Benchmarks continue lackluster trade in early noon deals

Indian equity benchmarks continued their lackluster trade in early afternoon session, on the back of selling activities by market-participants. Sentiments remained downbeat with foreign brokerage report that the trend of earnings downgrade for Indian equities that began three years ago is not showing signs of abating despite growth in the three quarters to December 2017. The report further highlighted that the consensus estimate for the earnings per share (EPS) of the MSCI India index for 2018 is lowered by 10.3% since December 2016. On the other hand, the EPS estimate of the MSCI Asia ex-Japan index has increased by 13.6%. Besides, investors focused on key domestic cues of retail inflation data and industrial production data due tomorrow and corporate results starting from Friday. However, losses were limited with Asian Development Bank’s report that India is expected to bounce back to 7.3% in fiscal 2018 and firm to 7.6% in 2019 as the new tax regime improves productivity and as banking reform and corporate deleveraging take hold to reverse a downtrend in investment. In scrip specific development, KP Energy gained on tying-up with GE Renewables India for developing Wind Power Project of 300 MW (120 Wind Turbine Generators of 2.5 MW each) at Kutch, Gujarat.

On the global front, Asian markets were trading mostly in green, as investor sentiment improved after China's President Xi Jinping helped ease fears over a US-China trade row. Meanwhile, China's producer price inflation continued to cool in March, slowing to a 17-month low and backing expectations of a broader slackening in economic growth this year. Consumer inflation also eased in the previous month as the effects of booming demand spurred by the Lunar New Year holiday in February receded.

The BSE Sensex is currently trading at 33862.93, down by 17.32 points or 0.05% after trading in a range of 33750.74 and 33972.51. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.32%, while Small cap index was down by 0.02%.

The top gaining sectoral indices on the BSE were Metal up by 1.54%, IT up by 0.92%, TECK up by 0.84%, Telecom up by 0.40% and Consumer Durables up by 0.31%, while Oil & Gas down by 1.80%, PSU down by 1.60%, Bankex down by 0.82%, Utilities down by 0.57% and Energy down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.66%, ONGC up by 1.44%, TCS up by 1.40%, Reliance Industries up by 1.20% and Hindustan Unilever up by 0.83%. On the flip side, SBI down by 2.05%, Adani Ports & SEZ down by 2.03%, Yes Bank down by 1.54%, ICICI Bank down by 1.42% and Axis Bank down by 1.31% were the top losers.

Meanwhile, with the help of rise in productivity post Goods and Services Tax (GST) and investment revival on the back of banking reform, the Asian Development Bank (ADB) in its latest report has said growth in the Indian economy is expected to rebound to 7.3% in the fiscal year 2018 and will accelerate further to 7.6% in 2019. It added that the country’s Gross Domestic Product (GDP) grew 6.6% in the fiscal year 2017 due to the lingering effects of demonetization in 2016, businesses adjusting to a new tax regime in 2017, and subdued agriculture.

In its Asian Development Outlook, 2018, ADB has stated that overall growth will get a boost on improved rural consumption, a modest uptick in private investment, and less drag from net exports. It also said that urban consumption growth will remain stable, and impetus from public investment modest. It added that growth will pick up further in 2019 as efforts to strengthen the banking system and continued corporate deleveraging are likely to bolster private investment. Also set to catalyse growth are benefits from the GST as it mitigates geographic fragmentation and adds revenue to the exchequer, as well as further progress on fiscal consolidation and reform to promote foreign direct investment (FDI).

The report pointed out that the prospects for policy stimulus remain limited and there is risk of tight interest rate regime. It also said that the deferment of fiscal consolidation, upside risks to inflation, and expected hikes in US interest rates in 2018 squeeze maneuvering room for policy rate cuts to stimulate growth. At the same time, the odds of a rate hike are low with the central bank indicating tolerance for slightly higher inflation and recognition of the need to nurture recovery. Consequently, it said that the status quo is likely to hold in FY2018, albeit with some risk of monetary tightening. Besides, it projected inflation to average 4.6% in 2018, rising to 5.0% in 2019 with further firming of global commodity prices and strengthening of domestic demand.

The CNX Nifty is currently trading at 10383.75, down by 18.50 points or 0.18% after trading in a range of 10355.60 and 10428.15. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 4.05%, Eicher Motors up by 2.33%, HCL Tech. up by 2.24%, Hindalco up by 1.80% and Sun Pharma up by 1.65%. On the flip side, HPCL down by 7.27%, BPCL down by 6.89%, Indian Oil Corporation down by 6.39%, Adani Ports & SEZ down by 2.38% and SBI down by 2.11% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 8.04 points or 0.43% to 1,869.02, Shanghai Composite was up by 9.36 points or 0.29% to 3,199.69, Jakarta Composite added 32.1 points or 0.51% to 6,357.92, Taiwan Weighted surged 46.84 points or 0.43% to 10,974.02 and Hang Seng rose 122.2 points or 0.4% to 30,850.94.

On the flip side, Nikkei 225 decreased 107.22 points or 0.49% to 21,687.10 and KOSPI Index was down by 6.52 points or 0.27% to 2,444.22.