As per the report, if there is a normal monsoon, motorcycle volumes are likely to recover slightly over April-December 2016 growth level of 6.3% with increased currency in circulation, leading to a demand revival in 4Q of FY17 and 18. Meanwhile, the ratings agency also said that the implementation of the Goods and Services Tax (GST) might benefit the auto industry and companies engaged in manufacturing in terms of significant reduction in logistics and supply chain costs. However, these benefits would be partly offset by the increase in effective tax rate.

The CNX Nifty is currently trading at 9447.65, up by 40.35 points or 0.43% after trading in a range of 9426.65 and 9450.65. There were 37 stocks advancing against 14 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 4.90%, Hindalco up by 4.38%, Eicher Motors up by 3.30%, Hero MotoCorp up by 2.59% and Bank of Baroda up by 2.24%. On the flip side, Bharti Airtel down by 1.61%, Hindustan Unilever down by 0.94%, Indiabulls Housing down by 0.90%, GAIL India down by 0.89% and Dr. Reddys Lab down by 0.84% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite increased 10.19 points or 0.33% to 3,062.98, FTSE Bursa Malaysia KLCI rose 10.87 points or 0.62% to 1,777.43, KOSPI Index added 26.25 points or 1.16% to 2,296.37, Taiwan Weighted surged 33.16 points or 0.33% to 10,001.48, Nikkei 225 was up by 61.46 points or 0.31% to 19,961.55 and Hang Seng increased 124.36 points or 0.5% to 25,139.78.

On the flip side, Jakarta Composite was down by 44.05 points or 0.77% to 5,653.01.