Benchmarks continue to trade in green with marginal gains

Indian equity benchmarks trimmed most of their gains in morning session and continued their trade in green territory with marginal gains, on account of buying in frontline blue chip counters. The rupee opened up against the dollar on account of selling of the American currency by exporters and banks. Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 240.29 crore on February 15, as per provisional data released by the stock exchanges. Domestic Institutional Investors (DIIs) bought shares worth a net Rs 49.92 crore. Investors remained cautious with report that India’s exports plunged by 9.80% to $24.38 billion in January, from $27.03 billion worth of merchandise shipped out in December 2017. Conversely, the country’s imports during the month under review declined by 2.93% and stood at $40.68 billion in January 2018 from $41.91 billion in December 2017. The PSU banking stocks were reeling under pressure stung by a massive Rs 11,400 crore fraud as Punjab National Bank (PNB) crisis continued. The Enforcement Directorate conducted searches in 17 properties linked to billionaire jewellery designer Nirav Modi and his maternal uncle and business partner Mehul Chinubhai Choksi’s firm Gitanjali Gems across India in a case of fraud, and seized diamond, gold, and jewellery worth Rs 51 billion.

However, downside remained capped with the International Monetary Fund (IMF) director of Communications Department Gerry Rice’s statement that the tax collection assumptions in India’s budget is ambitious as the budget for 2018-19 assumes the tax revenue to increase faster than the value of transactions in the economy. He added that the budget aims for a deficit that is smaller than the deficit that was expected in 2017-18. Some support also came on report that growth in non-food credit in the fortnight to February 2, 2018, rose to near three-year high of 11.89% year-on-year (y-o-y). According to data compiled by the Reserve Bank of India (RBI), the outstanding loans from banks to industry and individuals stood at Rs 82.11 lakh crore as on February 2. Credit growth has moved into double-digit territory in recent months.

Investors took note of Union Minister Nitin Gadkari statement that India will soon come out with a policy to scrap vehicles that are more than 15 years old. The policy aims at curbing rising vehicular pollution in the country. Gadkari said India is bound to become the hub for automobile industry and the prices were bound to be cheaper as scrap could be used for production of auto parts among other things. Separately, Union minister D V Sadananda Gowda has said that the government will change the base year to 2017-18 for the calculation of GDP and IIP numbers while for retail inflation the year will be revised to 2018.

Traders were seen piling position in IT, TECK and Energy sector stocks, while selling was witnessed in Auto, PSU and Consumer Disc sector stocks. In scrip specific development, Indoco Remedies was trading in green as it has received certification for its Goa plant. The company received European GMP certification from Regulatory Authority of Hungary for its manufacturing facility for non-sterile products (Goa-plant III).

On the global front, most of the Asian markets were closed on account of Lunar New Year holiday. Bank of Japan Governor Haruhiko Kuroda said that central bank should not prematurely announce plans for withdrawing its massive monetary stimulus as doing so could confuse markets. Kuroda added that when the time for an exit (from the ultra-easy policy) comes, the BOJ will communicate its intentions appropriately to ensure it doesn’t cause turbulence in markets. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,300 and 10,550 levels respectively. The market breadth on BSE was negative in the ratio of 827:1529 while 91 scrips remained unchanged.

The BSE Sensex is currently trading at 34318.95, up by 21.48 points or 0.06% after trading in a range of 34308.24 and 34508.24. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.34%, while Small cap index was down by 0.26%.

The top gaining sectoral indices on the BSE were IT up by 1.53%, TECK up by 1.23%, Energy up by 0.18%, Telecom up by 0.13% and Basic Materials up by 0.10%, while Auto down by 0.84%, PSU down by 0.61%, Consumer Disc down by 0.49%, Utilities down by 0.37% and FMCG down by 0.21% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.18%, Infosys up by 1.78%, Dr. Reddy’s Lab up by 1.66%, Kotak Mahindra Bank up by 1.27% and Wipro up by 1.17%.

On the flip side, Yes Bank down by 1.84%, Sun Pharma down by 1.26%, SBI down by 1.18%, Axis Bank down by 1.09% and HDFC down by 0.87% were the top losers.

Meanwhile, terming tax collection assumptions in India’s budget as ambitious, the International Monetary Fund (IMF) director of Communications Department Gerry Rice has said that the budget for 2018-19 assumes the tax revenue to increase faster than the value of transactions in the economy. He added that the budget aims for a deficit that is smaller than the deficit that was expected in 2017-18.

IMF director of Communications Department has pointed out that the budget also assumes the government will be able to collect higher tax revenue from the same amount of consumption and income. But, he said there is a need to look into the fiscal implications of some of the initiatives that are presently unfunded.

Citing some of the implementations relating to the goods and services tax (GST) in 2017, Rice said if these issues persist, tax revenue collection could fall short on the budget. Referring to some of the social welfare programmes announced by finance minister Arun Jaitley, he said that in the budget, there are also some initiatives that are presently unfunded and fiscal implications of these need to look at a little bit more closely as more details become available.

Gerry Rice further said that the IMF is also looking at some of the potential slippages on the revenue side or higher outlays on new policy initiatives because they could result in cost to capital expenditures, which the world body feels is important to support a medium-term growth.

The CNX Nifty is currently trading at 10554.25, up by 8.75 points or 0.08% after trading in a range of 10551.10 and 10612.90. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Ambuja Cement up by 2.64%, HCL Tech up by 2.16%, TCS up by 2.10%, Infosys up by 1.76% and Dr. Reddy’s Lab up by 1.56%.

On the flip side, Yes Bank down by 1.78%, Eicher Motors down by 1.31%, SBI down by 1.18%, Axis Bank down by 1.09% and Sun Pharma down by 0.99% were the top losers.

Most of the Asian markets were closed on account of Lunar New Year holiday. Nikkei 225 increased 244.31 points or 1.14% to 21,709.29.