Benchmarks extend winning streak for sixth straight session

Extending northward journey for sixth straight session, Indian equity benchmarks ended the Thursday’s trade in green terrain with frontline gauges recapturing their crucial 34,100 (Sensex) and 10,450 (Nifty) levels. Despite making a cautious start, markets gained strength and traded in green throughout the session as traders took some encouragement with report that India has jumped 13 places in the last one year to earn 130th spot in the latest annual Index of Economic Freedom released by a top American think-tank. In 2017, India with a score of 52.6 points was ranked at 143 among 180 countries, two spots below neighbour Pakistan. Some support also came with a report highlighting that FDI inflows have increased by 34% to an average of $10.2 billion quarterly since the NDA-government assumed power in 2014. The report notes that FDI inflows in India have nearly doubled to $42 billion in FY17.

Markets extended rally in last leg of trade with traders taking some support with the International Monetary Fund’s (IMF) report stating that it is optimistic on the outlook for global growth but warned darker clouds are looming due to fading fiscal stimulus and rising interest rates. The trade conflict between the United States and China is creating significant uncertainty for businesses and their global supply chains. The street shrugged off a study published in RBI’s monthly bulletin that India’s social sector spending remains woefully below peers, including Latvia and Iceland, in terms of GDP. The social sector expenditure primarily constitutes health and education in India. The conclusion is based on an analysis of 17 countries, including India, with respect to their social sector expenditure as percent of GDP (2016). Meanwhile, former RBI governor Raghuram Rajan has said that proper implementation of the Goods and Services Tax (GST) in India can be worked upon and is not an ‘unfixable problem’.

Firm trade in European counters too aided sentiments despite Euro zone industrial production was much weaker than expected in February, data showed, as a surge in energy output failed to offset a slump in the production of capital goods and consumer goods. Asian markets ended mostly in red on Thursday as concerns over possible US military action in Syria and hawkish statements from the Federal Reserve dented investors’ risk appetite.

Back home, banking stocks remained in focus after the Reserve Bank ruled out any relaxation in bad loan rules, saying the tough norms will discipline borrowers and prevent banks from pushing distressed loans under the carpet. Aviation stocks flied higher with International Air Transport Association’s (IATA) statement that India is on track to register 50 straight months of double-digit domestic air passenger growth in October 2018 as the near term outlook remains bright. IATA also said that it continues to expect India to surpass the UK as the world’s third largest origin-destination market by the mid-2020s. However, sugar stocks closed in red on report that the food ministry has no immediate plans to give subsidy to sugarcane growers for bailing out cash-starved sugar mills, and it asked factories to export 2 million tonnes sweetener, even at loss, to liquidate surplus stock and improve domestic prices.

Finally, the BSE Sensex surged 160.69 points or 0.47% to 34,101.13, while the CNX Nifty was up by 41.50 points or 0.40% to 10,458.65.

The BSE Sensex touched a high and a low of 34,177.44 and 33,924.88, respectively and there were 17 stocks on gaining side as against 14 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index slipped 0.13%, while Small cap index was down by 0.27%.

The few gaining sectoral indices on the BSE were IT up by 3.18%, TECK up by 2.49%, Bankex up by 0.35% and Capital Goods was up by 0.19%, while Realty down by 1.82%, Metal down by 1.41%, Telecom down by 0.82%, Healthcare down by 0.73% and Basic Materials was down by 0.68% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 4.04%, Infosys up by 3.41%, Axis Bank up by 1.63%, ICICI Bank up by 0.83% and Tata Motors - DVR up by 0.80%. On the flip side, Dr. Reddy’s Lab down by 1.97%, Tata Steel down by 1.51%, SBI down by 1.17%, Sun Pharma down by 1.12% and Adani Ports & SEZ down by 1.11% were the top losers.

Meanwhile, in order to speed up the process of granting exploration licences, the Union Cabinet chaired by Prime Minister Narendra Modi has given its approval for delegating the powers to Minister of Petroleum and Natural Gas and Finance Minister to award oil and gas blocks to their winners in the ongoing auction, bids for which are due on May 2. This delegation of powers will expedite the decision making process on awarding blocks and give a boost to the initiative of ease of doing business. Earlier, only the Cabinet had the powers to approve award of a block or area for exploration and production of oil and gas. 

The Cabinet stated that the two ministers will approve the award based on the recommendations of a panel of secretaries, called the Empowered Committee of Secretaries (ECS). The delegation of power is for Open Acreage Licensing Policy (OALP) bid rounds under the Hydrocarbon Exploration and Licensing Policy (HELP). Presently, the first round of OALP is underway, with bids for 55 exploration blocks on offer for prospecting of oil and gas due on May 2. These blocks are to be awarded by July. Under the new HELP, the competitive bidding will be continuous and blocks will be awarded twice a year.

The central government received an overwhelming response in first Eol cycle of OALP which started on July 01, 2017 and closed on November 15, 2017. In the first Bid round, 55 blocks, having an area of 59282 Square kilometer spreading across 11 States have been offered for bidding. The bidding process is being handled through a secured and dedicated e-bidding portal.

The CNX Nifty traded in a range of 10,469.90 and 10,395.25. There were 23 stocks in green as against 27 stocks in red on the index.

The top gainers on Nifty were HCL Tech up by 4.10%, TCS up by 4.04%, Infosys up by 3.54%, Tech Mahindra up by 3.03% and Axis Bank up by 1.17%. On the flip side, Vedanta down by 2.39%, Lupin down by 2.11%, Dr. Reddy’s Lab down by 1.94%, Tata Steel down by 1.59% and Sun Pharma down by 1.56% were the top losers.

The European markets were trading mostly in green; France’s CAC rose 3.78 points or 0.07% to 5,281.72 and Germany’s DAX gained 13.25 points or 0.11% to 12,307.22, while UK’s FTSE 100 was down by 1.88 points or 0.03% to 7,255.26.

The Asian markets closed mostly in red on Thursday, on escalating Middle East tensions. People’s Bank of China Governor Yi Gang said economic indicators have performed better than expected in the first quarter, amid continued improvement in the global economic outlook. South Korea’s central bank held interest rates steady, as expected, with inflation running more slowly than forecast and exports showing a modest improvement. The Bank of Korea’s Monetary Policy Board voted to keep the benchmark interest rate at 1.50 percent, leaving its monetary policy setting unchanged since raising it in November from a record-low 1.25 percent.