Indian benchmarks continue to hold their head above water

In an extremely range-bound session of trade, Indian equity benchmarks continued to hold their head above water on sustained and selective buying by funds and retail investors amid mixed global cues.  Sentiments got some support with Fitch Ratings’ latest report indicating that India's economic growth is expected to rise by 7.4% and 7.6% in the next two fiscal years. The rating agency added that the investment in India is also expected to witness gradual rise owing to transmission of supportive monetary policy along with the government’s various structural reforms. Some support also came with India, pitching for a greater engagement with BRICS (Brazil, Russia, India, China and South Africa) nations on issues the international community addressed during BRICS Foreign Ministers meeting in Beijing. However, gains remained capped after Punjab joined Maharashtra and Uttar Pradesh in announcing sops for farmers. Punjab Chief Minister Amarinder Singh on Monday announced a total waiver of entire crop loans of 8.75 lakh small and marginal farmers. Meanwhile, Airline stocks such as SpiceJet, IndiGo and Jet Airways gained traction after passengers carried by domestic airlines grew by close 18% to 465.87 lakhs during January-May 2017 as against 396.04 lakhs in the corresponding period of previous year. 

On the global front, Asian markets were trading mixed on Tuesday, with Japan's Nikkei index climbing over 1 percent to its highest level in nearly two years, as the dollar hit a three-week high against the yen. Chinese and Hong Kong shares remain subdued as investors await a decision on whether the MSCI index committee will include China A-shares in its Emerging Market Index. Meanwhile, Wall Street's S&P 500 and the Dow industrial average hit record highs as technology shares bounced back after some sudden falls earlier this month. 

Back home, stocks from Consumer Durables, Oil & Gas and IT counters were supporting the markets’ uptrend, while those from Realty counters were adding to the underlying cautious undertone. In scrip specific development, Apollo Hospitals Enterprise gained after the company entered into partnership with Mumbai-based Regenerative Medical Services (RMS) Regrow to offer a safe and cost-effective cell therapy for cartilage and bone problems for the first time in India. Furthermore, Gravita India gained after the company started commercial production of Washed Polypropylene by installing new automated eco- friendly washing line having annual capacity of 6000 MTPA at its existing recycling unit situated in Jaipur.

The market breadth remained optimistic, as there were 1186 shares on the gaining side against 1140 shares on the losing side, while 122 shares remained unchanged.

The BSE Sensex is currently trading at 31350.04, up by 38.47 points or 0.12% after trading in a range of 31318.87 and 31392.53. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.50%, while Small cap index up by 0.49%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.16%, Oil & Gas up by 0.68%, IT up by 0.60%, Industrials up by 0.59% and Energy up by 0.57%, while Realty down by 0.03% was the sole losing index on BSE.

The top gainers on the Sensex were Tata Motors up by 2.56%, Infosys up by 1.41%, Tata Motors - DVR up by 1.18%, Tata Steel up by 0.88% and ONGC up by 0.87%. On the flip side, Lupin down by 1.45%, HDFC down by 0.71%, Bajaj Auto down by 0.65%, TCS down by 0.56% and Hero MotoCorp down by 0.52% were the top losers.

Meanwhile, Indian economy is likely to pick up pace in the next two fiscal years. The Credit rating agency, Fitch Ratings in its latest report ‘Global Economic Outlook’ has forecasted the Gross Domestic Product (GDP) of the country to grow at 7.4 per cent this year and 7.6 per cent in the next fiscal year buoyed by rising public spending on infrastructure. The rating agency added that the investment in India is also expected to witness gradual rise owing to transmission of supportive monetary policy along with the government’s various structural reforms.

The report further said that the upcoming Goods & Services Tax (GST) regime will facilitate trade within India and reduce transaction costs. However, the rating agency also pointed that the demonetization move did have a material impact on spending and its lagged effect on the economy is quite puzzling and the effects would be expected to be quite rapidly felt - but partly reflects the challenges of measuring spending in an economy with a large informal sector.'

Moreover, Fitch Ratings predicted that the consumer price index (CPI) Inflation would rise as the current low food price effect will fade, but expecting to remain firmly within the central bank’s target range. It also said that investment dipped into negative territory (-2.1 per cent). This partly reflected poor construction activity, which fell by 3.7 per cent, an unprecedentedly low level in recent years and added that investment has been persistently weak in recent years.

Talking about other nations, the rating agency said that global economic growth is expected to rise from 2.5 percent last year to 2.9 percent in 2017 and 3.1 percent in 2018, the highest rate since 2010. Besides, it stated that the current year’s faster growth reflects a synchronised improvement across both advanced and emerging market economies, while pointing that this improving global picture implies an evolving monetary policy outlook.

The CNX Nifty is currently trading at 9669.25, up by 11.70 points or 0.12% after trading in a range of 9655.60 and 9676.50. There were 30 stocks advancing against 20 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Tata Power up by 3.40%, Tata Motors up by 2.49%, IOC up by 1.72%, Infosys up by 1.39% and Ambuja Cement up by 1.26%. On the flip side, Lupin down by 1.60%, HDFC down by 0.82%, Eicher Motors down by 0.79%, GAIL India down by 0.76% and TCS down by 0.54% were the top losers.

Asian markets were trading mixed; Shanghai Composite gained 0.06%, Jakarta Composite jumped 0.17%, Taiwan Weighted added 0.72% and Nikkei 225 was up by 1.02%. On the flip side, KOSPI Index declined by 0.1%, Hang Seng decreased 0.18% and FTSE Bursa Malaysia KLCI was down by 0.43%.