Markets pare some early gains; trade continues in green

Indian equity indices pared some of their initial gains but were still trading in green in late afternoon session due to value buying. Investors turned cautious ahead of the US Fed policy meeting scheduled later in the day. Adding to the pessimism, Bibek Debroy, the head of Economic Advisory Council to the Prime Minister (EAC-PM) and Niti Aayog Member, said 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.

However, markets managed to hold their head above water with taking support from Reserve Bank of India’s (RBI) data on performance of private corporate sector showing that the India’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. 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.

On the global front, European markets were trading higher as investors focused on earnings ahead of a Federal Reserve meeting. The central bank is expected to announce a rate hike, which could have repercussions in the bond and equity markets. Back home, in scrip specific development, State Bank of India (SBI) was trading in green after inking pact with India Mortgage Guarantee Corporation (IMGC) to offer mortgage guarantee scheme for prospective non-salaried and self-employed home loan customers. The offering will help increase home loan eligibility up to 15% within the regulatory norms.

The BSE Sensex is currently trading at 32994.16, up by 71.04 points or 0.22% after trading in a range of 32810.86 and 33102.74. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index gained 0.11%, while Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were IT up by 1.07%, TECK up by 0.90%, Capital Goods up by 0.54%, Auto up by 0.38% and Consumer Disc up by 0.36%, while Oil & Gas down by 0.66%, Energy down by 0.57%, Realty down by 0.43%, Bankex down by 0.34%, Utilities down by 0.34% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.25%, Wipro up by 1.70%, Dr. Reddy’s Lab up by 1.46%, Larsen & Toubro up by 1.43% and HDFC up by 1.33%. On the flip side, Bharti Airtel down by 1.15%, ONGC down by 1.13%, ICICI Bank down by 0.98%, NTPC down by 0.93% and Mahindra & Mahindra down by 0.81% were the top losers.

Meanwhile, highlighting India’s exports scenario, the head of Economic Advisory Council to the Prime Minister (EAC-PM) and Niti Aayog Member, Bibek Debroy has said that India’s net exports are not performing well even as the global economy is witnessing a decent recovery. He added 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. Debroy also noted that ideally the central bank should intervene in the market but intervention by the Reserve Bank of India (RBI) in the market is not without its cost side.

The exports witnessed lowest expansion in the last four months in February where it grew 4.5 per cent to 25.8 billion as shipments of engineering, textiles and gems and jewellery declined while trade deficit narrowed to a five-month low of $12 billion. The chairman of EAC-PM insisted as long as India’s import duties are below the bound rates, it can raise import duties. Moreover, some of India’s tariff rates are misaligned and the country has signed plethora of free trade agreements.

Noting that traditionally, Commerce Ministry and Ministry of External Affairs (MEA) have worked in silos, he said, “this is first time, they have started working together.” India’s trade prospects will depend on the efforts being made to improve logistics, integrate investments in the global supply-chain, improve the business environment and develop infrastructure, he added.

The CNX Nifty is currently trading at 10119.05, up by 24.80 points or 0.25% after trading in a range of 10049.10 and 10155.65. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 4.41%, Tech Mahindra up by 3.40%, Tata Steel up by 3.37%, Eicher Motors up by 3.20% and Wipro up by 1.85%. On the flip side, Vedanta down by 5.94%, IOC down by 2.33%, ONGC down by 1.33%, Ultratech Cement down by 1.22% and Bharti Airtel down by 1.05% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI advanced 1.58 points or 0.09% to 1,849.52, KOSPI Index surged 10.49 points or 0.42% to 2,485.52, Shanghai Composite increased 11.39 points or 0.35% to 3,290.64 and Hang Seng was up by 36.17 points or 0.11% to 31,549.93. On the other hand, Nikkei 225 decreased 99.93 points or 0.47% to 21,380.97, Jakarta Composite slipped 58.67 points or 0.93% to 6,230.90 and Taiwan Weighted was down by 36.06 points or 0.33% to 11,010.84.

European markets were trading in green; France’s CAC surged 7.17 points or 0.14% to 5,230.01, Germany’s DAX increased 15.56 points or 0.13% to 12,232.58 and UK’s FTSE 100 was up by 20.84 points or 0.3% to 7,063.77.