Benchmarks trade firm; BJP crosses halfway mark

Indian equity benchmarks continued their firm trade in morning session on account of buying in frontline blue chip counters. The beleaguered rupee plunged against dollar in early trade following heavy buying of American currency by banks and importers amid fund outflows from equities. Oil prices held firm as ongoing production cuts by OPEC and looming US sanctions against Iran tightened the market amid strong demand. The sentiments were upbeat as vote count for the recently concluded Karnataka elections kicked off, with BJP leading the halfway mark. A total of 113 of 222 seats are needed for a majority. Separately, a private report enlightened that capex by Indian companies is slowly making a comeback as Tata Steel, Ambuja Cements, Eicher Motors, Hero MotoCorp, Asian Paints, CEAT, Apollo Tyres and Jubilant FoodWorks among other companies have announced investments totaling Rs 50,000 crore in the past four months.

Investors took note of India Ratings report which highlighted that profitability improvement last year mainly in the metals sector is expected to keep corporate outlook for the new fiscal stable, but a broad-based recovery could take much longer. The report added that even though EBITDA growth could be between 8% to 11% in 2018-19, headwinds from rising oil prices, higher commodity prices, higher interest cost and depreciation in rupee could limit the expected growth. Separately, a SBI research report highlighted that delayed payments under the guaranteed rural employment programme MNREGA fell to 6-year low of Rs 67,956 crore last fiscal ended March 31. On the other hand total payments under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) was also at 6-year high of Rs 3.87 lakh crore.

Meanwhile, select real estate stocks were buzzing on report that housing sales increased by 25% in the country’s seven major cities in April to 1,726 units over the previous month, driven by the Delhi-NCR market which saw a sharp rise in demand. Total housing sales stood at 1,382 units in March at seven major cities -- the National Capital Region (NCR), Mumbai Metropolitan Region (MMR), Kolkata, Chennai, Bengaluru, Hyderabad and Pune. The street shrugged off the report that reversing the easing trend of last three months, India’s retail inflation inched up to 4.58% in the month of April 2018, as compared to 4.28% in March 2018 and 2.99% in April 2017. Inflation based on Consumer Price Index (CPI) firmed up due to faster rises in prices of food and fuel products.

Traders were seen piling position in Bankex, Metal and Power sector stocks. In scrip specific developments, Orchid Pharma is locked at lower circuit after the lenders to the company have rejected the resolution plan of the bankrupt company, a decision that could push the troubled drug-maker toward liquidation. The company was referred to the bankruptcy court by Lakshmi Vilas Bank after it failed to pay about Rs 3,500 crore to lenders. Allahabad Bank was trading in red after the government asked the board of Allahabad Bank to take away all executive powers of managing director Usha Ananthasubramanian, after the Central Bureau of Investigation (CBI) named her in the $2-billion Punjab National Bank scam.

On the global front, Asian markets were trading mostly in red. Fixed asset investment in China rose 7% in the first four months of 2018 from a year earlier, compared to the general consensus of a 7.4% gain, official data showed, suggesting that the country’s economy might be losing steam. Real estate investment in China rose 10.3% in the first four months of 2018 from a year earlier, while property sales softened in the face of government cooling measures. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,800 and 10,850 levels, respectively. The market breadth on BSE was positive in the ratio of 1419:704, while 95 scrips remained unchanged.

The BSE Sensex is currently trading at 35872.87, up by 316.16 points or 0.89% after trading in a range of 35498.83 and 35993.53. There were 27 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.27%, while Small cap index was up by 0.74%.

The gaining sectoral indices on the BSE were Bankex up by 1.49%, Metal up by 1.33%, Power up by 1.06%, Utilities up by 0.99%, Basic Materials up by 0.87%.

The top gainers on the Sensex were Power Grid up by 2.44%, Tata Steel up by 2.38%, Kotak Mahindra Bank up by 2.25%, Yes Bank up by 2.07% and HDFC Bank up by 1.67%.

On the flip side, Tata Motors - DVR down by 3.48%, Tata Motors down by 1.70%, ITC down by 0.39% and Adani Ports & Special Economic Zone down by 0.36% were the top losers.

Meanwhile, in order to meet the ever- increasing demands of India’s growing population, NITI Aayog CEO Amitabh Kant has said that the country’s real Gross domestic product (GDP) must register a growth of around 10 percent annually over the next three decades. However, he cautioned that this order of growth will not be attained if the ‘business-as-usual’ approach to the use of scarce resources continues.

Kant has said that for reducing reliance on fossil fuels in transportation, a NITI Aayog analysis suggests that the way forward is the use of bio-fuels. He also said that they are giving a big push to electric vehicles in a bid to conserve exhaustible natural resources and bring about resource efficiency. Besides, he emphasized the need to embed the principles of circular economy in India’s school education system. He also explained that a circular economy, in contrast to the ‘make-use-dispose’ model of the linear economy, focuses on use of resources for longest possible time as also recovering and regenerating products and materials at the end of their life cycle.

Noting that the government needs to enable regulatory framework for circular economy, NITI Aayog CEO said that they should incentivize use of renewable material for construction sector. He also stressed that the government needs to push the limits of the circular economy and make it a mass movement.

The CNX Nifty is currently trading at 10893.50, up by 86.90 points or 0.80% after trading in a range of 10789.80 and 10929.20. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 3.50%, Power Grid up by 2.58%, Tata Steel up by 2.42%, Yes Bank up by 2.28% and Kotak Mahindra Bank up by 2.19%.

On the flip side, Tata Motors down by 1.50%, Indian Oil Corporation down by 1.04%, HPCL down by 0.87%, Grasim Industries down by 0.67% and ITC down by 0.60% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 287.82 points or 0.91% to 31,253.26, Jakarta Composite decreased 75.65 points or 1.27% to 5,871.51, Taiwan Weighted decreased 54.19 points or 0.49% to 10,898.20, Nikkei 225 decreased 21.08 points or 0.09% to 22,844.78, KOSPI Index decreased 17.59 points or 0.71% to 2,458.52 and Shanghai Composite decreased 6.79 points or 0.21% to 3,167.24.

On the other hand, FTSE Bursa Malaysia KLCI increased 5.38 points or 0.29% to 1,855.80.