Benchmarks trim gains in morning session

Indian equity benchmarks trimmed their gains and continued to trade in green in morning session. The rupee opened lower against US dollar. Panic dollar demand from importers and traders had sent the Indian unit tumbling triggering RBI’s intervention to defend the sinking currency. The street is eyeing the outcome of the Karnataka Assembly elections which will have larger implications for the way the capital markets will view the future of reforms. The sentiments were upbeat with India Ratings’ statement that the Indian economy is gradually coming out of the twin shock of demonetization and GST which temporarily derailed growth. The ratings agency, however, cautioned on the possible widening of the current account deficit (CAD) due to rising oil prices which was creating pressure on the currency. It added that on the monetary side, areas of concern are rising bond yields which indicate potential slippages on the fiscal front. The street shrugged off the report that a day after President Donald Trump withdrew the US from the Iran nuclear deal and decided to re-impose sanctions on the key crude oil producer, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said that this move will exert pressure on fuel prices and affect the Indian economy on the downside.

Investors took note of FICCI President Rashesh Shah’s statement that industry chambers must transform their role from being advocacy groups to ensuring that the country’s expectations are translated into reality. Shah said India is at a fascinating stage of economic growth and it needs lot of investments to create jobs and boost growth and for that savings need to be channelized. Separately, Commerce Secretary Rita Teaotia has said that India is not expecting any major shift in trade with Iran following the US decision to re-impose trade sanctions against the Islamic nation. The bilateral trade between India and Iran has increased to $12.9 billion in 2016-17 from $9 billion in the previous fiscal.

Meanwhile, select companies in renewable energy space were trading in green after RK Singh, Minister of Power and new and renewable energy, said that India is making quick progression in the field of renewable energy and the government is committed to achieving the said target by 2022. In the run up to India’s target of achieving 175 GW of renewable energy capacity addition, the government said that the country has already achieved 70 GW project capacity while an additional 38 GW is under implementation, as per data available till March 31, 2018.

Traders were seen piling position in Energy, Telecom and TECK stocks, while selling was witnessed in Power, Utilities and Realty sector stocks. In scrip specific developments, Kerala-based Federal Bank tumbled after reporting a 44 per cent fall in net profit in the March quarter, mainly due to a sharp rise in provisions for bad loans. The lender recognized Rs 872 crore of slippages mainly to comply with the central bank’s February stipulations that had tightened norms for bad-loan resolution. The profit was lower than a Bloomberg poll of 14 brokers who had expected the bottom-line to rise 12 per cent to Rs 287 crore.

On the global front, Asian markets were trading in green. China’s producer inflation picked up for the first time in seven months in April, bolstered by surging commodities prices and suggesting its industrial demand remains resilient even as trade tensions ratchet up with the United States. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,300 and 10,700 levels, respectively. The market breadth on BSE was negative in the ratio of 869:1280, while 90 scrips remained unchanged.

The BSE Sensex is currently trading at 35369.27, up by 49.92 points or 0.14% after trading in a range of 35353.96 and 35500.76. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.51%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were Energy up by 0.48%, Telecom up by 0.45%, TECK up by 0.27%, Oil & Gas up by 0.27% and IT up by 0.20%, while Power down by 0.96%, Utilities down by 0.75%, Realty down by 0.53%, Basic Materials down by 0.42% and FMCG down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.86%, Bharti Airtel up by 1.71%, Coal India up by 1.44%, Mahindra & Mahindra up by 0.81% and HDFC Bank up by 0.71%.

On the flip side, Power Grid down by 2.31%, Dr. Reddy’s Lab down by 1.68%, Tata Motors down by 1.27%, Tata Steel down by 0.65% and Yes Bank down by 0.62% were the top losers.

Meanwhile, the government is mulling to permit 100 percent foreign direct investment (FDI) in insurance intermediaries in a bid to give a fillip to the sector and attracting additional funds. Intermediary services encompasses of insurance broking, third party administrators, surveyors and loss assessors.

Presently, the FDI policy allows 49 percent foreign investment in the insurance sector, which includes insurance intermediaries. There is a need to de-link the FDI cap in insurance intermediaries from insurance companies. Representations have been made to the government that these intermediary services should be treated at par with other financial services intermediaries, where 100 percent FDI is allowed.

Further, industry experts stated that the insurance sector is being impacted due to weak distribution networks. There is a need to strengthen the distribution network to support the sector as a whole. Besides, India's current insurance penetration rate stands at 3.42%, far below the global average of 6.2%. It was 3.3% in the country in 2014.

The CNX Nifty is currently trading at 10743.80, up by 2.10 points or 0.02% after trading in a range of 10742.05 and 10785.55. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.94%, Coal India up by 1.80%, Bharti Airtel up by 1.65%, Zee Entertainment up by 1.61% and Tech Mahindra up by 1.47%.

On the flip side, Power Grid down by 2.62%, Dr. Reddy’s Lab down by 1.93%, Tata Motors down by 1.52%, Indiabulls Housing Finance down by 1.03% and Cipla down by 1.00% were the top losers.

The Asian markets were trading in green; KOSPI Index gained 13.41 points or 0.55% to 2,457.39, Shanghai Composite increased 3.10 points or 0.09% to 3,162.25, Taiwan Weighted rose 72.29 points or 0.68% to 10,775.64, Nikkei 225 jumped 75.24 points or 0.34% to 22,484.12 and Hang Seng up by 245.68 points or 0.80% to 30,781.81.

Jakarta Stock Exchange was closed on account of National holiday. Malaysia’s national stock exchange will be closed on Thursday and Friday after Malaysia’s opposition alliance won the general elections on Thursday in a shock victory.