Benchmarks trade jubilantly in early deals; Nifty reclaim 10,200 mark

Indian equity benchmarks made a gap-up opening and are trading jubilantly in early deals on Thursday, as investors welcomed signals the U.S. 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.

Firm global cues too aided sentiments with all the Asian markets trading in green, as investors hoped a full-blown trade war between the world’s two biggest economies can be averted. US stocks showed a substantial turnaround over the course of the trading session on Wednesday after moving sharply lower at the open. The rebound on Wall Street came as traders shrugged off trade war concerns after China issued a list of 106 U.S. products that will be subject to additional tariffs.

Back home, 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 per cent chances of excess rainfall that is more than 110 percent of long-period average (LPA). The average, or normal, rainfall in the country is defined between 96 and 104 per cent of a 50-year average for the entire four-month monsoon season. Meanwhile, phrama stocks remained buzzing on report that the government is planning to overhaul the existing system of fixing drug prices in the country.

The BSE Sensex is currently trading at 33381.10, up by 362.03 points or 1.10% after trading in a range of 33267.86 and 33427.35. There were 30 stocks advancing against 1 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index surged 1.31%, while Small cap index was up by 1.52%.

The top gaining sectoral indices on the BSE were Metal up by 2.82%, Basic Materials up by 2.10%, Realty up by 1.88%, Industrials up by 1.58% and Auto up by 1.56%, while there were no losers on the BSE sectoral front.

The top gainers on the Sensex were Tata Motors - DVR up by 2.89%, Tata Motors up by 2.67%, Tata Steel up by 2.54%, Adani Ports up by 2.07% and Mahindra & Mahindra up by 1.88%. On the flip side, Bharti Airtel down by 0.60% was the lone loser.

Meanwhile, with the expectations of strong agricultural and industrial growth, the India Ratings and Research (Ind-Ra), a subsidiary of Fitch Ratings, has upgraded its India’s economic growth forecast to 7.4% for the fiscal year 2018-18 (FY19) from 7.1% forecasted earlier. It said that overall economic growth will get a push with higher growth in agriculture (expectation of normal rainfall and assumption of even rainfall distribution over space and time) and industrial sectors on the production front, while on the expenditure front, private and government expenditure coupled with green shoots emerging in investment spending will boost the growth.

However, the rating agency expressed concern that the Indian economy is facing a number of headwinds, ranging from the non-performing assets of the banking system and elevated bond yields to increased trade protectionism and tightening global financial conditions. Besides, the Reserve Bank of India (RBI) has granted banks the option to spread their provisioning for marked-to-market losses on 'available for sale' and 'held for trading' portfolios for Q3FY18 and Q4FY18 equally up to four quarters. Thus, it expects this to provide relief from accounting perspective to banks, which are facing the impact of a sharp increase in G-sec yields. Despite the status quo by the RBI on policy repo rate since August 2017, yields in the bond market have risen on account of concerns over rising inflation, the central government’s fiscal slippage and an increase in state governments’ borrowings.

Ind-Ra said that the central government’s borrowing plan for 1HFY19 eased the short-term pressure on the debt market, but it cautions that higher market borrowings in 2HFY19, if accompanied by adverse fiscal and inflationary developments, could exert significant pressure on the debt market. On the key policy rates, it said that the immediate pressure on the RBI to raise policy rates has subsided, as the recent data for both wholesale and retail inflation came in softer than anticipated. Wholesale and retail inflation eased to 2.48% and 4.44%, respectively, in February 2018 from 2.84% and 5.07% for January 2018. Therefore, it said that the probability of a status quo on policy rates is quite high during FY19.

The CNX Nifty is currently trading at 10242.10, up by 113.70 points or 1.12% after trading in a range of 10227.45 and 10264.15. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.13%, UPL up by 3.06%, Vedanta up by 2.99%, Indiabulls Housing up by 2.90% and Tata Motors up by 2.73%. On the flip side, Bharti Infratel down by 1.32% and Bharti Airtel down by 0.68% were the only losers.

Asian markets are trading in green; FTSE Bursa Malaysia KLCI surged 17.16 points or 0.94% to 1,833.10, Jakarta Composite increased 29 points or 0.47% to 6,186.10, KOSPI Index soared 37.05 points or 1.54% to 2,445.11 and Nikkei 225 up by 386.34 points or 1.81% to 21,705.89.