Firm trade prevails in late morning session

Indian equity benchmarks continued their firm trade in late morning session on account of buying in frontline counters, taking comfort from positive inflation numbers. The rupee extended its gains for the third straight session on Monday and opened higher against dollar, on account of selling of American currency by banks and exporters. The robust capital inflows into local equities alongside unwinding of long dollar positions by traders gave some significant support to rupee in the past few days. Private equity investments saw a significant upturn in April with deals worth $3.16 billion, up 69% from a year ago, due to big ticket transactions. From a 32-month low recorded in February this year, the deal tally in April represents a significant bounce back both in terms of number of deals as well as value. Traders were taking support from Consumer Price Index (CPI) inflation easing to 2.99% in the first month of the new financial year compared with 3.89% in March and 5.47% in the year earlier. Also, the inflation based on the wholesale price index (WPI) slipped to a four-month low of 3.85% in April as both food articles and manufactured items showed cooling in prices. The street, however, shrugged off industrial output growth data which slipped to 2.7% in March compared to 5.5% in March 2016, mainly on account of poor performance of manufacturing sector.

Traders were seen piling position in Metal, Basic Materials and Realty stocks, while selling was witnessed in Consumer Durables, Telecom and IT stocks. In scrip specific development, Idea Cellular was trading in red after the company on Saturday reported a consolidated loss of Rs 325.6 crore in the three-month period ended March 31, 2017. The company had posted a profit of Rs 449.2 crore in the same period a year ago. Inox Wind was trading under pressure as its consolidated net profit dipped 36% to Rs 127.54 crore in the quarter ended March 31. The company’s consolidated net profit was Rs 201.12 crore in the corresponding quarter a year ago.

On the global front, Asian shares were trading mostly in green, despite headwinds from a weekend missile test by North Korea and concerns over further spread of ransomware cyberattacks globally. China’s factory output and fixed asset investment growth cooled more than expected in April, adding to signs that momentum in the world’s second-biggest economy is slowing from a strong start in the first quarter. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,400 and 30,300 levels respectively. The market breadth on BSE was positive in the ratio of 1434:875, while 105 scrips remained unchanged.

The BSE Sensex is currently trading at 30317.57, up by 129.42 points or 0.43% after trading in a range of 30273.62 and 30357.96. There were 22 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.03%, while Small cap index was up by 0.74%.

The top gaining sectoral indices on the BSE were Metal up by 1.79%, Basic Materials up by 1.65%, Realty up by 1.28%, Bankex up by 0.94% and Utilities up by 0.84%, while Consumer Durables down by 1.02%, Telecom down by 0.85%, IT down by 0.70% and TECK down by 0.66% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.35%, Dr. Reddy’s Lab up by 2.10%, ICICI Bank up by 1.87%, Mahindra & Mahindra up by 1.41% and HDFC up by 1.31%.

On the flip side, Infosys down by 1.44%, TCS down by 0.58%, Wipro down by 0.56%, Hero MotoCorp down by 0.46% and Cipla down by 0.35% were the top losers.

Meanwhile, the Confederation of Indian Industry (CII) has demanded lower interest rate for private sector investments to pick up, which can help the government to achieve full benefit of note ban. CII President Shobana Kamineni said that the recent ordinance to resolve bad loans will give banks that have been hesitant for the past two years the confidence to lend. However, she also said that the industry would need lower interest rates for picking up demand. With the ordinance, she pointed out that right steps have been taken on the supply side, but the demand side is waiting for a trigger or a signal of lower interest rate.

She said that industry is reasonably prepared for rolling out the country’s biggest reform by way of Goods and Services Tax (GST) from July 1. She also suggested fixing of a sunset period for cess to be levied on luxury cars, tobacco and aerated beverages. Talking about the anti-profiteering clause in the GST Bill, Kamineni has recommended that it should not be used in a discretionary manner. She also said that it leaves scope for ambiguity of declaring something as profiteering and since most products have MRPs, the scope for profiteering does not arise. She added that they are against anything that is ambiguous and discriminatory that leaves it for interpretation.

Earlier this month, the government through an ordinance amended a law to give powers to the Reserve Bank of India (RBI) to order banks to initiate insolvency proceedings against defaulters and to create committees to advise them on recovering non- performing loans. The increased powers given to the RBI to clean up asset quality, and to intervene at an early stage when risks build, represents an important positive step toward ensuring a healthy banking system in the future.

The CNX Nifty is currently trading at 9442.25, up by 41.35 points or 0.44% after trading in a range of 9423.10 and 9445.35. There were 34 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.82%, Tata Steel up by 2.61%, Dr. Reddy’s Lab up by 2.32%, Ultratech Cement up by 1.92% and Kotak Mahindra Bank up by 1.90%.

On the flip side, Infosys down by 1.47%, Bharti Infratel down by 1.45%, Aurobindo Pharma down by 0.99%, Eicher Motors down by 0.66% and Wipro down by 0.60% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 1.89 points or 0.08% to 2,287.91, Shanghai Composite increased 7.84 points or 0.25% to 3,091.35, Taiwan Weighted increased 35.68 points or 0.36% to 10,022.50 and Hang Seng increased 149.17 points or 0.59% to 25,305.51.

On the other hand, Nikkei 225 decreased 34.46 points or 0.17% to 19,849.44, Jakarta Composite decreased 15.74 points or 0.28% to 5,659.47 and FTSE Bursa Malaysia KLCI decreased 2.2 points or 0.12% to 1,773.67.