Benchmarks trim gains; Sensex holds 35,500 mark

Indian equity benchmarks were off opening highs but continued to trade in green in morning session on account of buying in front line blue chip counters. The rupee weakened against the US dollar in early trade today at the interbank foreign exchange on increased demand for the American currency from importers and banks. The sentiments were upbeat after a report enlightened that a greater proportion of provident fund savings could be headed for the stock market with shares rising to successive records in past weeks. Such a move could more than double the provident fund money invested in exchange-traded funds (ETFs) over time. The government is considering a plan to raise the equity investment limit for the Employees’ Provident Fund Organisation (EPFO) to 25% from 15%. Separately, according to private reports that India will overtake China to be the fastest growing large economy in 2018 and the country’s equity market will become the fifth largest in the world. The report added that while the rest of the world offers low growth and insufficient structural change, India, by contrast, is seen as a reforming economy with the prospect of strong long-term growth.

Meanwhile, Prime Minister Narendra Modi has indicated that the upcoming Budget will not be a populist one and it’s a myth that the common man expects ‘freebies and sops’ from the government. He also pledged that his government will stay on the course of the reforms agenda that has pulled out India from being among the ‘fragile five’ economies of the world to being a bright spot. Sentiments also remained up-beat, as traders took some encouragement with report that overseas investors have put in a whopping Rs 87 billion in the Indian capital markets this month so far on expectation of recovery in corporate earnings and attractive yields. This follows an investment of Rs 2 trillion in the capital markets (equity and debt) in the entire 2017. However, the upside was capped on private brokerage report that India’s fiscal deficit is expected to increase to 3.5% of GDP in 2018-19 but it will not have any material impact on macro stability risks. As per the report, fiscal deficit target may widen to 3.5% of GDP in 2018-19 from 3.4% in 2017-18.

Traders were seen piling up position in Energy, Industrials and Oil & Gas stocks, while selling was witnessed in Telecom, Metal and Utilities sector stocks. In scrip specific development, Reliance Industries was trading in green as the company’s third-quarter net profit touched a record Rs 9,423 crore exceeding street estimates and may reinforce investor confidence in earnings growth, which is being driven by the commissioning of new plants. Apollo Micro Systems made a strong debut as the scrip got listed at a 73.82 per cent premium over its issue price of Rs 275. The issue, which ran from January 10 to January 12, had got a strong response from investors, with QIB quota seeing 102 times subscription, followed by 958 times subscription by HNIs, 40 times by retail investors and 16.03 times by employee reserved. In total the issue was subscribed 248.51 times.

On the global front, the Asian markets were trading mostly in red. China is confident that its economy will maintain steady and good momentum in 2018 after the world’s second-largest economy reported better-than-expected fourth-quarter growth. Confidence among Japanese manufacturers jumped in January to an 11-year high, highlighting corporate optimism driven by nearly two years of uninterrupted economic expansion and a buoyant stock market. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,500 and 10,850 levels respectively. The market breadth on BSE was positive in the ratio of 1370:1113, while 117 scrips remained unchanged.

The BSE Sensex is currently trading at 35592.36, up by 80.78 points or 0.23% after trading in a range of 35547.24 and 35700.72. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.17%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Energy up by 1.13%, Industrials up by 0.28%, Oil & Gas up by 0.25%, Realty up by 0.14% and Consumer Disc up by 0.11%, while Telecom down by 0.99%, Metal down by 0.71%, Utilities down by 0.45%, TECK down by 0.30% and PSU down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 4.18%, Reliance Industries up by 1.87%, Kotak Mahindra Bank up by 1.63%, HDFC Bank up by 1.45% and Yes Bank up by 1.32%.

On the flip side, ICICI Bank down by 2.19%, Wipro down by 1.66%, Bharti Airtel down by 1.32%, Tata Motors - DVR down by 1.31% and SBI down by 1.16% were the top losers.

Meanwhile, in order to boost the steel sector, the steel ministry has sought waiver of the import duty on coking coal. Ahead of the Union Budget 2018- 19, Steel Secretary Aruna Sharma has said that the ministry in its recommendations to the finance ministry has suggested bringing down the import duty on coking coal to zero percent from 2.5 percent.

Sharma has said the ministry also suggested bringing down the import duty on steel scrap to nil. India has to heavily depend on import of coking coal, as the domestic quality has higher ash content, which is unsuitable for the steel industry with present technology. To bring down the imports of coking coal, the steel ministry had earlier said that it was in discussion with the coal ministry for investment in washeries.

According to the Coal Minister Piyush Goyal, during April-September of the ongoing fiscal, 22.6 million tonne (MT) (provisional) of coking coal was imported. He added that while 41.6 MT coking coal was imported in 2015-16, the import was 43.5 MT.

The CNX Nifty is currently trading at 10896.90, up by 2.20 points or 0.02% after trading in a range of 10881.40 and 10929.85. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were ONGC up by 3.98%, UPL up by 1.84%, Reliance Industries up by 1.62%, Kotak Mahindra Bank up by 1.52% and Coal India up by 1.41%.

On the flip side, HPCL down by 3.45%, Hindalco down by 2.17%, BPCL down by 2.14%, ICICI Bank down by 2.06% and Wipro down by 1.98% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 76.95 points or 0.32% to 23,731.11, KOSPI Index decreased 24.94 points or 0.99% to 2,495.32, Hang Seng decreased 14.11 points or 0.04% to 32,240.78 and FTSE Bursa Malaysia KLCI decreased 1.6 points or 0.09% to 1,827.23.

On the other hand, Shanghai Composite increased 7.54 points or 0.22% to 3,495.41, Jakarta Composite increased 24.59 points or 0.38% to 6,515.48 and Taiwan Weighted increased 67.22 points or 0.6% to 11,218.07.