Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and ended with gains of around two percent as trade-war fears eased and as RBI cuts inflation forecast. The shower of good news led bulls taking full control on Dalal Street with Nifty gaining 200 points and Sensex surpassing 33,600 mark. The market breadth was in favour of advances with 6 stocks advancing against one declining one. Indian equity benchmarks made a gap-up opening and traded jubilantly in early deals as investors welcomed signals the US and China are open to negotiations rather than escalating threatened tit-for-tat trade tariffs. The sentiments were also upbeat as expectation of normal rains, boost in private and government expenditure along with green shoots emerging in investment spending have prompted India Ratings and Research to revise its FY19 GDP growth forecast to 7.4% from 7.1% earlier. As per the agency report, FY19 growth will continue to be driven by consumption and associated sectors such as automobiles, cargo handled at major ports, railway freight, domestic air passengers and consumption of petroleum products. Separately, India’s services industry returned to growth in March as new business picked up on improved demand, encouraging firms to hire at the fastest pace in nearly seven years. The Nikkei/IHS Markit Services Purchasing Managers’ Index managed to narrowly push back above the 50-mark that separates growth from contraction, rising to 50.3 last month from 47.8. The new business sub-index that tracks overall demand also returned to growth in March, rising to 50.6 from 48.0 in a reflection of increased levels of new work.

Buying further intensified after the Reserve Bank of India expectedly kept repo rate unchanged at 6 percent but cut inflation forecast. The Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 percent. It suggests that FY20 real GDP growth will range from 7.4 percent to 7.9 percent. The central bank has projected the India’s Gross Domestic Product (GDP) growth to strengthen to 7.4% in 2018-19 from 6.6% in 2017-18. Banking stocks closed on a firm note as RBI deferred Indian Accounting Standards (IndAS) implementation by one year. Separately, the apex bank has temporarily relaxed provisioning norms for lenders to defaulters undergoing bankruptcy resolution in a move that could help banks bolster their financial results for the year and quarter ended March. Provisions for accounts referred to the National Company Law Tribunal (NCLT) have been reduced to 40% of dues at the end of March for secured loans, down from 50% earlier. Additionally, RBI data showed that loan write-offs as percentage of gross non-performing assets (NPAs) declined to 13 per cent as on March 2017 from a high of 25 per cent in March 2011.

Meanwhile, investors took note of Corporate Affairs Secretary Injeti Srinivas’ statement that less than half of the staggering Rs 9 lakh crore worth of non-performing assets (NPAs), or bad loans, accumulated by banks had returned due to the system set in place by the Insolvency and Bankruptcy Code (IBC), 2016. He added that a good outcome on half of these cases would help boost confidence in the system, a key component of which is the National Company Law Tribunal (NCLT) -- the final adjudicator. Separately, Niti Aayog CEO Amitabh Kant has said that the government has been able to save Rs 830 billion through direct benefit transfer scheme.

On the global front, Asian markets closed in green. The percentage of Japanese households expecting prices to accelerate fell in March from three months ago, underscoring the difficulty of eradicating the country’s sticky deflationary mindset. The Bank of Japan’s survey on people’s livelihood showed the percentage of households who expect prices to rise a year from now was 73.9% in March, down from 75.6% in December. The European markets were trading in green. Euro zone sales increased at a slower rate than expected in February as shoppers cut back on non-food purchases and figures for January were revised down, indicating a slowdown of business in the bloc’s high streets at the start of the year.

The BSE Sensex ended at 33615.62, up by 596.55 points or 1.81% after trading in a range of 33267.86 and 33637.46. There were 31 stocks advancing against 0 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.94%, while Small cap index was up by 1.88%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 4.04%, Basic Materials up by 3.17%, Bankex up by 2.96%, Realty up by 2.55% and PSU up by 2.42%, while there were no losers on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 5.71%, Tata Steel up by 3.89%, ICICI Bank up by 3.63%, Kotak Mahindra Bank up by 3.52% and Hero MotoCorp up by 3.51%, while there were no losers. (Provisional)

Meanwhile, after contracting in the month of February, activity in India’s services industry bounced back to modest growth in March, with greater inflows of new work. Softening inflationary pressures along with fastest job creation at services firms, also drove overall business activity during the reported month. However, outstanding business increased at service providers, on account of greater volumes of new work and a lack of capacity.

According to the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose back above the 50.0 no-change mark in March at 50.3 from 47.8 in February. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too climbed to 50.8 in March from 49.7 in February, driven by growth in both the manufacturing and service sectors.

The report further stated that new business improved in the service sectors with enhanced marketing initiatives and, in some instances discounts provided by them. Besides, new business in the manufacturing sector also rose for the fifth consecutive month during March, but the rate of expansion moderated to the slowest rate in the current sequence, mirroring the weakest gain in new export orders since November.

On inflation front, input cost inflation in the both service and manufacturing sector softened from February’s three-month high, but was marked overall amid increasing prices of items like fuel, food items and gold. Besides, output charge inflation eased to the weakest in 2018 so far, though the both the sectors raised output prices to pass on their higher cost burdens to consumers.

The CNX Nifty ended at 10328.95, up by 200.55 points or 1.98% after trading in a range of 10227.45 and 10331.80. There were 48 stocks advancing against 2 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 6.52%, Vedanta up by 5.56%, SBI up by 5.46%, Bajaj Finserv up by 4.89% and Indiabulls Housing up by 4.43%. (Provisional)

On the flip side, Cipla down by 1.72% and Bharti Airtel down by 0.27% were the only losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 78.94 points or 1.12% to 7,112.95, Germany’s DAX increased 180.29 points or 1.51% to 12,138.19 and France’s CAC increased 77.72 points or 1.51% to 5,219.52.

Asian stocks closed in green on Thursday as trade-war fears eased and investors turned their focus to the US jobs report due Friday for clues to job growth and future moves by the Federal Reserve. Japanese stocks saw relief rally as the yen weakened on improved risk appetite after the United States expressed willingness to negotiate a resolution to an escalating trade conflict with China. Meanwhile, markets in Taiwan, China and Hong Kong were closed for holidays.