Benchmarks snap six day losing streak; Sensex reclaims 33,300 mark

Indian equity benchmarks ended the Thursday’s trade in green terrain with frontline gauges recapturing their crucial 33,300 (Sensex) and 10,200 (Nifty) levels, as traders opted to buy beaten down but fundamentally strong stock after six days of continuous drubbing. After making an optimistic start, markets almost pared all of their initial gains, as the Congress’ victory over the ruling BJP in Rajasthan local body polls and the Telugu Desam Party’s decision to pull out two of its ministers in the central government kept the underlying sentiment somewhat cautious. Markets started gaining momentum in noon deals as traders took encouragement with Niti Aayog vice chairman Rajiv Kumar’s statement that the country’s economy, which had witnessed slow growth due to decline in private investment and other factors, is on the rise again. He added that the employment should get due attention and that job creation would contribute to GDP growth as well. Some support also came from report that the Indian government reiterated its pitch for a sovereign rating upgrade to Fitch, citing strong macro-economic fundamentals. Fitch has a BBB-, the lowest investment grade sovereign rating on India, with a stable outlook.

Some support also came with report highlighting that government is committed to bring down fiscal deficit in the medium term. The government also expects Asia's third largest economy to grow at 8 percent in the next couple of years. Besides, Prime Minister Narendra Modi’s statement that focus would be laid on development of 115 backward districts that he termed as ‘aspirational districts’, too provided some support to the markets. Investors took note of the report stating that the government sought Parliament nod for additional cash spending of Rs 85,315.30 crore in the current fiscal, of which 70 per cent is earmarked to compensate states for revenue loss on account of GST roll out. Minister of State for Parliamentary Affairs Arjun Ram Meghwal moved the fourth batch of Supplementary Demands for Grants for 2017-18 in the Lok Sabha.

Positive start in European counters too aided sentiments as deal-making gathered pace and fears of a trade war faded, although some disappointing earnings updates weighed. A data showed that weaker foreign demand drove a bigger than expected drop in German industrial orders in January, suggesting that busy factories in Europe’s largest economy could shift into a lower gear in the coming months. Asian markets rallied after market participants digested reports of top White House economic adviser Gary Cohn’s resignation.

Back home, Andhra Pradesh Chief Minister N Chandrababu Naidu on Wednesday night asked his party’s two central ministers to resign amid the growing strain in ties between his TDP and the BJP over alleged neglect of the state in the Union budget. On the sectoral front, shares of consumer goods remained on buyers’ radar after the Union Cabinet hiked dearness allowance to Central Government employees. However, stocks related to telecom space edged lower despite report that the Union Cabinet has relaxed spectrum holding caps, giving a boost to M&As and spectrum sale, as carriers try to sell assets, including airwaves, to repay debt. The Cabinet also extended the payments tenure for auctioned airwaves from 12 years.

Finally, the BSE Sensex surged 318.48 points or 0.96% to 33,351.57, while the CNX Nifty was up by 88.45 points or 0.87% to 10,242.65.

The BSE Sensex touched a high and a low of 33,439.97 and 33,037.48, respectively and there were 17 stocks on gaining side as against 14 stocks on losing side on the index.

The broader indices were ended in green; the BSE Mid cap index gained 0.56%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Realty up by 1.63%, Bankex up by 1.43%, Energy up by 1.30%, Capital Goods up by 1.12% and Consumer Discretionary Goods & Services was up by 1.04%, while Metal down by 0.45%, Telecom down by 0.30%, Healthcare down by 0.25%, FMCG down by 0.21% and Basic Materials was down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.09%, ICICI Bank up by 3.58%, Adani Ports & SEZ up by 2.95%, Mahindra & Mahindra up by 2.45% and Reliance Industries up by 2.25%. On the flip side, Tata Steel down by 1.98%, Sun Pharma down by 1.85%, Yes Bank down by 1.63%, TCS down by 0.92% and Tata Motors down by 0.60% were the top losers.

Meanwhile, former governor of the Reserve Bank of India C. Rangarajan has stated that Indian banks need to overcome their present problems as quickly as possible to be able to provide larger amount of credit. His comments came amid the Rs 12,700 crore scam detected recently at India's state-run Punjab National Bank (PNB) and the banking system's overall struggle to overcome the mounting problem of Non-Performing Assets (NPAs).

To a query on the problems of NPAs or bad loans and frauds that have hit the country's banking system, Rangarajan said, ‘I think the banking system is stressed. It had already been stressed for some years’. He also feels that through recapitalisation and other measures, there is need to ensure that the banking system gets strong enough to be able to begin the process of lending. He noted that the primary role of banks is to raise deposits and lend money to borrowers.

Recently, the PNB had detected fraudulent transactions worth about Rs 12,700 crore at one of its branches in Mumbai. The transactions were allegedly carried out by diamond jeweller Nirav Modi by acquiring fraudulent letters of undertaking (LoUs) from the lender's Brady House branch in Mumbai to secure overseas credit from other Indian lenders.

The CNX Nifty traded in a range of 10,270.35 and 10,146.40. There were 26 stocks in green as against 24 stocks in red on the index.

The top gainers on Nifty were SBI up by 4.05%, ICICI Bank up by 3.91%, Adani Ports & SEZ up by 3.44%, Reliance Industries up by 2.39% and Mahindra & Mahindra up by 2.29%. On the flip side, Sun Pharma down by 2.83%, Tata Steel down by 1.77%, Hindalco down by 1.11%, Yes Bank down by 0.99% and Tech Mahindra down by 0.88% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 rose 0.84 points or 0.01% to 7,158.68 and France’s CAC was up by 14.06 points or 0.27% to 5,201.89, while Germany’s DAX was down by 36.4 points or 0.3% to 12,208.96.

Asian markets closed in green on Thursday after the White House indicated that some countries could be exempt from President Donald Trump's planned tariffs on steel and aluminum imports. Better-than-expected economic data from China and Japan also offered some support.  Japanese shares ended higher on hopes the impending US tariffs on steel and aluminium will be milder than previously thought, but the market pared gains as caution ruled ahead of the formal announcement from Washington. Japan’s revised GDP data showed the economy grew an annualised 1.6 percent, more than the initial estimate of 0.5 percent, in the last quarter of 2017, due to an upward revision of capital expenditure and inventory. Further, Chinese stocks ended higher after official data showed China's exports grew at a faster-than-expected pace in February. China's exports jumped 44.5 percent year-over-year in February in dollar terms, much faster than the 11.0 percent rise economists had forecast. Imports climbed 6.3 percent from a year ago, slower than the expected growth of 8.0 percent. The trade surplus totaled $33.74 billion, in contrast to the expected deficit of $5.7 billion.