Firm trade continues on Dalal Street; Nifty reclaims 10,550 mark

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters. Investors were closely monitoring March quarter earnings to get further market direction. IT bellwether TCS is all set to release its March quarter earnings. The rupee’s fall spiraled as it opened lower against the dollar. The domestic currency on Wednesday hit a fresh seven-month low of 65.78 on fresh demand for the greenback from importers and banks. Brent marked its highest level since November, 2014 at $73.93 per barrel. The street took some support from private poll that India will claim the top spot among the world’s fastest-growing major economies this year, but rising trade tensions between the United States and China may restrain that growth. The recent tit-for-tat import tariffs imposed by the US and China have raised concerns about a full-fledged global trade war which could throw an otherwise-strong world economy off-course. The latest poll, taken April 11-18, predicted India’s economy will expand 7.4 percent in the fiscal year that began this month. Separately, International Monetary Fund (IMF) in its Fiscal Monitor report titled ‘Capitalising on Good times’, has said that India, which recovered from the adverse effects of demonetization and implementation of goods and services tax (GST) regime, should now fully implement the new nationwide indirect tax to avoid tax revenue underperformance resulting in cuts to capital expenditures. It added that the country has quite a high debt to GDP ratio, but the government is trying to lower it using the right policies.

Meanwhile, oil marketing companies (OMCs) like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) extended their losses as oil prices edged up. The Organization of the Petroleum Exporting Countries, Russia and several other producers began to reduce supply in January 2017 in an attempt to erase a glut. They have extended the pact until December 2018 and meet in June to review policy. Saudi Arabia has emerged as OPEC’s leading supporter of measures to boost prices. Separately, as per foreign brokerage report that a further rise in oil prices could damage investor sentiments and raise twin deficit fears. The report added that the twin deficit issues could re-emerge with current account deficit moving up to 3 per cent of the Gross Domestic Product and fiscal risks to the tune of 40-50 basis points of GDP.

Aviation stocks like Jet Airways, SpiceJet and InterGloble Aviation were trading under pressure on sharp surge in Brent crude oil futures. Aviation turbine fuel (ATF) or jet fuel prices are directly linked to international crude oil prices and a surge in crude prices will escalate the operating expenses of aircraft carriers. Stocks related to wind power generation Inox Wind and Orient Green Power company were trading in green on back of ICRA Ratings report that the wind power capacity addition will improve to 3 GW this fiscal, backed by project awards by Solar Energy Corporation of India (SECI) and state utilities.

Traders were seen buying in Metal, Basic Materials and IT stocks, while selling was witnessed in Oil & gas, Consumer Durables and PSU sector stocks. In scrip specific development, Kirloskar Oil Engines was trading on firm note after Blackstone, the world’s biggest private equity fund, emerged the frontrunner to buy the company, the listed flagship company of the $3.5-billion Kirloskar Group that is in the middle of an escalating family feud. Promoters own 59.33 per cent of Kirloskar Oil Engines. Pulak Prasad’s Nalanda Capital, with 9.61 per cent stake, is the second-largest shareholder in the company that makes diesel engines, agricultural pump sets and generating sets.

On the global front, Asian markets were trading in green. China’s commerce ministry said that the country is well prepared to handle any negative effects from its trade dispute with the United States, adding that Beijing’s tariff hikes on US imports will not have a big impact overall on its domestic industries. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,400 and 10,550 levels, respectively. The market breadth on BSE was positive in the ratio of 1220:917, while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 34440.06, up by 108.38 points or 0.32% after trading in a range of 34392.11 and 34478.82. There were 21 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.38%, while Small cap index was up by 0.41%.

The top gaining sectoral indices on the BSE were Metal up by 3.38%, Basic Materials up by 2.18%, IT up by 0.84%, TECK up by 0.81% and Realty up by 0.59%, while Oil & Gas down by 1.16%, Consumer Durables down by 0.60%, PSU down by 0.32% and Energy down by 0.32% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.30%, ONGC up by 1.49%, Yes Bank up by 1.41%, Bharti Airtel up by 1.21% and TCS up by 1.16%.

On the flip side, Axis Bank down by 1.03%, Wipro down by 0.58%, Sun Pharma down by 0.53%, Bajaj Auto down by 0.44% and ICICI Bank down by 0.28% were the top losers.

Meanwhile, International Monetary Fund (IMF) in its Fiscal Monitor report titled ‘Capitalising on Good times’, has said that India, which recovered from the adverse effects of demonetization and implementation of goods and services tax (GST) regime, should now fully implement the new nationwide indirect tax to avoid tax revenue underperformance resulting in cuts to capital expenditures. Besides, it said that relatively buoyant revenues supported by base-broadening efforts and lower capital expenditures were offset by higher spending and lower profit transfers from the Reserve Bank of India (RBI) due to costs incurred during the demonetisation exercise.

IMF has stated that emerging market and middle-income economies’ overall fiscal deficits fell marginally in 2017 for the first time after four years of steady increase, largely by fiscal adjustment among commodity exporters. It indicated that on average, the overall deficit dropped to 4.4 percent of GDP in 2017 as compared to 4.8 percent of GDP in 2016, with diverging fiscal developments across countries. Further, it pointed out that commodity exporters have continued to push through reform to adjust to ‘lower for longer’ oil prices. It added that the headline fiscal balances improved in most commodity exporters, backed by a pickup in commodity prices and by expenditure cuts.

According to the report, in emerging market and developing economies, fiscal policy is appropriately focused on consolidation, especially in those countries that are still adjusting to lower commodity prices. However, it said that the speed of adjustment could be fine-tuned and, in some cases, it can be more ambitious. It noted that several countries could step up the speed of their fiscal adjustment. It added that given the strength of the recovery, Brazil should quicken the pace of consolidation and front-load the fiscal effort.

The CNX Nifty is currently trading at 10562.15, up by 35.95 points or 0.34% after trading in a range of 10547.10 and 10568.90. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 5.34%, Hindalco up by 5.33%, Ultratech Cement up by 2.83%, Tata Steel up by 2.14% and HCL Tech up by 2.04%.

On the flip side, HPCL down by 5.55%, BPCL down by 5.47%, Indian Oil Corporation down by 3.94%, Titan Co down by 2.07% and Axis Bank down by 1.28% were the top losers.

The Asian markets were trading in green; KOSPI Index increased 6.01 points or 0.24% to 2,485.99, FTSE Bursa Malaysia KLCI increased 8.9 points or 0.47% to 1,888.22, Jakarta Composite increased 13.84 points or 0.22% to 6,333.85, Shanghai Composite increased 35.98 points or 1.16% to 3,127.38, Nikkei 225 increased 84.82 points or 0.38% to 22,243.02, Taiwan Weighted increased 113.37 points or 1.05% to 10,961.26 and Hang Seng increased 439.09 points or 1.45% to 30,723.34.