Benchmarks continue to trade in green in morning session

Indian equity benchmarks continued their trade in green in morning session on account of buying in frontline blue chip counters. The rupee was trading up against US dollar in morning trade on account of selling American currency by banks and exporters. Oil prices edged lower as a relentless rise in US drilling activity points to increased output, while resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran. Exit polls in Karnataka on Saturday suggested Narendra Modi’s BJP could emerge as the leading party, potentially boosting the prime minister’s chances of winning a second term in general elections early next year. While three TV channels predicted 80 to 114 seats for Modi’s Bharatiya Janata Party, short of the half-way mark in the 224-member house, polls also forecast 22-43 seats for a regional group, Janata Dal (S), which could emerge as a kingmaker.

The sentiments were upbeat on global rating agency Fitch’s statement that India’s economic growth is likely to accelerate to 7.3% in FY19 and 7.5% in FY20 on the back of recovery in money supply to its pre-demonetization level. Moreover, disruptions related to the rollout of GST have also eased and will support in the growth of Indian economy. Investors took note of private report that India was the largest remittance-receiving country in the world, with migrant workers from the country sending home $69 billion in 2017, according to a report which said remittances to the Asia-Pacific region amounted to $256 billion last year.

Meanwhile, select stocks in healthcare space was buzzing on a private report that the healthcare industry is expected to grow annually at 16-17% to reach to Rs 8.6 trillion by FY22 on the back of the Centre’s Ayushman Bharat scheme which if implemented successfully can go a long way in meeting the severe shortage of healthcare infrastructure. The report added that if the above scheme is implemented successfully, healthcare delivery market can grow multi-fold. Select banking stocks were buzzing on report that the Finance Ministry is examining a proposal to find innovative ways for dealing with burden of NPA provisions by issuing provision shore-up certificates (PSC) to banks. With the help of this instrument, the operating profit of bank is saved from erosion and the lender would be able to focus on lending activities as being in financially good shape.

Separately, the street shrugged off India’s industrial output report which expanded at its slowest in five months in March, pulled down by slow growth in mining and contraction in the production of key items such as hand tools, gold jewellery, paper and readymade garments. The Index of Industrial Production (IIP) rose 4.4% from a year ago, data issued by CSO showed, compared with 7% rise in February. For the full year 2017-18, industrial production grew 4.3%, compared with 4.6% in 2016-17. Additionally, foreign investors have pulled out Rs 12,671 crore ($2 billion) from the Indian capital markets, in the last eight trading sessions, primarily due to surge in global crude prices and rise in yields of government securities here. These developments follow an outflow of over Rs 15,500 crore from the capital markets (equity and debt) in April, the steepest in 16 months.

Traders were seen piling position in Healthcare, Bankex and PSU stocks, while selling was witnessed in Consumer Durables, IT and Realty sector stocks. In scrip specific developments, GlaxoSmithkline Consumer Healthcare was trading in green after its net profit rose 20.43% to Rs 211.81 crore in the quarter ended March 2018 as against Rs 175.88 crore during the previous quarter ended March 2017. Sales rose 6.96% to Rs 1179.58 crore in the quarter ended March 2018 as against Rs 1102.81 crore during the previous quarter ended March 2017. Allahabad Bank was trading in red on reporting a net loss of Rs 3,510 crore in the fourth quarter owing to higher loan risk coverage as well as taking cover against frauds involving Punjab National Bank and diamond trader Nirav Modi. The bank posted net profit of Rs 111 crore in the year-ago period.

On the global front, Asian markets were trading mostly in green amid signs of easing US-China trade tension as US President Donald Trump ordered the Commerce Department to get Chinese telecom equipment maker ZTE Corp back into business. Malaysian equities were another focus as the stock market reopened after a two-day holiday following a surprising victory of Mahathir Mohamad in the country’s general elections last week. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,600 and 10,800 levels, respectively. The market breadth on BSE was negative in the ratio of 1005:1169, while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 35614.67, up by 78.88 points or 0.22% after trading in a range of 35506.34 and 35642.72. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.25%, while Small cap index was down by 0.03%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.12%, Bankex up by 0.45%, PSU up by 0.26%, FMCG up by 0.19% and Telecom up by 0.15%, while Consumer Durables down by 1.16%, IT down by 0.58%, Realty down by 0.40%, TECK down by 0.38% and Auto down by 0.25% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.84%, Dr. Reddy’s Lab up by 2.32%, NTPC up by 1.79%, Kotak Mahindra Bank up by 1.70% and Bajaj Auto up by 1.02%.

On the flip side, Tata Motors - DVR down by 2.15%, Tata Motors down by 1.25%, Mahindra & Mahindra down by 1.09%, TCS down by 0.95% and ICICI Bank down by 0.79% were the top losers.

Meanwhile, with contraction in capital goods segment and sluggish growth in mining sector, India’s industrial production measured by Index of Industrial Production (IIP) slowed down to 4.4% in the month of March 2018, as compared to 7.1% growth recorded in previous month. This is the first time in four months that the IIP recorded less than 7% growth. Besides, the industrial output index grew by 4.4% in March 2017.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of January 2018, stood at 139.0, which is 4.4% higher as compared to the level in the month of March 2017. The cumulative growth for the period April-March 2017-18 over the corresponding period of the previous year stood at 4.3% lower than 4.6% in the previous fiscal.

On the sectoral basis, the manufacturing segment, which constitutes the bulk of the index at 77.6%, saw sharp slowdown in March 2018 at 4.4% as compared to 8.7% in February. In March last year, manufacturing growth came in at 3.3%. However, mining recorded sharp fall in growth at 2.8% as compared to 10.1% growth in same month last year, while it had contracted 0.3 percent in February 2018. Besides, electricity sector recorded 5.9% growth in March 2018 as compared to 6.2% in same month last year, while, in February 2018, electricity sector grew 4.5%. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2018 stand at 131.3, 138.6 and 156.7 respectively. The cumulative growth in these three sectors during April-March 2017-18 over the corresponding period of 2016-17 has been 2.3%, 4.5% and 5.4% respectively.

On the other hand, capital goods output, a proxy to measure private sector investment activity, contracted by 1.8% during March as compared to a growth of 9.4% in the corresponding period last year. However, consumer durables output showed an increase of 2.9% as against decline of 0.6% in March 2017. The consumer non-durables segment showed an impressive growth of 10.9% in March as against 7.5% in corresponding month last year. As per Use-based classification, the growth rates in March 2018 over March 2017 are 2.9% in Primary goods, 2.1% in intermediate goods and 8.8% in Infrastructure/ Construction Goods. 

In terms of industries, 11 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of March 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of furniture’ has shown the highest positive growth of 41.5% followed by 20.6% in ‘Manufacture of food products’ and 17.2% in ‘Manufacture of motor vehicles, trailers and semi-trailers’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest negative growth of (-) 30.7% followed by (-) 20.6% in ‘Manufacture of tobacco products’ and (-) 18.6% in ‘Manufacture of wearing apparel’.

The CNX Nifty is currently trading at 10825.15, up by 18.65 points or 0.17% after trading in a range of 10801.50 and 10834.85. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.91%, Dr. Reddy’s Lab up by 2.38%, Lupin up by 2.05%, NTPC up by 1.88% and Kotak Mahindra Bank up by 1.40%.

On the flip side, Indiabulls Housing down by 2.11%, Titan Co down by 1.37%, Tata Motors down by 1.21%, Mahindra & Mahindra down by 1.05% and Coal India down by 0.89% were the top losers.

The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 8.01 points or 0.43% to 1,854.52, Shanghai Composite increased 19.46 points or 0.62% to 3,182.72, Nikkei 225 increased 100.03 points or 0.44% to 22,858.51, Taiwan Weighted increased 102.33 points or 0.94% to 10,961.31 and Hang Seng increased 399.5 points or 1.28% to 31,521.56.

On the other hand, Jakarta Composite decreased 45.04 points or 0.76% to 5,911.79 and KOSPI Index decreased 1.14 points or 0.05% to 2,476.57.