Indian market remain flat with negative bias in range-bound session of trade

In the extremely range-bound session of trade, Indian equity indices altering between positive and negative territory, were now trading flat with bit of negative bias as investors and foreign funds were adopting a cautious approach, after two back-to-back record-setting sessions. Besides, weak trend in Asian stocks coupled with pessimistic cause from US markets also weighed on the sentiment. However, losses remained capped with the report that Indian economy is entering a productive growth phase and real GDP growth is likely to rise to 7.9% by December driven by favourable external demand, improving corporate balance sheets and private capex recovery. Adding the optimism among investors, senior UN economic official has said demonetisation policy is not expected to have a long-term impact on domestic demand in India, which is projected to clock a 7.9% growth in fiscal 2018. Also, the government’s move to demonetise Rs 500 and Rs 1,000 notes has helped the authorities bring 9.1 million people under the tax net as money has lost its anonymity, Union Finance Minister Arun Jaitley said on Tuesday. 

On the global front, Asian markets were trading lower on Wednesday, as investors remained cautious about US President Donald Trump’s ability to push through his economic agenda following accusations that he tried to quash an FBI probe. Fresh reports emerged of President Donald Trump's interference in the Federal Bureau of Investigation's probe around his former National Security Advisor Michael Flynn. The latest development adds to the ongoing political turmoil after a report that the US president shared terrorism intelligence with Russian officials, an action he has since defended. Further, Japanese market edged lower after the dollar eased against the yen on weak US economic data, while financials stocks underperformed hit by lower US yields.

Back home, stocks from Metal, Basic Materials and Power counters were supporting the markets, while those from Consumer Durables, IT and FMCG counters were adding to the underlying cautious undertone. In scrip specific development, Punjab & Sind Bank declined after the bank reported a fall of 91.51% in its net profit at Rs 8.33 crore for the quarter ended March 31, 2017 as compared to Rs 98.12 crore for the same quarter in the previous year. On the other hand, Minda Industries gained after the company reported a rise of 35.79% in its consolidated net profit at Rs 57.78 crore for the quarter ended March 31, 2017 as compared to Rs 42.55 crore for the same quarter in the previous year.

The market breadth remained pessimistic, as there were 1166 shares on the gaining side against 1242 shares on the losing side, while 138 shares remained unchanged.

The BSE Sensex is currently trading at 30579.95, down by 2.65 points or 0.01% after trading in a range of 30519.14 and 30642.94. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were showing mixed trend; the BSE Mid cap index was up by 0.12%, while Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were Metal up by 2.44%, Basic Materials up by 0.65%, Power up by 0.53%, Utilities up by 0.35% and Capital Goods up by 0.21%, while Consumer Durables down by 0.73%, IT down by 0.62%, FMCG down by 0.62%, TECK down by 0.44% and Healthcare down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 8.00%, ICICI Bank up by 1.52%, Hero MotoCorp up by 0.94%, Mahindra & Mahindra up by 0.89% and Tata Motors up by 0.88%. On the flip side, Adani Ports & SEZ down by 1.36%, ITC down by 1.22%, Wipro down by 0.99%, Infosys down by 0.98% and Sun Pharma down by 0.75% were the top losers.

Meanwhile, cautioning that execution of provisions in the new steel policy will remain a key challenge for the government, India Ratings and Research (Ind-Ra) in its latest report has said that the policy which is betting on higher spending on infrastructure and construction sector will though give a boost to the struggling Indian steel industry, but the execution of provisions in the policy will remain a key challenge for the government and therefore to make the policy successful, timely implementation of various steps will be crucial along with ways to build demand leading to improvement in capacity utilisations of existing plants.

The report further said that steel demand will have to grow at a CAGR of around 7 -7.5 percent during the period against a CAGR of 3.5-4 per cent over the last 5 year to meet the expected demand of 230 MT and to increase the steel capacity to 300 MT by 2030-31 would require extensive efforts towards increasing the availability of resources such as infrastructure, raw material and finance. While accelerated spending by government in infrastructure, construction, railways and the defence sector will be the key to achieve the aggressive demand growth, Ind-Ra believes the expected growth in steel demand looks ambitious and may face hurdles like political instability, budget constraint and timely execution of projects.

Furthermore, the agency pointed that the policy also focuses on improvement in the efficiency parameters so as to reduce the cost of production and develop advanced steel products to reduce the dependence on imports. However, it has said that the capacity creation which requires capital expenditure of around Rs 10 trillion will lead to stretched credit metrics on a sustained basis for companies, due to the continuous capex undertaken, and expects that central public sector enterprises will be under pressure to build capacity for catering to any demand- supply gap after considering the capex by the private sector.

The CNX Nifty is currently trading at 9501.75, down by 10.50 points or 0.11% after trading in a range of 9489.70 and 9521.00. There were 20 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 8.09%, Indiabulls Housing up by 2.60%, ICICI Bank up by 1.50%, Hindalco up by 0.99% and Hero MotoCorp up by 0.98%. On the flip side, Tech Mahindra down by 2.47%, Bosch down by 1.88%, Yes Bank down by 1.76%, Adani Ports & SEZ down by 1.48% and ITC down by 1.22% were the top losers.

Asian markets were trading in red; Nikkei 225 decreased 0.62%, Hang Seng slipped 0.1%, Taiwan Weighted dropped 0.18%, Jakarta Composite shed 0.39%, KOSPI Index fell 0.22%, FTSE Bursa Malaysia KLCI dipped 0.38% and Shanghai Composite was down by 0.23%.