Post Session: Quick Review

Indian equity benchmarks took their winning run to third consecutive session on Wednesday, boosted by buying across sectors except Auto. Key indices opened in green and stayed in the positive terrain for whole trading session, as investors’ sentiment got a boost from the further decline in crude oil prices. Traders took encouragement with Ficci President Sandip Somany’s statement that the government has promised to lower corporate tax rate to 25% for all companies once Goods and Services Tax (GST) mop-up improves. However, markets trimmed some of their morning gains, as market-men got anxious with the Centre for Monitoring Indian Economy’s (CMIE) latest report showing that the unemployment rate in India rose to 7.2% in February 2019, the highest since September 2016, and up from 5.9% in February 2018. The unemployment rate has climbed despite a fall in the number of job seekers.

But, key indices regained traction in the early noon session, as optimism remained among traders with the Reserve Bank of India (RBI) stating that it would infuse Rs 12,500 crore into the financial system through open market operations (OMO). The decision is based on an assessment of liquidity conditions and also of durable liquidity needs. The market breadth has also improved with Commerce Secretary Anup Wadhawan’s statement that the US decision to withdraw duty benefits on Indian products under the Generalized System of Preferences (GSP) programme will not have a significant impact on exports to America. Traders also took a note of World Bank’s report that it will provide a $250-million loan for the National Rural Economic Transformation Project (NRETP) to help women in rural households develop viable enterprises for farm and non-farm products.

On the global front, Asian markets ended mixed on Wednesday, while European markets were trading mostly in red, as market players waited for clarity from U.S.-China trade talks. Back home, Sugar sector stocks were in focus with the government’s statement that Sugar mills can sell 24.5 lakh tonne of the sweetener in the open market in the current month. Majority of cement industry stocks ended in green with Crisil’s report that the recent steep hike in cement prices expected to boost operating profitability of cement manufacturers. It added that the price hikes, coupled with falling costs and rising demand growth, will enable 200-250 basis points on-year improvement in margins in the current quarter. 

The BSE Sensex ended at 36650.01, up by 207.47 points or 0.57% after trading in a range of 36456.82 and 36666.47. There were 17 stocks advancing against 14 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.44%, while Small cap index was up by 0.88%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 1.61%, Consumer Durables up by 1.22%, Telecom up by 1.15%, Power up by 1.13% and PSU up by 0.82%, while Auto down by 0.25% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Finance up by 2.78%, ICICI Bank up by 2.66%, Reliance Industries up by 1.94%, Vedanta up by 1.94% and HDFC up by 1.52%. (Provisional)

On the flip side, Tata Motors down by 2.40%, Axis Bank down by 1.71%, Tata Motors - DVR down by 1.51%, Hindustan Unilever down by 1.41% and Hero MotoCorp down by 1.28% were the top losers. (Provisional)

Meanwhile, with an aim to increase liquidity into the market, the Reserve Bank of India (RBI) has stated that it would infuse Rs 12,500 crore into the financial system on March 07, 2019. The purchase will be made through open market operations (OMOs). It also said there is no security-wise notified amount.

The central bank said it has decided to purchase certain government securities under OMO for an aggregate amount of Rs 12,500 crore on March 07 through multi-security auction, using the multiple price method. It added that the decision is based on an assessment of liquidity conditions and also of durable liquidity needs.

The RBI further said the eligible participants should submit their offers in electronic format on RBI Core Banking Solution (E-Kuber) system before noon on March 07. The result of the auction will be announced on the same day and payment to successful participants will be made during banking hours on the following day.

OMOs are financial tools to either inject or suck out liquidity from the system. When the liquidity is tight, money is pumped into the market by purchase of government securities. While in the case of surplus, the excess money is sucked out by selling of government bonds.

The CNX Nifty ended at 11057.25, up by 69.80 points or 0.64% after trading in a range of 10998.85 and 11062.30. There were 31 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 2.91%, Bajaj Finance up by 2.90%, Bharti Infratel up by 2.58%, ICICI Bank up by 2.35% and Titan Co up by 2.14%. (Provisional)

On the flip side, Zee Entertainment down by 2.85%, Tata Motors down by 2.60%, Indiabulls Housing Finance down by 1.61%, Axis Bank down by 1.48% and Hindustan Unilever down by 1.43% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC dropped 9.53 points or 0.18% to 5,287.99 and Germany’s DAX was down by 24.73 points or 0.21% to 11,596.01, while UK’s FTSE 100 increased 4.36 points or 0.06% to 7,187.79.

Asian markets ended mixed on Wednesday as investors awaited further progress in US-China trade talks and remained focused on the Brexit negotiations. Chinese shares ended up on stimulus hopes after China's state planner said the government would implement measures to boost domestic consumption. Investors shrugged off survey data from IHS Markit showing that China's private sector growth weakened marginally in February with softer growth in services activity. The Caixin composite output index fell to 50.7 in February from 50.9 in January. The services PMI slid to 51.1 from 53.6 a month ago. Meanwhile, Japanese shares ended lower as investors fretted about US-China trade issues and fresh tensions on the Korean Peninsula amid signs that North Korea is restoring part of a missile launch site.