Indian markets trade flat with positive bias in range-bound session of trade

In an extremely range-bound session of trade, Indian equity benchmarks altering between positive and negative territory, were now trading flat with bit of positive bias, as investors and foreign funds were adopting a cautious approach, amid quarterly earnings season which picks up pace, with nearly 2,000 companies slated to unveil their Q4 results this week. Traders will keep a close tab on the arrival of monsoon rains which is expected to hit the southern Kerala coast by the end of the month. On the macro front, the government will announce data on Q4 March 2017 gross domestic product (GDP) on 31 May 2017. Besides, auto stocks will be in focus as they will start reporting monthly sales figure from June, 01 2017. 

Sentiments got some support with the Employees Provident Fund Organisation (EPFO) approving hike in investment limit in exchange traded funds (ETFs) to 15%, from the existing 10%. The decision was taken during the meeting of the Central Board of Trustees (CBT) here on Saturday. Some support also came with the report that foreign investors have pumped in nearly $4 billion in the country’s capital market so far this month due to finalization of GST rates for bulk of the items and stable outlook for the rupee. According to latest depository data, FPIs invested a net Rs 9,007 crore in equities during May 2-26, while they poured Rs 15,769 crore in the debt markets during the period under review, translating into a net inflow of Rs 24,776 crore ($3.85 billion). Meanwhile, Telecom stocks remained cautious after the report that India’s top bankers have warned the government that failure in the debt-bruised telecom sector could result in defaults in the industry whose total borrowings amount to Rs 8 lakh crore. This happens to be more than double the direct exposure banks have made to this sector as disclosed in the Reserve Bank of India’s data.  

On the global front, Asian markets were exhibiting mixed trend on Monday after opinion polls showed a shrinking lead for British Prime Minister Theresa May in upcoming elections and North Korea test-fired another short-range ballistic missile early Monday. Japan's Nikkei index gained as the dollar edged higher versus the yen on the back of upbeat US GDP data. On Friday, the S&P 500 and Nasdaq scraped to record closing highs on strength in consumer shares. The dollar index against a basket of major currencies was steady at 97.487 after rising on Friday thanks to upbeat US gross domestic product data.

Back home, stocks from FMCG, Consumer Durables and Metal counters were supporting the markets’ uptrend, while those from Healthcare, Realty and IT counters were adding to the underlying cautious undertone. In scrip specific development, DLF declined after the company’s net sales bookings fell sharply by 63% to Rs 1,160 crore during the last fiscal due to demand slowdown in the property market. On the other hand, Surana Solar gained after the company emerged as the lowest bidder under the Resco (Renewable Energy Service Company) for the rooftop installation of 5 MW solar power generating units under the Kakinada Smart City Project in Andhra Pradesh.

The market breadth remained pessimistic, as there were 815 shares on the gaining side against 1554 shares on the losing side, while 134 shares remained unchanged.

The BSE Sensex is currently trading at 31084.16, up by 55.95 points or 0.18% after trading in a range of 30869.90 and 31155.40. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.71%, while Small cap index down by 0.93%.

The top gaining sectoral indices on the BSE were FMCG up by 1.49%, Consumer Durables up by 1.45%, Metal up by 0.45%, Auto up by 0.22% and Energy up by 0.20%, while Healthcare down by 3.10%, Realty down by 2.97%, IT down by 1.01%, TECK down by 0.92% and Power down by 0.92% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.67%, HDFC up by 2.34%, Hindustan Unilever up by 2.04%, Power Grid up by 1.31% and Reliance Industries up by 1.21%. On the flip side, Sun Pharma down by 11.36%, Adani Ports & SEZ down by 4.68%, ICICI Bank down by 1.91%, Wipro down by 1.19% and Infosys down by 1.07% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has once again listed the poor performance by private investors and banks to be a big challenge for the Indian economy. He said that even though India has emerged as most attractive investment destination for foreign investors, investment cycle of domestic industry is not at satisfactory level, mainly owing to banking sector performance.

Jaitley noted that increasing investment cycle of domestic industry still remains a big challenge when two other major challenges, the rollout of upcoming Goods and Services Tax (GST) from July 1and signs of positive trends in global growth have been overcome.

Finance minister had earlier said that the banks have to recover their bad loans to boost private investment, as domestic private investment needs to pick up. Efficiency has to be brought in so as to recover the money from defaulters. Further, he said that a number of steps will be taken to revitalise public sector banks, including those relating to sale of assets, closure of non-profitable branches and reduction of overheads when memorandums of understanding (MoUs) are signed with them for recapitalisation.

He further said that a defaulting litigant hurts the lending environment in India, adding that the ordinance promulgated by the government on bad loans will empower the Reserve Bank of India to issue directions to banks for resolution of stressed assets.

The CNX Nifty is currently trading at 9601.40, up by 6.30 points or 0.07% after trading in a range of 9547.70 and 9622.30. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were ITC up by 2.57%, HDFC up by 2.33%, Hindustan Unilever up by 2.08%, Bharti Infratel up by 2.07% and Power Grid up by 1.76%. On the flip side, Sun Pharma down by 11.24%, Tech Mahindra down by 10.10%, Adani Ports & SEZ down by 5.10%, Yes Bank down by 2.45% and Aurobindo Pharma down by 2.35% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI rose 0.03%, Nikkei 225 added 0.06% and Hang Seng was up by 0.19%. On the flip side, KOSPI Index declined 0.25% and Jakarta Composite was down by 0.06%.