Benchmarks trim gains in morning session

Indian equity benchmarks trimmed gains in morning session as the street is eyeing outcome of Reserve Bank of India’s (RBI) monetary policy review scheduled later in the day. RBI is expected to have a hawkish tone when it unveils its last credit policy of the financial year as inflation and fear in the expansion in the fiscal deficit preoccupy its mind. The other major concern is the faster than earlier anticipated rise in the US treasury yields which is expected to slow down the foreign capital flows into India which may be accentuated by a hike in rates by the US Federal Reserve. Besides, the rupee strengthened against the dollar at the interbank forex market on fresh selling of the American currency by exporters and banks.

Traders were drawing some support from the report that as many as 67 Foreign Direct Investment proposals worth Rs 11,703 crore were approved during the first nine months of the ongoing fiscal. Separately, as per the latest data available with the Securities and Exchange Board of India, Indian firms mobilized Rs 21,000 crore by issuing shares to institutional investors during the December quarter of the current fiscal, resulting into an over 13-fold rise from the year-ago period. The firms had mopped up Rs 1,576 crore in the same period of the previous fiscal. The funds have been mobilized for business expansion, refinancing of debt, working capital requirements and other general corporate purposes.

Investor took note of domestic brokerage report that there will be minimal impact on inflation from the government’s decision to fix support prices for the upcoming Kharif crops like paddy at least 50 per cent higher than the cost of production. The report added that early implementation of the 1.5-times MSP scheme along with the price compensation support and several other innovative schemes for the rural sector will pave the way for a transformational change in rural economy going forward.

Traders were seen piling position in Realty, Oil & gas and Consumer Durables sector stocks, while selling was witnessed in IT and TECK sector stocks. In scrip specific development, Alok Industries is locked at upper circuit limit on report that at least four potential suitors, including the distressed funds of Kotak Mahindra and Edelweiss, have expressed interest in bidding for bankrupt textile company. The company is among the 12 defaulters that the RBI ordered to be referred to the bankruptcy court in June last year.

On the global front, the Asian markets were trading mostly in green. Wages of Japanese workers fell in December at the fastest pace in five months after adjustments for inflation, in a worrying sign that consumers could cut back spending because salaries are not keeping up with the cost of goods and services. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,200 and 10,500 levels respectively. The market breadth on BSE was positive in the ratio of 2021:405, while 80 scrips remained unchanged.

The BSE Sensex is currently trading at 34238.81, up by 42.87 points or 0.13% after trading in a range of 34235.90 and 34666.33. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.93%, while Small cap index was up by 2.12%.

The top gaining sectoral indices on the BSE were Realty up by 2.21%, Oil & Gas up by 1.66%, Consumer Durables up by 1.59%, Metal up by 1.47% and Industrials up by 1.46%, while IT down by 0.15% and TECK down by 0.13% were the only losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.26%, Tata Motors up by 2.07%, Dr. Reddy’s Lab up by 1.80%, Tata Motors - DVR up by 1.73% and Tata Steel up by 1.34%.

On the flip side, NTPC down by 2.03%, Hindustan Unilever down by 1.45%, Sun Pharma down by 1.26%, Wipro down by 1.07% and Bharti Airtel down by 1.05% were the top losers.

Meanwhile, with policymakers seeking to promote economic growth by reducing the pace of fiscal consolidation, the Fitch group company, BMI Research in its latest report has revised India’s fiscal deficit forecast to 3.5 percent of gross domestic product (GDP) for the fiscal year 2018-2019 (FY19) as against its earlier estimate of 3.3 percent. It also said that there is room for fiscal slippage as the government seeks to achieve its 7.5 percent growth target.

According to the report, Union Budget for FY19 (April-March) that was presented by Finance Minister Arun Jaitley on February 01, seeks to support growth and job creation at the expense of a slower pace of fiscal consolidation as policymakers aim to achieve a $5 trillion economy by 2025. The report also stated that while the Indian government loosened its central fiscal deficit target for FY19, it did not abandon its fiscal consolidation plans completely, but instead pushed its 3 percent fiscal deficit target back by a year to FY20.

Besides, the government outlined a fiscal deficit target of 3.3 percent of GDP in FY19 as against a revised estimate of 3.5 percent in FY18, indicating some fiscal consolidation, albeit at a slower pace than that recommended under the Fiscal Responsibility and Budget Management (FRBM) framework. Moreover, the FY19 budget saw a further increase in overall expenditure, with the biggest allocation going to transport, rural development, agriculture, education, and healthcare, as the key focus is supporting long term growth.

The CNX Nifty is currently trading at 10518.55, up by 20.30 points or 0.19% after trading in a range of 10518.35 and 10614.00. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were HPCL up by 4.75%, Aurobindo Pharma up by 2.37%, ONGC up by 2.21%, Dr. Reddy’s Lab up by 2.07% and Tata Motors up by 1.85%.

On the flip side, NTPC down by 2.03%, HCL Technologies down by 1.81%, Hindustan Unilever down by 1.31%, Bharti Airtel down by 1.25% and Sun Pharma down by 1.23% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 26.76 points or 1.48% to 1,839.21, Jakarta Composite increased 74.18 points or 1.14% to 6,552.72, Taiwan Weighted increased 179.91 points or 1.73% to 10,583.91, Nikkei 225 increased 204.79 points or 0.95% to 21,815.03 and Hang Seng increased 336.82 points or 1.1% to 30,932.24.

On the other hand, Shanghai Composite decreased 24.55 points or 0.73% to 3,346.11 and KOSPI Index decreased 23.45 points or 0.96% to 2,429.86.