Bulls go brisk on Dalal Street as RBI maintains status quo

Thursday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls went brisk on Dalal Street, with Nifty conquering its crucial 10,300 level, while Sensex ending just shy of 33,600 mark after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6% in the first Monetary Policy Committee (MPC) meet of FY19. Sentiments remained up-beat since beginning of the trade as markets started the session with a gap-up opening, as investors welcomed signals the US and China are open to negotiations rather than escalating threatened tit-for-tat trade tariffs. Traders took some encouragement with report that the trade deficit between India and the US dropped by almost six per cent in 2017 compared to the previous year, even as it continued to harp on issues such as market access and high tariffs on several American products being imported into India. Some support also came from NITI Aayog CEO Amitabh Kant’s statement that the government has been able to save Rs 83,000 crore through direct benefit transfer (DBT) scheme. He said that advantages of digitization are so enormous in making India a progressive, effective society.

Markets extend rally in last leg of trade after RBI on expected lines kept the repo rate unchanged at 6% in its First Bi-monthly Monetary Policy Review, 2018-19. Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) remained at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25% each. This is the fourth time when the RBI maintained status quo on repo rate. Meanwhile, 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. Traders also took some encouragement with private weather forecasting agency Skymet’s forecast that Monsoon in India is likely to be normal with no chances of drought this year. The forecaster said there were 5% chances of excess rainfall that is more than 110% of long-period average (LPA). The average, or normal, rainfall in the country is defined between 96 and 104% of a 50-year average for the entire four-month monsoon season.

Firm opening in European counters too aided sentiments on report that the US is willing to sit down with the Chinese authorities and fix their trade divergences. Asian markets ended mostly in green on Thursday, as trade tensions eased. Meanwhile, 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.

Back home, 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. On the sectoral front, phrama stocks remained buzzing on report that the government is planning to overhaul the existing system of fixing drug prices in the country.

Finally, the BSE Sensex surged 577.73 points or 1.75% to 33,596.80, while the CNX Nifty was up by 196.75 points or 1.94% to 10,325.15.

The BSE Sensex touched a high and a low of 33,637.46 and 33,267.86, respectively and there were 29 stocks on gaining side as against 2 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index soared 1.88%, while Small cap index was up by 1.87%.

The top gaining sectoral indices on the BSE were Metal up by 4.14%, Basic Materials up by 3.18%, Bankex up by 2.78%, Realty up by 2.55% and PSU was up by 2.19%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were SBI up by 4.66%, Tata Motors - DVR up by 3.95%, Tata Steel up by 3.67%, ICICI Bank up by 3.52% and Kotak Mahindra Bank up by 3.38%. On the flip side, Power Grid Corporation down by 0.15% and Bharti Airtel down by 0.14% were the only losers.

Meanwhile, the Minister of State for Steel Vishnu Deo Sai has said that India’s ambition to become a top steel exporter will not be disrupted by the US president’s recent move to impose 25 percent tariff on steel imports, as it depends on a number of factors which includes demand in the foreign markets, its competitiveness and domestic demand.

The minister has indicated that the exports to the US constitute only about 2.6 percent of the country’s total exports of steel. He noted that the exports of total finished steel from India have increased by 84 percent to 10.87 million tonnes (MT) in the January-December 2017 from 5.90 MT the corresponding period of last year.

US President Donald Trump had imposed high tariffs on steel and aluminium imports and defended his step by saying that it was necessary to boost the US industry hit by 'unfair' business practices, a move that has ignited fears of a global trade war. The US decided to levy import tariffs of 25 percent on foreign-made steel and 10 percent on aluminum.

The CNX Nifty traded in a range of 10,331.80 and 10,227.45. There were 48 stocks in green as against 2 stocks in red on the index.

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 5.19% and Indiabulls Housing Finance up by 4.50%. On the flip side, Cipla down by 1.72% and Bharti Airtel down by 0.27% were the only losers.

The European markets were trading in green; France’s CAC surged 91.66 points or 1.78% to 5,233.46, UK’s FTSE 100 increased 93.14 points or 1.32% to 7,127.15 and Germany’s DAX was up by 219.42 points or 1.83% to 12,177.32.

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.