Benchmarks snap two day winning streak

Thursday turned out to be a dismal day of trade for Indian equity markets with frontline gauges ending the session with a cut of around half a percent, after the US Federal Reserve raised interest rates while retaining its view for three hikes this year. In its first policy meeting under new Fed chief Jerome Powell, the US central bank indicated that inflation should finally move higher after years below its 2% target and that the economy had recently gained momentum. Markets, however, started the session on an optimistic note as traders took some encouragement with report that private equity (PE) investments witnessing a two-fold jump in February with transactions worth $1.3 billion taking the deal tally for the first two months of this year to $2.3 billion. There were 62 PE deals worth $1,330 million, while in the corresponding period last year there were 45 such transactions worth $588 million. Meanwhile, the Union Cabinet has given its approval for revision of the agreement between India and Qatar for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.

But traders pared early gains and markets entered into red terrain in second half of the session to end lower. Selling in banking counters too dampened sentiments, as traders shrugged off S&P Global Ratings’ report stated that the banking sector could witness a turnaround in fiscal 2019-20. The report added that the banking sector’s performance will get a boost from economic expansion and believes its deep protracted credit down cycle is nearing, with a turnaround by fiscal 2020. In addition, government and RBI’s significant steps are aiding the recovery. Sell off in telecom stocks too weighed sentiments on report that telecom operators including Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm have been served notices for exaggerated credit claims under the goods and services tax.

Weakness in European markets too dampened sentiments, as German business confidence deteriorated for the second consecutive month but remained at an overall high level, suggesting that Europe’s biggest economy will continue its solid upswing in the next months. Asian markets exhibited mixed trend after the US Federal Reserve raised rates by 25 basis points to a range of 1.5 percent to 1.75 percent on Wednesday, as was widely expected.

Back home, oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) closed in red as crude oil prices rose on surprise weekly decline in US crude inventories which had already been bolstered by renewed geopolitical risk to global output. Sugar stocks closed lower on report that the wholesale sugar market ended on a steady note in the national capital with prices moving in a narrow range in limited deals and pegged at last levels. Stocks of textiles sector ended lower despite the Cabinet Committee on Economic Affairs (CCEA) approved  ‘Integrated Scheme for Development of Silk Industry’ for the next three years from 2017-18 to 2019-20, with a financial outlay of Rs 2161.68 crore. Fertilizer stocks remained buzzing after the government allowed 14 urea units, which could not meet the new energy norms under the 2015 policy, to continue with the existing norms for a period of two years with token penalties. The CCEA approved the Fertilizer Ministry’s proposal to extend the present energy norms for two years with token penalties for 14 urea units.

Finally, the BSE Sensex declined 129.91 points or 0.39% to 33,006.27, while the CNX Nifty was down by 40.50 points or 0.40% to 10,114.75.

The BSE Sensex touched a high and a low of 33,281.77 and 32,963.31, respectively and there were 9 stocks on gaining side as against 22 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.75%, while Small cap index was down by 1.05%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.79%, Metal up by 0.37% and Energy was up by 0.31%, while Telecom down by 1.30%, Realty down by 1.28%, Capital Goods down by 1.07%, Industrials down by 1.00% and TECK was down by 0.99% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.45%, Indusind Bank up by 1.41%, Tata Motors up by 1.29%, Reliance Industries up by 1.22% and Tata Motors - DVR up by 1.03%. On the flip side, SBI down by 2.46%, Wipro down by 2.32%, Mahindra & Mahindra down by 2.14%, ICICI Bank down by 2.09% and Maruti Suzuki down by 2.01% were the top losers.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, has allowed 14 urea manufacturing units, which could not meet the new energy norms under the 2015 policy, to continue with the existing energy norms for further period of 2 years with token penalties. Under the new urea policy 2015, 27 urea units were to meet the energy efficiency norms by the end of fiscal year 2017-18. Out of 27 urea units, only 11 urea units have mostly achieved the target.

The cabinet also decided to allow three naphtha-based units to carry on with existing energy norms for another two years or till they get gas pipeline connectivity. Besides, it approved implementation of new energy norms under the new urea policy 2015 for 11 urea units with effect from April, 2018, which would help the government save subsidy of about Rs 268 crore. In addition, it approved continuation of the new energy norms for five years with effect from 2020.

According to the CCEA, the extension of present energy norms for further period of 2 years will ensure easy availability of urea to farmers throughout the country. It will also help to maximise the indigenous urea production and will lessen the import of urea. Apart from this, it will also help to recover some part of the CAPEX invested by urea manufacturing units for making their units more energy efficient. It noted that energy efficient urea manufacturing units will reduce the carbon footprint and it will be more environment friendly.

The CNX Nifty traded in a range of 10,207.85 and 10,105.40. There were 14 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were ONGC up by 1.97%, Vedanta up by 1.64%, Reliance Industries up by 1.34%, Indusind Bank up by 1.30% and Tata Motors up by 1.27%. On the flip side, BPCL down by 3.87%, HPCL down by 3.01%, SBI down by 2.62%, Wipro down by 2.49% and ICICI Bank down by 2.11% were the top losers.

European markets were trading in red; Germany’s DAX declined 107.12 points or 0.87% to 12,202.03, France’s CAC decreased 46.3 points or 0.88% to 5,193.44 and UK’s FTSE 100 was down by 38.08 points or 0.54% to 7,000.89.

Asian equity markets ended mixed on Thursday after the Federal Reserve announced its widely anticipated decision to raise interest rates by 25 basis points and projected three rate hikes in 2018, citing a strong outlook for US economic growth. Underlying sentiments remained somewhat cautious amid expectations that US president Donald Trump will introduce tariffs on Chinese goods for approximately $50 billion. Japanese shares ended higher in choppy trade as pension funds and retail investors lapped up beaten-down shares, helping offset a strong yen and mixed manufacturing data. The manufacturing sector in Japan continued to expand in March, albeit at a slower pace, the latest survey from Nikkei revealed with a manufacturing PMI score of 53.2, down from 54.1 in February. Meanwhile, Chinese shares ended lower after the People's Bank of China raised its short-term interest rates for the first time this year in reaction to the Fed's rate hike. The central bank lifted its 7-day reverse repo rate by 5 basis points to 2.55 percent from 2.50 percent. This was the first rate action after the appointment of Yi Gang as central bank governor.