Benchmarks manage to keep head above water

Indian equity benchmarks, despite a dismal start, managed to enter into green terrain, keeping head above water, as traders got some support with World Bank’s expectation that India, the fastest growing major economy in the world, will grow at 7.2 per cent in the current fiscal and further up to 7.7 per cent by 2019-20 on strong fundamentals, reform momentum and improving investment scenario. It noted that demonetisation in November 2016 caused a slight disruption to India’s growth recovery, following a favourable monsoon last fiscal, but things seem to be bettering. However, gains remained capped as Securities and Exchange Board of India (Sebi) on Monday proposed to bring in tougher regulations to squeeze the use of participatory notes.

Global cues remained muted due to holiday in Hong Kong, Taiwan and China. Other indices were trading mostly in red after leaders of the G7 group of rich nations failed to make progress on narrowing differences on climate change and North Korea fired another missile off its east coast. Japanese market was down as the yen strengthened against the dollar. The US markets remained closed in last session, unable to give any cues to the other global markets.

Back home, traders will be eyeing the monsoon movement, as the southwest monsoon is most likely to hit the Kerala coast and northeast India simultaneously on Tuesday, the onset date forecast by the India Meteorological Department earlier this month. The market breadth indicating the overall health of the market was weak, with 829 shares gaining and 1,082 shares declining, while a total of 73 shares were unchanged.

The BSE Sensex is currently trading at 31161.79, up by 52.51 points or 0.17% after trading in a range of 31064.04 and 31183.42. There were 17 stocks advancing against 12 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading mixed; the BSE Mid Cap index gained 0.21%, however Small Cap index was down by 0.11%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.65%, Bankex up by 0.53%, Auto up by 0.41%, Utilities up by 0.16% and Oil & Gas up by 0.15%, while Consumer Durables down by 0.79%, Power down by 0.68%, FMCG down by 0.63%, Capital Goods down by 0.52% and Telecom down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.46%, Cipla up by 2.30%, ICICI Bank up by 2.13%, Dr. Reddy’s Lab up by 1.85% and GAIL India up by 1.63%. On the flip side, Power Grid down by 1.61%, Coal India down by 1.51%, TCS down by 1.10%, ITC down by 0.89% and Hindustan Unilever down by 0.60% were the top losers.

Meanwhile, World Bank in its ‘India Development Report’ has increased its hopes that India, the fastest growing major economy in the world, will grow at 7.2 per cent in the current fiscal and further up to 7.7 per cent by 2019-20 on strong fundamentals, reform momentum and improving investment scenario. The World Bank had in January scaled down India’s growth forecast to 7 per cent for 2016-17 and had estimated growth to rebound in 2017-18 to 7.6 per cent. In its latest report it said that Economic activity ought to accelerate in 2017-18 and GDP is projected to grow at 7.2 per cent from 6.8 per cent in 2016- 17. Growth to increase gradually to 7.7 per cent by 2019-20, underpinned by recovery in private investments

The report pointed that India remains the fastest growing economy in the world and it will get a boost from its approach to GST which will reduce the cost of doing business for firms, reduce logistics cost of moving goods across states, while ensuring no loss in equity. The World Bank report said that the overall impact of GST on equity and poverty is likely to be positive.

The Indian Development Update further said that India's economy was slowing down in early 2016-17, until the favourable monsoon started lifting the economy, but the recovery was temporarily disrupted by the government's 'demonetization' initiative , but things seems to be bettering.

According to the report, reforms such as the insolvency code and measures to deal with bad loans of public sector banks, including promulgation of the new ordinance, will also be crucial to enhance growth.  It expects inflation and external conditions to remain stable this fiscal, attributing it to coping mechanisms (which included greater usage of digital transactions), higher rural incomes, and robust public consumption.

The CNX Nifty is currently trading at 9620.65, up by 15.75 points or 0.16% after trading in a range of 9581.20 and 9621.45. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 8.12%, ICICI Bank up by 2.14%, Lupin up by 2.05%, Cipla up by 1.89% and Dr. Reddy’s Lab up by 1.81%. On the flip side, BPCL down by 2.07%, Power Grid down by 1.72%, Bharti Infratel down by 1.44%, Coal India down by 1.38% and TCS down by 1.16% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 26.54 points or 0.13% to 19,656.03, KOSPI Index shed 9.23 points or 0.39% to 2,343.74 and FTSE Bursa Malaysia KLCI was down by 0.21 points or 0.01% to 1,764.68. On the flip side, Jakarta Composite was up by 10.61 points or 0.19% to 5,722.95.