Benchmarks continue to trade higher; Nifty above 9450 mark

Benchmark equity indices continue to trade higher in noon session on robust foreign fund inflows, better-than-expected earnings by some blue-chip companies so far, and overnight gains in European and the US markets. Sentiments got some support with Industry body FICCI’s latest Economic Outlook Survey pegging India's gross domestic product (GDP) growth at around 7.4 percent for the fiscal year 2017-18. The survey was conducted during March and April 2017 and recorded a median GDP group forecast of 7.4 percent for the current fiscal year, with a minimum and maximum level of 7 percent and 7.6 percent respectively. The pick-up in overall GDP growth will also be supported by an improvement in industry and services sector growth. Some support also came with the report that India's monsoon rains are expected to arrive on the southern Kerala coast on May 30, two days ahead of schedule. India looks likely to receive higher monsoon rainfall than previously forecast as concern over the El Nino weather condition has eased.

However, investors turned cautious on report that India’s trade deficit swelled to a 29-month high in April as imports led by gold grew sharper than exports.  While Imports grew 49% from a year ago to $37.8 billion, buoyed by a 211% rise in gold imports, exports increased 19.7% to $24.6 billion, widening trade deficit to $13.2 billion from $4.8 billion in the year ago period. Meanwhile, India and Japan are together embarking upon multiple infrastructure projects across Africa, Iran, Sri Lanka and Southeast Asia in what could be viewed as pushback against China’s massive, unilateral infrastructure initiatives under the One Belt One Road (OBOR) project connecting it with Europe and Africa. While in East Africa, Delhi and Tokyo are planning to fund infrastructure and capacity building projects, Japan is expected to join the Indian foray into the expansion of Iran’s Chabahar port and the adjoining special economic zone.

On the global front, Asian markets were trading mostly lower on Tuesday, as valuations look stretched with the latest rally taking place in thin volumes and led by just a few sectors.  Chinese markets edged lower, after data on Monday disappointed with retail sales and industrial production seeing slower growth in April, while fixed asset investment in the first four months of the year failed to meet expectations, rising just 8.9% compared with the same period the year before. However, Japan's Nikkei share average rose to a 17-month high, drawing support from a sagging yen and Wall Street hitting record highs overnight. Meanwhile, Oil prices jumped 2% to its highest in more than three weeks on Monday, briefly topping $52 a barrel after Saudi Arabia and Russia said that supply cuts need to last into 2018, a step towards extending an OPEC-led deal to support prices for longer than first agreed. On Wall Street, the S&P 500 and the Nasdaq notched record closing highs on Monday powered by demand for technology stocks after a global cyber attack and by rising oil prices.

Back home, stocks from Telecom, Teck and Basic Materials counters were supporting the markets’ uptrend, while those from PSU and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, Dr. Reddy’s Laboratories gained after the company launched the generic version of Sofosbuvir and Velpatasvir fixed-dose combination under the brandname Resof Total in India. Furthermore, Atlanta gained after the company reported a jump of 64.15% in its net profit after taxes, minority interest and share of profit of associates at Rs 21.58 crore for the quarter ended March 31, 2017 as compared to Rs 13.15 crore for the same quarter in the previous year.

The market breadth remained optimistic, as there were 1298 shares on the gaining side against 1133 shares on the losing side, while 154 shares remained unchanged.

The BSE Sensex is currently trading at 30436.43, up by 114.31 points or 0.38% after trading in a range of 30363.37 and 30518.78. 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 0.10%, while Small cap index up by 0.26%.

The top gaining sectoral indices on the BSE were Telecom up by 2.15%, TECK up by 0.76%, IT up by 0.67%, Basic Materials up by 0.43% and Energy up by 0.37%, while PSU down by 0.12%, Capital Goods down by 0.10%, Metal down by 0.08% and Bankex down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.94%, TCS up by 1.84%, Dr. Reddys Lab up by 1.58%, Tata Motors up by 1.35% and Wipro up by 1.23%. On the flip side, Asian Paints down by 1.11%, Coal India down by 0.67%, Hero MotoCorp down by 0.61%, ONGC down by 0.54% and Axis Bank down by 0.36% were the top losers.

Meanwhile, furthering its efforts to protect the domestic steel industry, the government has imposed anti-dumping duty on cold rolled steel products exported from Korea, Japan, China and Ukraine.  As per finance ministry’s notification, the duty will be the difference between the landed value of the steel products and $576 per tonne and will be effective for a period of five years from the date of imposition of the provisional anti-dumping duty i.e. the 17th August, 2016.

The Directorate General of Antidumping and Allied Duties (DGAD) which administers the anti-dumping and countervailing measures in India, in its final findings concluded that the domestic industry has suffered material injury due to dumping of these items and recommended imposition of definitive anti-dumping duty on the imports of these goods in order to remove injury to the domestic industry. Earlier, Essar Steel India, Steel Authority of India, JSW Steel and JSW Steel Coated Products had jointly filed the application for dumping probe and other cold rolled steel products manufacturers like Bhushan Steel and Tata Steel have supported the cause.

With an aim to restrict cheaper imports, the government in last week had issued a similar notification to impose an anti-dumping duty on 47 hot rolled steel products from half-a-dozen nations, including China, Japan, Korea, Russia and Indonesia, for a period of five years. Countries initiate anti-dumping probe to determine if the domestic industry has been hurt by flooding of below-cost import.

The CNX Nifty is currently trading at 9468.05, up by 22.65 points or 0.24% after trading in a range of 9456.35 and 9492.60. There were 29 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were ACC up by 3.14%, Bharti Airtel up by 2.94%, TCS up by 1.81%, Dr. Reddys Lab up by 1.54% and Bharti Infratel up by 1.48%. On the flip side, Zee Entertainment down by 1.86%, Indiabulls Housing down by 1.48%, Asian Paints down by 1.22%, Hindalco down by 1.21% and Bank Of Baroda down by 1.06% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 0.18%, Taiwan Weighted shed 0.05%, Jakarta Composite dropped 0.27%, Shanghai Composite fell 0.09% and FTSE Bursa Malaysia KLCI was down by 0.16%. On the flip side, KOSPI Index increased 0.06% and Nikkei 225 was up by 0.12%.