Benchmarks continue firm trade in morning session

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters. Globally, oil prices retreated from three-and-a-half-year highs as investors’ awaited announcement by US President Donald Trump on whether the United States will re-impose sanctions on Iran. The street is eyeing Karnataka elections whereby the market participants expect that a victory for the BJP in the upcoming elections could take the indices even higher. The street took note that the Reserve Bank of India reportedly intervened in the currency markets to prevent a further slide in the Indian rupee, which breached the 67 mark (at 67.14) to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. Some support also came with ICRA’s report which highlighted that the estimated surge in states’ borrowings in the first quarter do not reflect a deterioration of their financial health as it is driven more by the changes in central devolution. The report added that the planned increase in SDL (state development loans) issuance in Q1 of FY19 should not be construed as an indicator of a sharp fiscal deterioration of the states’ fiscal health.

Investors took note that Commerce and Industry Minister Suresh Prabhu has called a meeting of various departments, including finance and textiles, to discuss ways to promote exports. The meeting would deliberate upon ways on sectoral export promotion strategy. The meeting assumes significance as India’s exports dipped after a gap of four months in March. Separately, a private report highlighted that India is projected to have a skilled labour surplus of 245 million workers by 2030, mainly on the back of vast supply of working age citizens, even as most of developed and developing economies are expected to grapple with talent crunch at that time. Select power sector stocks were buzzing on World Bank’s report that while the government is currently reporting country’s electrification numbers in low 80s, the actual numbers are much higher. About 85 percent of India’s population has access to electricity. The global body added that about 30 million people received electricity between 2010 and 2016, which is much more than any other country in the world.

Meanwhile, select metal stocks were buzzing on report that India’s total export of finished steel increased by 16.7% and stood at 9.621 million tonnes (MT) in 2017-18. According to data compiled by the Joint Plant Committee (JPC), the country had exported 8.242 MT of finished steel during 2016-17 fiscal. Mixed reactions were witnessed in gold and jewellery stocks on ICRA’s report that demand for gold jewellery is likely to decline by 2-4 percent this calendar year due to high prices and subdued financing environment. Also, financing to the gems and jewellery sector have been under increased scrutiny in the recent months following reporting of fraud by few lenders on their exposures to the sector.

Traders were seen piling position in Bankex, Energy and Realty stocks, while selling was witnessed in Capital Goods, Auto and Consumer Durables sector stocks. In scrip specific developments, Vijaya Bank was trading in green after the company reported a marginal rise of 1.63% in its net profit at Rs 207.31 crore for the quarter ended March 31, 2018 as compared to Rs 203.99 crore for the same quarter in the previous year. Total income of the Bank increased by 6.38% at Rs 3728.22 crore for quarter under review as compared to Rs 3504.73 crore for the quarter ended March 31, 2017.

On the global front, Asian markets were trading mostly in green. China’s exports rebounded more strongly than expected in April after a surprise drop the previous month, suggesting global demand remains relatively resilient and providing a cushion to the economy amid a heated trade dispute with the United States. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,200 and 10,700 levels, respectively. The market breadth on BSE was positive in the ratio of 1130:1026, while 91 scrips remained unchanged.

The BSE Sensex is currently trading at 35299.82, up by 91.68 points or 0.26% after trading in a range of 35235.88 and 35388.87. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.08%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Bankex up by 1.07%, Energy up by 0.66%, Realty up by 0.61%, Oil & Gas up by 0.54% and Basic Materials up by 0.42%, while Capital Goods down by 0.35%, Auto down by 0.29%, Consumer Durables down by 0.28%, Consumer Disc down by 0.14% and TECK down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 6.58%, TCS up by 1.37%, Axis Bank up by 1.09%, Coal India up by 1.03% and Tata Steel up by 0.93%.

On the flip side, IndusInd Bank down by 1.69%, Mahindra & Mahindra down by 1.59%, Infosys down by 1.10%, Larsen & Toubro down by 0.99% and Wipro down by 0.86% were the top losers.

Meanwhile, the Andhra Pradesh Chief Minister, N Chandrababu Naidu took strong opposition to the Fifteenth Finance Commission's (FFC) Terms of Reference (ToR) and claimed that progressive states would lose heavily if the 2011 census data was taken as the basis for disbursing tax revenues among states. He also demanded that the Centre respect the cooperative federal system. Further, he asserted “It is not right to penalise states that are in the forefront in population control. We will not tolerate this injustice. We will fight till justice is secured.” 

 Pointing out that Kerala was leading in the country in terms of population control, Naidu said Andhra Pradesh too has adopted firm measures to control over their rate of population growth. He said “but now, population control is not our policy. Our ultimate objective is poverty eradication and we have accordingly been implementing various schemes.”

The Chief Minister also apprehended that south Indian states would lose seats (in legislatures) if delimitation of constituencies was undertaken based on 2011 population. Besides, he noted that South Indian states are under the threat of losing their eminence because they were successful in population control. He maintained that it is not right for the Centre to penalise such states.

The CNX Nifty is currently trading at 10737.15, up by 21.65 points or 0.20% after trading in a range of 10707.55 and 10758.55. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 6.38%, HPCL up by 1.58%, TCS up by 1.51%, Eicher Motors up by 1.14% and Coal India up by 1.08%.

On the flip side, IndusInd Bank down by 1.89%, Mahindra & Mahindra down by 1.60%, Larsen & Toubro down by 1.10%, Infosys down by 1.02% and Wipro down by 0.98% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 13.4 points or 0.73% to 1,841.60, Shanghai Composite increased 29.5 points or 0.94% to 3,166.14, Nikkei 225 increased 30.74 points or 0.14% to 22,497.90, Taiwan Weighted increased 75.75 points or 0.71% to 10,680.66 and Hang Seng increased 401.31 points or 1.34% to 30,395.57.

On the other hand, Jakarta Composite decreased 124.75 points or 2.12% to 5,760.35 and KOSPI Index decreased 2.25 points or 0.09% to 2,459.13.