Benchmarks extend gaining streak for third straight session

Indian equity benchmarks ended the Monday’s trade on an optimistic note with frontline gauges garnering the gains of around half a percent, as traders remained hopeful ahead of quarterly earnings this week, with IT major Infosys likely to declare its March quarter results on April 13. After a cautious start, markets gained strength, as sentiments turned upbeat on the World Economic Situation and Prospects 2018 report of the United Nations, which enlightened that the Indian economy is projected to grow at 7.2% in 2018-19 and 7.4% in 2019-20. The report indicates that the outlook for India remains largely positive, underpinned by robust private consumption and public investment as well as ongoing structural reforms. Sentiments also got some support with Finance Minister Arun Jaitley’s statement that the Indian economy, which saw temporary disruptions caused by demonetization and the roll-out of the Goods and Services Tax (GST) over the past two years, will see consolidation in the current fiscal. Jaitley added that reforms such as GST, Insolvency and Bankruptcy Code and new income tax regulations are contributing to a better investment climate.

Meanwhile, Economic Affairs Secretary Subhash Chandra Garg said India will have to create and nurture a very healthy and supportive macroeconomic environment to become $10 trillion economy by 2030. He added that government has taken many reform measures since 2014, including GST and IBC (Insolvency and Bankruptcy Code). Separately, industry CII welcomed the launch of the E-way Bill system for inter-state movement of goods under GST, saying it will pave the way for widening of the tax base, reduce logistics costs, and faster movement of goods. The industry body added that the major relief to industry and business is in hassle-free movement of goods across state borders under GST by removing the state barriers, which is a milestone for improvement in ease of doing business. Traders shrugged off a private report that inflows into Indian equity funds in March were the smallest in 13 months as some investors sold before a tax on stock holdings took effect from April 1 and volatility returned to markets worldwide. Equity funds took in a net Rs 66.57 billion ($1 billion), the least since last February.

Positive opening in European counters too aided sentiments despite a survey showing that investors’ morale in the euro zone deteriorated for the third month in April, on concerns about a slowdown in global growth as trade tensions rise between the United States and China. Asian markets ended in green as the focus turned to the upcoming earnings season in the US.

Back home, metal stocks remained on buyers’ radar on report that India will take up the issue of duty hike on certain steel and aluminium products by the US at the Trade Policy Forum (TPF) meeting on April 10. However, telecom stocks like Bharti Airtel, Idea Cellular and Reliance Communications ended in red as the industry body COAI expects earnings of mobile operators to remain depressed for another 3-4 quarters, hurt by the sheer intensity of competition in the telecom market. A recent report by the Telecom Regulatory Authority of India (TRAI) has noted that the gross revenue of telecom services providers fell 8.1%, while the licence fee collected by the government dropped by 16% year-on-year in the quarter ended December 31, 2017.

Finally, the BSE Sensex surged 161.57 points or 0.48% to 33,788.54, while the CNX Nifty was up by 47.75 points or 0.46% to 10,379.35.

The BSE Sensex touched a high and a low of 33,846.50 and 33,578.91, respectively and there were 17 stocks on gaining side as against 13 stocks on losing side, while 1 stock remained unchanged on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.16%, while Small cap index was up by 0.38%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.70%, Oil & Gas up by 1.52%, FMCG up by 1.15%, Energy up by 1.14% and Bankex was up by 0.90%, while TECK down by 0.99%, IT down by 0.92%, Telecom down by 0.51%, Healthcare down by 0.26% and Realty was down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.44%, Mahindra & Mahindra up by 2.15%, ITC up by 2.05%, Indusind Bank up by 1.90% and Hindustan Unilever up by 1.18%. On the flip side, Tata Motors - DVR down by 2.11%, Infosys down by 1.62%, Tata Motors down by 1.53%, Bharti Airtel down by 1.21% and TCS down by 0.97% were the top losers.

Meanwhile, the agriculture ministry will soon move a Cabinet note to ensure farmers get the minimum support price (MSP). The note will seek the Cabinet approval for a new policy that aims to rope in both states and private firms in procurement of other crops than wheat and paddy for ensuring support price. The objective of the proposed policy is to improve the speed of response and effectiveness of procurement in cases when prices drop below the MSP. The policy also aims to give liberty to States to implement either one of the models of procurement.

The ministry has proposed three models -- Market Assurance Scheme (MAS), Price Deficiency Procurement Scheme (PDPS) and Private Procurement and Stockists Scheme. In case of MAS, it is to be implemented by state governments who can take immediate decisions on the basis of local conditions, to enter the market and begin procurement through their own state agencies or any other private agency authorised by states. States will be responsible for procurement and liquidation of the procured commodity. They would create a corpus fund for this purpose and make all logistics arrangements to handle the procurement. The central government will compensate the operational loss, if any, on value of MSP, up to a maximum 30-40%.

Under the PDS scheme, if the sale price is below a model price then the farmers would be compensated to the difference between the MSP and actual price, subject to certain conditions and ceiling. The MAS and PDPS are primarily government-owned and driven schemes. The central government wants to bring in private sector players to supplement its schemes. Therefore the ministry, in the new policy, has proposed engagement of private sector in MSP-linked procurement through a transparent e-market platform. States will be allowed to empanel private firms via a transparent bidding for purchase of farm produce when prices fall below the MSP. The private firms will be given tax incentive and a commission.

The CNX Nifty traded in a range of 10,397.70 and 10,328.50. There were 26 stocks in green as against 24 stocks in red on the index.

The top gainers on Nifty were BPCL up by 3.78%, Axis Bank up by 3.44%, HPCL up by 3.40%, Hindalco up by 3.27% and Indian Oil Corporation up by 3.16%. On the flip side, Zee Entertainment down by 2.14%, Lupin down by 1.80%, Tata Motors down by 1.61%, Infosys down by 1.38% and Bharti Airtel down by 1.29% were the top losers.

The European markets were trading in green; UK’s FTSE 100 gained 4.24 points or 0.06% to 7,187.88, France’s CAC increased 16.4 points or 0.31% to 5,274.64 and Germany’s DAX was up by 93.19 points or 0.76% to 12,334.46.

Asian stocks closed in green on Monday as the focus turned to the upcoming earnings season in the US. While trade rhetoric continued between the US and China, investors looked ahead to the release of US and Chinese inflation data as well as comments from the US Federal Reserve, European Central Bank and the Bank of Japan for directional cues. Chinese shares ended higher as investors awaited Chinese President Xi Jinping's Tuesday speech at the Boao Forum for directional cues. Also, Hong Kong shares rose on hopes that China and the United States will eventually reach a deal to avert a trade war, even as Beijing repeated that it was impossible for negotiations to take place under current conditions. Furthermore, Japanese shares reversed initial losses to end higher as the dollar pushed higher against the yen and traders awaited Bank of Japan governor Haruhiko Kuroda's speech later in the day as he starts his second term.