Local equities hold positive momentum

Local equity benchmarks continued to trade with healthy gains in the morning trades on account of buying in front line counters. Energy, Metal and Healthcare have elevated with gains on their respective front line stocks. Traders remained optimistic with a report that with inflation likely to remain under 4 percent till October, the Reserve Bank may cut rates to the tune of 75-100 basis points in the next financial year. The report also includes the 25 basis points reduction in the February policy. Headline CPI inflation is likely to remain below 4 per cent until October and averages at 3.8 percent in FY20. however, traders overlooked the Fitch Ratings report that government’s latest capital infusion of Rs 48,239 crore in PSU banks announced on 21 February 2019 may not be sufficient to support significantly stronger lending growth. Besides, traders took note of a report that the government has detected Rs 20,000 crore worth GST evasion so far this fiscal and will take more steps to check frauds and increase compliance. Central Board of Indirect Taxes and Customs Member would soon call a meeting of the representatives of the real estate sector to understand transition issues faced by the sector post reduction in GST rates.

On the global front, Asian markets were trading mostly in red, as investors remained cautious amid a spate of worldwide geopolitical concerns, including President Donald Trump’s summit with North Korean leader Kim Jong Un, US-China trade talks, testimony by former Trump lawyer Michael Cohen, BREXIT. Back home, rating agency CRISIL reported that domestic iron ore prices are likely to rise by three to four per cent in 2019 on account of global supply glitch. Further, domestic steel prices are likely to soften following global clues.

The BSE Sensex is currently trading at 36027.66, up by 122.23 points or 0.34% after trading in a range of 35916.26 and 36085.85. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.38%, while Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were Energy up by 0.92%, Metal up by 0.85%, Healthcare up by 0.57%, Basic Materials up by 0.50% and Industrials was up by 0.48%, while there were no losers on the sectoral indices.

The top gainers on the Sensex were Tata Motors up by 2.12%, Sun Pharma up by 1.69%, Vedanta up by 1.31%, Reliance Industries up by 1.21% and Coal India was up by 1.11%. On the flip side, ONGC down by 1.65%, Hero MotoCorp down by 1.22%, Bajaj Auto down by 0.76%, Mahindra & Mahindra down by 0.68% and Axis Bank was down by 0.54% were the top losers.

Meanwhile, India Ratings in its latest report has said it is expecting that domestic cement demand will register a modest growth of 6-8% in next financial year (FY20). The modest growth is expected to come mainly on account of the diminishing base effect, increased thrust on infrastructure by the Central government and the affordable housing segment. Maintaining a stable outlook for the sector, the report said that cement manufacturers are poised to benefit from the continuing demand push, led by the healthy growth expected across end-markets such as individual home building, affordable housing, roads and irrigation sectors.

The report further motioned the capacity utilisations of the cement industry may improve gradually over the next two years on account of limited capacity additions amidst the turnaround of acquired assets. The sector will witness capacity addition of around 20 million tonnes per annum (MTPA) over FY19-FY21 (with higher addition in FY20), and the capacity utilisation will increase by 120 bps and 200 bps in FY20 and FY21, respectively.

Besides, between 2008 and 2018, cement demand increased at 6.15% CAGR, while capacity increased at nine percent CAGR. Accordingly, capacity utilisation rates dropped to 64% in FY18 from 83% in FY08, leading to increased competition and pressure on selling prices. Any further demand-supply imbalance at the regional level may impact the profitability of the players.

The CNX Nifty is currently trading at 10834.65, up by 28.00 points or 0.26% after trading in a range of 10800.20 and 10865.70. There were 32 stocks advancing against 17 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Tata Motors up by 2.26%, Sun Pharma up by 1.49%, Vedanta up by 1.34%, Indian Oil Corporation up by 1.28% and Reliance Industries was up by 1.15%. On the flip side, ONGC down by 1.59%, Hero MotoCorp down by 1.43%, Mahindra & Mahindra down by 0.85%, Indiabulls Housing Finance down by 0.77% and Bajaj Auto was down by 0.75% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite dropped 72.86 points or 1.12% to 6,452.82, Nikkei 225 slipped 72.16 points or 0.33% to 21,484.35, Straits Times trembled 18.44 points or 0.57% to 3,231.58, KOSPI fell 13.30 points or 0.6% to 2,221.49 and Shanghai Composite was down by 10.40 points or 0.35% to 2,943.42. On the other hand, Hang Seng was up by 63.95 points or 0.22% to 28,821.39.