Benchmarks trade in fine fettle ahead of RBI policy outcome

Indian equity benchmarks, despite some initial hiccups, are trading in fine fettle in early deals, with frontline gauges recapturing their crucial 31,600 (Sensex) and 9,900 (Nifty) levels. Sentiments remained up-beat with traders taking encouragement with report of core sector output growing at its fastest pace in five months in August, driven by higher coal and electricity production. However, traders remained cautious ahead of the Reserve Bank of India’s (RBI) policy outcome scheduled for later in the day. This will be the fourth bimonthly monetary policy review of FY2017-18. With inflation firming up and the rupee coming under pressure, the general view is that RBI will keep the policy rates unchanged.

Global cues remained supportive with all the Asian counters trading in green at this point of time with China’s and South Korea’s markets on a week-long holiday and Taiwan too closed for a holiday. The US markets continued their upmove in the last session and with the upward move on the day, the major averages climbed to new record closing highs, as traders seemed optimistic about the economic outlook and the prospects for Republican tax reform.

Back home, stocks related to oil and gas counters remained on buyers’ radar, as the government reduced basic excise duty rate on both branded and unbranded petrol and diesel by Rs 2 per litre. The Finance Ministry said that this has been done to cushion the impact of rising international prices of crude petroleum oil, petrol and diesel on their retail sale prices. Also a report by Moody's has said that India will surpass China as the fastest-growing Asian market for petroleum products in 2018, on the back of a 6 per cent demand growth.

The BSE Sensex is currently trading at 31617.63, up by 120.25 points or 0.38% after trading in a range of 31457.78 and 31618.26. There were 19 stocks advancing against 11 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index gained 0.67%, while Small cap index was up by 0.77%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.52%, Energy up by 1.20%, Oil & Gas up by 1.16%, FMCG up by 1.01% and PSU was up by 0.70%, while Telecom down by 0.40%, TECK down by 0.28% and IT was down by 0.20% were the few losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.84%, Dr. Reddy’s Lab up by 1.73%, Asian Paints up by 1.59%, ITC up by 1.53% and Reliance Industries up by 1.27%. On the flip side, Bharti Airtel down by 1.15%, Tata Motors - DVR down by 0.64%, Coal India down by 0.61%, Tata Motors down by 0.47% and TCS down by 0.45% were the top losers.

Meanwhile, giving some relief to the government amid anxiety over Goods and Services Tax (GST) roll out, India’s exports from special economic zones (SEZs) jumped 15.4% to Rs 1.35 lakh crore during the first quarter (April-June) of the financial year 2017-18. During the fiscal year 2016-17, exports grew about 12% to Rs 5.24 lakh crore as against Rs 4.67 lakh crore in the financial year 2015-16. Exports from SEZs and export-oriented units (EOUs) contributed about 33% to the country’s total shipments.

According to the commerce ministry data, SEZs have attracted investments worth Rs 4.33 lakh crore up to June this year and the highest numbers of SEZs are operational in states like Tamil Nadu, Karnataka, Telangana, and Maharashtra. Besides, till September 7, the government has approved as many as 424 zones, of which 222 are operational. Supplies from the domestic market to SEZs are treated at par with exports under the GST regime to promote exports from these zones.

Chairman of Export Promotion Council for EOUs and SEZs (EPCES) Rahul Gupta has said that in the GST regime, units in SEZs have advantage compared to the units in domestic tariff area. He also urged that the government should set up a proper refund mechanism for duties to be paid by SEZs when they buy products from outside these zones.

The CNX Nifty is currently trading at 9905.75, up by 46.25 points or 0.47% after trading in a range of 9850.65 and 9906.85. There were 38 stocks advancing against 12 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were HPCL up by 2.13%, Indiabulls Housing up by 1.83%, Dr. Reddys Lab up by 1.70%, Sun Pharma up by 1.67% and Asian Paints up by 1.47%. On the flip side, Bharti Airtel down by 0.97%, Coal India down by 0.81%, TCS down by 0.63%, Eicher Motors down by 0.48% and Tata Motors down by 0.40% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI rose 0.37 points or 0.02% to 1,760.04, Jakarta Composite gained 21.78 points or 0.37% to 5,961.23, Nikkei 225 increased 33.49 points or 0.16% to 20,647.56 and Hang Seng was up by 213.11 points or 0.76% to 28,386.32.