Rally continues on Dalal Street as RBI maintains status quo

Key Indian equity benchmarks continued their upward rally in late afternoon session, as the Reserve Bank of India’s (RBI’s) six-member monetary policy committee (MPC) kept the key repo rate unchanged at 6%. Firm opening in European markets along with positive services PMI data, also supported the markets to hold their gains in late noon deals. 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 domestic sentiments also remained upbeat as the India Ratings and Research (Ind-Ra) upgraded its India’s economic growth forecast to 7.4% for FY19 from 7.1% forecasted earlier. In line with the larger peers, the broader markets too maintained their upward rally, while Metal shined among all other sectoral indices by gaining around 4%. Besides, the major industry gainers such as Tata Motors, Tata Steel and SBI, were contributing to the gains. Some comfort also came with the Minister of State for Steel Vishnu Deo Sai’s stattement that India’s ambition to become a top steel exporter will not be disrupted by the US president’s recent move to impose 25% tariff on steel imports, as it depends on a number of factors which includes demand in the foreign markets, its competitiveness and domestic demand.

On the global front, European markets were trading in green, amid improved risk appetite, with investors hoping that the US and China still have opportunities to avert a damaging trade war. Asian markets were also trading in green. Back home, in scrip specific development, Larsen & Toubro jumped higher after its construction arm won orders worth Rs 3,376 crore across various business segments.

The BSE Sensex is currently trading at 33525.38, up by 506.31 points or 1.53% after trading in a range of 33267.86 and 33536.86. There were 30 stocks advancing against 1 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.66%, while Small cap index was up by 1.67%.

The top gaining sectoral indices on the BSE were Metal up by 3.77%, Basic Materials up by 2.94%, Realty up by 2.69%, Industrials up by 2.12% and Bankex up by 2.11%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 4.55%, Tata Motors up by 3.82%, Tata Steel up by 3.27%, SBI up by 3.12% and ICICI Bank up by 3.07%. On the flip side, Power Grid Corporation down by 0.05% was the only loser.

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 is currently trading at 10297.25, up by 168.85 points or 1.67% after trading in a range of 10227.45 and 10299.25. There were 47 stocks advancing against 2 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Hindalco up by 6.03%, Vedanta up by 5.05%, Tata Motors up by 3.84%, Bajaj Finance up by 3.61% and Indiabulls Housing Finance up by 3.61%. On the flip side, Cipla down by 1.37% and Bharti Airtel down by 0.11% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI increased 20.41 points or 1.12% to 1,836.35, KOSPI Index increased 29.46 points or 1.22% to 2,437.52, Jakarta Composite increased 38.82 points or 0.63% to 6,195.92 and Nikkei 225 increased 325.87 points or 1.53% to 21,645.42. China, Hong Kong and Taiwan markets are closed on account of National holiday.

All European markets were trading in green; France’s CAC increased 82.47 points or 1.6% to 5,224.27, UK’s FTSE 100 increased 86.63 points or 1.23% to 7,120.64 and Germany’s DAX increased 195.52 points or 1.64% to 12,153.42.