Benchmarks end lackluster trade on quiet note

Wednesday turned-out to be a quiet day of trade for Indian equity benchmarks with frontline gauges ending almost flat on Wednesday, as traders remained anxious eyeing ongoing result season and ahead of Federal Reserve meeting outcome tonight. Markets altered between green and red throughout the session and traded mostly near neutral lines, as traders remained cautious on report that the eight core industries’ output growth slowed to three-month low of 4.1 per cent in March, largely due to some base effect and contraction in crude oil production. The latest print was lower than the revised 5.4 per cent growth in February and 6.1 per cent in January. Also, the December 2017 print for core eight industries has been revised downwards to 3.8 per cent from 4.2 per cent projected earlier. Traders also remained cautious with Moody’s Investors Service’s latest report stating that the Reserve Bank of India’s (RBI) push to banks to recognize problem assets more accurately will reduce profitability of banks in the near term. It said that increased provisioning will hurt the banks' profitability, and weaker public sector banks (PSBs) in particular will continue to report losses in the next fiscal year (FY19), adding pressure on their capital ratios.

However, market participants got some respite with a report highlighting that the Indian manufacturing activity expanded further in April, on the back of faster expansions in output and new orders, signaling a faster improvement in business conditions across the country’s goods-producing sector compared to the previous March month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 51.6 in April from 51.0 in March. Some solace also came with report stating that the government mopped up over Rs 1 trillion in GST collection in April, indicating stabilisation of the new indirect tax regime which was rolled out on July 1 last year. While Goods and Services Tax (GST) collection in entire 2017-18 stood Rs 7.41 trillion, in March the figure was Rs 892.6 billion. Some support also came with Union Minister Suresh Prabu’s statement that India, driven by a new industrial policy to be rolled out soon, will be the next engine of growth for the world. Auto stocks remained in top gear after companies released April month sales number.

On the global front, European markets were trading in green despite Euro zone economic growth slowed as expected at the start of 2018, although economists said temporary factors were partly behind the weakness and that the economy should continue to expand strongly this year. Asian markets ended mostly in red with traders refraining from making big moves ahead of US Federal Reserve's monetary policy statement, due later in the day.

Back home, Aviation stocks viz. Jet Airways and InterGlobe Aviation (IndiGo) closed in red as investors remained wary of hike in aviation fuel prices. Effective May 1, Indian Oil Corporation (IOC) has decided to hike jet fuel (aviation turbine fuel) to Rs 65,340/KL, implying a hike of 6.5 percent against Rs 61,450/KL in the previous month.

Finally, the BSE Sensex rose 16.06 points or 0.05% to 35,176.42, while the CNX Nifty was down by 21.30 points or 0.20% to 10718.05.

The BSE Sensex touched a high and a low of 35,357.15 and 35,072.42, respectively and there were 10 stocks on gaining side as against 21 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.17%, while Small cap index was down by 1.15%.

The lone gaining sectoral index on the BSE was Energy up by 0.19%, while Metal down by 3.40%, Basic Materials down by 2.11%, Realty down by 1.75%, PSU down by 1.52% and Consumer Durables down by 1.33% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 3.87%, ITC up by 2.03%, Asian Paints up by 1.80%, HDFC up by 1.37% and HDFC Bank up by 1.32%. On the flip side, Tata Steel down by 3.30%, ICICI Bank down by 2.58%, Hindustan Unilever down by 2.49%, Sun Pharma down by 2.39% and SBI down by 2.29% were the top losers.

Meanwhile, easing rules for investments from the foreign portfolio investors (FPIs), the Reserve Bank of India (RBI) has permitted them to invest in Treasury Bills or T-Bills issued by the Central Government. However, the FPIs will have to ensure that their exposure in government securities as well as corporate bonds of less than one year maturity shall not exceed 20 percent of total investment. It also asked the investors to bring down their total exposure in debt instruments (G-secs, state development loans or, corporate bonds) with one-year maturity to below 20 percent within six months.

The central bank has stated that the implementation date of online monitoring of utilisation of G-sec limits has been set as June 1, 2018. The requirement that investment in securities of any category with residual maturity below one year should not exceed 20 percent of total investment by an FPI in that category applies, on a continuous basis. It added that all securities with residual maturity of less than one year will be reckoned for the 20 percent limit, regardless of the maturity of the security at the time of purchase by the FPI.

The RBI further said that if there are investments in securities with less than one year residual maturity as on May 2, 2018, and it constitutes more than 20% of the total investment in any category, the FPI will have to bring such share below 20% within a period of six months from the date of the circular. Besides, it noted that the FPI should ensure that no further additions are made to the portfolio of securities with residual maturity of less than one year as on May 2, 2018.

The CNX Nifty traded in a range of 10,784.65 and 10,689.80. There were 15 stocks in green as against 35 stocks in red on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 4.04%, Zee Entertainment up by 2.03%, ITC up by 1.83%, Axis Bank up by 1.46% and Asian Paints up by 1.40%. On the flip side, Vedanta down by 4.98%, HCL Tech down by 4.50%, Hindalco down by 3.54%, Tata Steel down by 3.39% and HUL down by 2.51% were the top losers.

The European markets were trading in green; France’s CAC gained 5.4 points or 0.1% to 5,525.90, UK’s FTSE 100 increased 30.14 points or 0.4% to 7,550.50 and Germany’s DAX was up by 121.45 points or 0.96% to 12,733.56.

Asian equity markets ended mostly in red on Wednesday, with traders refraining from making big moves ahead of US Federal Reserve's monetary policy statement, due later in the day. Chinese shares ended roughly flat as investors returning from the Labour Day holiday braced for trade talks between US and Chinese officials amid worries about economic health. Further, Japanese shares ended lower amid caution ahead of the Federal Reserve’s policy decision and US jobs data, although the dollar’s rise against the yen and positive sentiments toward tech stocks helped curb some of the losses.