Firm trade prevails in morning session

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters. The rupee made a muted opening against the dollar. Investors are eyeing Reliance Industries result which is scheduled for today. Apart from the expectations of another billion-dollar profit, investors will be looking out for key monitorables such as gross refining margin (GRM), petchem business margins, the progress on the remaining core expansion plans and the update on telecom venture. The sentiments were upbeat with Confederation of Indian Industry (CII) president Rakesh Bharti Mittal’s statement that demand in the economy is picking up and it is time private investment started flowing in. He added that India’s economic environment started improving due to introduction of major reforms such as GST, Insolvency and Bankruptcy Code, and fixed-term employment. Separately, a foreign brokerage highlighted that India’s economic growth will accelerate to 7.2% in the current fiscal buoyed by manufacturing activity even as rising oil prices and high government debt remain a challenge. The report added that agriculture sector is expected to grow higher than the estimated 2.1% in the current fiscal year on account of positive prospects on Rabi harvest and a normal monsoon, contributing significantly to the national GDP.

Investors took note that China’s trade with India saw robust growth in the first quarter, with bilateral trade hitting $22.1 billion, up 15.4% year-on-year. The growth continued from the upward momentum seen last year, when bilateral trade reached a record high of $84.4 billion, up 20.3% from the previous year. By the end of 2017, Chinese investments into India added up to more than $8 billion, as India has become an important market for infrastructure cooperation among Chinese companies and a major investment destination. Realty companies stocks were buzzing after RBI data showed that housing prices went up by an average of 7.6% in the three months ended December 2017, with highest appreciation recorded in Kochi. After Kochi, the maximum rise in housing prices was witnessed in Kanpur at 23.6%, followed by Ahmedabad (17.9%) and Jaipur (16%). Mumbai saw a price rise of 9%, Delhi (6.7%), Kolkata (5.5%), Lucknow (5%) and Chennai (1.87%).

Meanwhile, select stocks related to Non-banking finance companies (NBFC) and housing finance companies were buzzing after CRISIL in its report highlighted that wholesale credit book of these companies, which includes real estate and infrastructure lending, is likely to grow at 21% annually till 2020. The report added that asset quality in the segment has largely been stable because of robust controls, and despite an increase in infrastructure loan delinquencies. Mixed reactions were witnessed in sugar stocks. ICRA highlighted that the government support will be crucial for successful implementation of the targeted sugar exports, otherwise current low global sugar prices will render exports un-remunerative for the millers. Given a significantly higher-than-anticipated domestic sugar production for sugar year 2018 (SY2018) which resulted in a downside correction in sugar prices, to a low of Rs 28,500 per metric tonne (MT) in April 2018 (all prices quoted in this report are ex-mill UP), the government has allowed for sugar exports of 2 million MT during SY2018.

Traders were seen buying in Bankex, Energy and Realty stocks, while selling was witnessed in IT, TECK and Utilities sector stocks. Select telecom companies were trading in red. Global rating agency Fitch said that the merger of Bharti Infratel with Indus Towers (Indus) reflects fierce price competition in the Indian telecom market. There is heightened pressure for consolidation on incumbents to sell assets to raise funds. In scrip specific development, Axis Bank was trading in green. The bank has posted its worst quarterly earnings, declaring a loss of Rs 2,189 crore in the January-March period, as outgoing chief executive Shikha Sharma more than doubled provisions for bad loans in a bid to leave a cleaner balance sheet for her successor.

On the global front, Asian markets were trading mostly in green. Japan’s central bank kept monetary policy steady and removed a phrase on the timeframe for achieving its 2 percent inflation target, suggesting it is no rush to reach its elusive price goal with the economy in good shape. As widely expected, the Bank of Japan maintained a pledge to guide short-term interest rates at minus 0.1 percent and the 10-year bond yield around zero percent. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,900 and 10,650 levels, respectively. The market breadth on BSE was positive in the ratio of 1429:719, while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 34977.16, up by 263.56 points or 0.76% after trading in a range of 34744.73 and 35030.87. There were 23 stocks advancing against 8 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.65%, while Small cap index was up by 0.66%.

The top gaining sectoral indices on the BSE were Bankex up by 1.67%, Energy up by 1.55%, Realty up by 1.26%, PSU up by 1.16% and Capital Goods up by 1.04%, while IT down by 0.85%, TECK down by 0.52% and Utilities down by 0.02% were the only losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 4.40%, SBI up by 4.35%, ICICI Bank up by 3.61%, Reliance Industries up by 2.56% and Larsen & Toubro up by 1.68%.

On the flip side, Wipro down by 1.85%, TCS down by 1.71%, NTPC down by 1.42%, HDFC Bank down by 0.85% and Hindustan Unilever down by 0.70% were the top losers.

Meanwhile, in order to ensure orderly growth of the fast-growing sector, the government is mulling a national policy on retail trade. The commerce and industry ministry has written to the department of consumer affairs to set up a task force for framing the policy. In a letter to Consumer Affairs, Food and Public Distribution Minister Ram Vilas Paswan, Commerce and Industry Minister Suresh Prabhu said the task force should have representations from different stakeholders.

Retail trade is crucial for growth of Indian economy and the policy should be formulated to promote trade without sacrificing the interest of consumers. As the Consumer Affairs Ministry is the nodal agency for regulating internal trade, it is already in the process of formulating guidelines on e-commerce and hence it would be appropriate for the ministry to come out with norms for retail trade. The commerce ministry should also take on board state governments while framing the policy norms as retail trade is also governed by the Shops and Establishment Act. 

The matter assumes importance as traders’ body Confederation of All India Traders (CAIT) has written to Prime Minister Narendra Modi seeking a national policy for retail trade and formation of a separate ministry of internal trade. It also claimed that these steps will not only strengthen the domestic trade but also improve export performance of the country. According to them, over 6.5 crore small businesses are engaged in the sector across the country thereby strengthening the economy.

The CNX Nifty is currently trading at 10685.80, up by 68.00 points or 0.64% after trading in a range of 10647.55 and 10704.85. There were 39 stocks advancing against 11 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 4.63%, SBI up by 4.50%, ICICI Bank up by 3.50%, Reliance Industries up by 2.63% and Eicher Motors up by 2.45%.

On the flip side, HCL Tech down by 3.43%, Tech Mahindra down by 2.33%, Wipro down by 2.15%, TCS down by 1.79% and NTPC down by 1.37% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 0.73 points or 0.01% to 5,909.93, FTSE Bursa Malaysia KLCI increased 8.82 points or 0.48% to 1,861.09, KOSPI Index increased 14.83 points or 0.6% to 2,490.47, Taiwan Weighted increased 33.67 points or 0.32% to 10,522.25, Hang Seng increased 83.92 points or 0.28% to 30,091.60 and Nikkei 225 increased 100.16 points or 0.45% to 22,419.77.

On the other hand, Shanghai Composite decreased 18.68 points or 0.61% to 3,056.35.