Markets trim gains to trade flat in late afternoon session

Indian equity benchmarks trimmed most of their gains in late afternoon session and were trading a tad above the neutral lines, as investors maintained caution ahead of the outcome of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meet due later in the day. The markets trimmed gains due to sell-off in IT and TECK stocks. However, a better-than-expected monsoon forecast by the India Meteorological Department (IMD) coupled with healthy buying in Healthcare, FMCG and Metal sectors, kept market sentiments buoyed. IMD has upgraded its monsoon forecast to 98% (with an error margin of +/-4%) of the long period average (LPA) for 2017, from 96% earlier forecasted. It also said that rainfall during the June-September period monsoon season will be normal this year. Some support also came with NITI Aayog CEO Amitabh Kant’s statement that the new tax regime would help the Indian economy to achieve 9 per cent growth rate. Meanwhile, the revenue department has imposed antidumping duty on import of a chemical used in furniture cushion and automobile seats from China, Japan and Korea.

On sectoral front, shares of steel companies were trading higher with report stating that India produced 16.391 million tonne (MT) of crude steel in the first two months of the current fiscal, up 4.5 per cent year-on-year. It had produced 15.683 MT in the same period of last fiscal. Output in May was 8.163 MT, up 2.2 per cent, from 7.989 MT a year ago. Besides, infrastructure companies’ shares were also trading higher with the BMI Research’s latest report that the infrastructure market of India, which is the third-largest in Asia may surpass Japan’s market in nominal value terms in next five years.

On the global front, European markets were trading mixed as investors opted for less risky options ahead of the U.K. General Election and a European Central Bank (ECB) meeting. Asian markets were trading in green. Back home, in scrip specific development, Alembic Pharmaceuticals edged higher on plan to file  100 abbreviated new drug applications (ANDAs) with the US health regulator United States Food and Drug Administration (USFDA) over the next three years starting this fiscal as part of its expansion plans. The company is also aiming to launch up to 12 products per year in America during this time.

The BSE Sensex is currently trading at 31207.99, up by 17.43 points or 0.06% after trading in a range of 31178.77 and 31346.99. 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 0.20%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.18%, FMCG up by 1.00%, Metal up by 0.64%, Consumer Disc up by 0.57% and Auto up by 0.54%, while IT down by 2.74%, TECK down by 2.12% were the only losing indices on BSE.

The top gainers on the Sensex were Mahindra & Mahindra up by 1.65%, GAIL India up by 1.62%, ICICI Bank up by 1.57%, Hindustan Unilever up by 1.45% and Sun Pharma up by 1.44%. On the flip side, TCS down by 3.76%, Infosys down by 2.94%, Wipro down by 2.88%, Tata Motors down by 1.01% and Adani Ports & SEZ down by 0.65% were the top losers.

Meanwhile, the government’s various initiatives to improve the country’s infrastructure is likely to result in Indian infrastructure market witnessing growth in future, with increasing demand for investment in roads, railways, ports, power transmission and water utilities. The Fitch group company, BMI Research in its latest report has forecasted that the infrastructure market of India, which is the third-largest in Asia may surpass Japan’s market in nominal value terms in next five years.

The research agency has said that even if the construction activity got hampered due to a negative impact of demonetization, robust growth will return in 2017 as work resumes on the large pipeline of infrastructure, residential and non-residential projects in the country. Though, it also stated that the industry remains immensely challenging on account of delay and cost overrun of infrastructure projects and remains relatively risky owing to the slow pace of reform.

BMI Research pointed that the government has made some progress in addressing underlying issues in the sector, such as streamlining the land-acquisition process in some states. Furthermore, it said that the several programmes aimed at improving logistics, stimulating investment in manufacturing and building affordable housing will contribute to growth in the construction industry over the next 10 years, noting that reforms to foreign investment laws under Make in India initiative have made it easier for international companies to invest and participate in India's infrastructure projects.

The CNX Nifty is currently trading at 9643.35, up by 6.20 points or 0.06% after trading in a range of 9631.35 and 9678.55. There were 36 stocks advancing against 15 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.18%, Mahindra & Mahindra up by 1.85%, Hindustan Unilever up by 1.69%, ICICI Bank up by 1.57% and Sun Pharma up by 1.53%. On the flip side, TCS down by 3.84%, Infosys down by 2.98%, Wipro down by 2.92%, Tech Mahindra down by 2.90% and BPCL down by 1.87% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted increased 3.81 points or 0.04% to 10,209.99, Nikkei 225 increased 4.72 points or 0.02% to 19,984.62, Jakarta Composite increased 6.13 points or 0.11% to 5,713.96 and Shanghai Composite increased 38.2 points or 1.23% to 3,140.33. On the flip side, Hang Seng decreased 22.98 points or 0.09% to 25,974.16, KOSPI Index decreased 8.48 points or 0.36% to 2,360.14 and FTSE Bursa Malaysia KLCI decreased 2.4 points or 0.13% to 1,788.61.

European markets were trading mixed; UK’s FTSE 100 increased 11.12 points or 0.15% to 7,536.07 and France’s CAC increased 13.55 points or 0.26% to 5,282.77. On the flip side, Germany’s DAX decreased 21.85 points or 0.17% to 12,668.27.