Markets snap four day losing streak; Nifty reclaims 10,100 mark

Snapping four days losing streak, Indian equity benchmarks ended the choppy day of trade with marginal gains, as traders opted to buy beaten-down but fundamentally strong stocks after four days of continuous drubbing. After making a cautious start, markets gained momentum and entered into green terrain, as traders took some encouragement with Reserve Bank of India’s (RBI) release stating that the country’s manufacturing sector witnessed an improvement in sales growth in the third quarter this fiscal on annual basis, though net profit has remained subdued due to lack of support from other income. The sales of manufacturing companies increased by 14% in the October-December quarter of 2017-18 compared to similar period of the previous fiscal while net profit declined by 2.4% in the third quarter. Some support also came with Former Reserve Bank of India (RBI) Governor Raghuram Rajan’s statement that India can achieve a growth rate of 10%. He added that some key reforms are needed to accelerate India's Growth Rate.

Some support also came with ICRA’s report that the credit to micro, small and medium enterprises (MSMEs) is expected to grow at 12-14% over the next five years, helped by higher lending by non-banking finance companies (NBFC) to the segment. As on March 2017, credit to MSMEs stood at Rs 16 trillion. However, gains remained capped with Bibek Debroy’s statement that India’s net exports are not doing well even as the global economy is on the recovery path. Debroy further highlighted that India is facing a dilemma from the point of view of pushing exports, as exporters would like exchange rate to depreciate, however exchange rate might not depreciate as much as exporters want because of capital inflows. Besides, investors remained on sidelines looking forward to the latest developments in the parliament following the no-confidence motion moved by Telugu Desam Party (TDP) after it broke away from the BJP-led NDA following the Centre's refusal to grant Special Category status to Andhra Pradesh.

Weak trade in European counters too dampened sentiments, as tech stocks stayed under pressure after concerns over increased regulation and taxation of large tech companies prompted selling overnight on Wall Street. Asian markets exhibited mixed trend on Tuesday, as  investors waited for cues from the new Federal Reserve Chairman Jerome Powell's first policy meeting starting later in the day.

Back home, most of the telecom stocks rang louder after the Department of Telecom amended licence norms of service providers to increase the number of instalments for spectrum payments and radiowaves frequency holding limit to provide relief to the sector reeling under deep financial stress. Aviation stocks flied higher after data showed that domestic air passenger traffic rose by 24.14% in February as compared to the corresponding month last year, helped by an increased tourist-season demand. The data released by DGCA showed that in February, domestic airlines flew 1.07 crore passengers compared to 86.55 lakh passengers flown during the corresponding period last year. Steel stocks shined after the government said that 8.22 million tonnes finished steel was exported during April-January of 2017-18. India had exported 8.24 MT during 2016-17 and 4.08 MT in 2015-16.

Finally, the BSE Sensex surged 73.64 points or 0.22% to 32,996.76, while the CNX Nifty was up by 30.10 points or 0.30% to 10,124.35.

The BSE Sensex touched a high and a low of 33,102.74 and 32,810.86, respectively and there were 19 stocks on gaining side as against 11 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.21%, while Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were IT up by 1.29%, TECK up by 1.18%, Telecom up by 0.64%, Auto up by 0.49% and Power was up by 0.45%, while Oil & Gas down by 0.84%, Energy down by 0.66%, Metal down by 0.45%, Bankex down by 0.42% and PSU was down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.17%, Sun Pharma up by 2.20%, Dr. Reddy’s Lab up by 1.85%, Wipro up by 1.54% and Adani Ports & SEZ up by 1.47%. On the flip side, ONGC down by 1.13%, ICICI Bank down by 1.10%, Yes Bank down by 0.92%, Reliance Industries down by 0.64% and HDFC Bank down by 0.56% were the top losers.

Meanwhile, the Reserve Bank of India’s (RBI) data on performance of the private corporate sector has showed that India's manufacturing sector witnessed an improvement in sales growth in the period October-December 2017-18 (Q3) on annual basis, however net profit has remained subdued due to lack of support from other/non-operating income. It noted that during Q3 of FY18, manufacturing companies’ sales surged by 14 percent as compared to similar period of the previous fiscal, while net profit of these companies declined by 2.4 percent.

According to the data, the information technology (IT) sector also registered modest improvement in sales growth, although lower than in the previous year. It also noted that the services (non-IT) sector showed signs of revival as reflected by positive sales growth. Besides, it pointed out that among major manufacturing industries, demand conditions improved for chemical and chemical products; cement and cement products; machinery and machine tools; and motor vehicles and other transport equipment.

The data further stated that operating profits of the manufacturing sector were supported by improved demand conditions and continued to record a healthy growth, despite significant increase in input costs. It also said that pricing power in terms of the net profit margin declined for the manufacturing sector, while it improved for the services (non-IT) sector.

The CNX Nifty traded in a range of 10,155.65 and 10,049.10. There were 33 stocks in green as against 16 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Bharti Infratel up by 4.96%, Tech Mahindra up by 3.95%, Eicher Motors up by 3.46%, Tata Steel up by 3.37% and Sun Pharma up by 2.46%. On the flip side, Indian Oil Corporation down by 2.30%, ONGC down by 1.33%, BPCL down by 1.10%, GAIL down by 0.92% and Coal India down by 0.84% were the top losers.

The European markets were trading mostly in red; Germany’s DAX decreased 22.54 points or 0.18% to 12,194.48, France’s CAC decreased 13.12 points or 0.25% to 5,209.72, while UK’s FTSE 100 increased 8.35 points or 0.12% to 7,051.28.

Asian equity markets ended mixed on Tuesday as trade-war worries persisted and investors waited for cues from the new Federal Reserve Chairman Jerome Powell's first policy meeting starting later in the day, with the central bank widely expected to raise interest rates by 25 basis points. Sentiment was also dampened after Facebook shares suffered the biggest one-day drop in four years overnight amid allegations that political consulting firm Cambridge Analytica inappropriately obtained and used the social media giant's user data. Chinese shares ended higher as China's legislature nominated Yi Gang, vice-governor of the People's Bank of China, as its new chief. Further, Japanese shares ended lower as domestic tech stocks tracked US counterparts' declines on Wall Street. Many investors stayed on the sidelines ahead of a Japanese public holiday and the two-day Fed meeting expected to produce a rate hike.