Firm trade persists on Dalal Street

Key barometer gauges continued their firm trade in afternoon session, on the back of mostly positive trade in Asian equities coupled with sustained buying by domestic institutional investors. Domestic sentiments remained firm 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. The markets also drew some solace 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. Traders shrugged off the Centre for Monitoring Indian Economy’s (CMIE) report stating that unemployment rate in India rose to 7.2 percent in February 2019, the highest since September 2016, and up from 5.9 percent in February 2018.

On the global front, Asian markets were trading mostly in green, as investors awaited fresh clues on the progress of US-China trade negotiations. Back home, the BSE Sensex is currently trading at 36615.55, up by 173.01 points or 0.47% after trading in a range of 36456.82 and 36640.27. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.82%, while Small cap index was up by 1.31%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.71%, Telecom up by 1.61%, Energy up by 1.46%, Realty up by 1.45% and PSU was up by 1.05%, while Auto down by 0.05% was the lone losing index on BSE.

The top gainers on the Sensex were Vedanta up by 2.31%, ICICI Bank up by 2.17%, Bajaj Finance up by 2.09%, Coal India up by 1.77% and Reliance Industries up by 1.77%. On the flip side, Hero MotoCorp down by 1.46%, Tata Motors down by 1.29%, Axis Bank down by 1.12%, Yes Bank down by 0.74% and Hindustan Unilever down by 0.67% were the top losers.

Meanwhile, ratings agency Crisil in its latest report has said that the recent steep hike in prices of cement is likely to help cement companies to increase profitability and margins even as costs are descending and demand growth ascending. It indicated that cement prices increased by Rs 24-25 per bag of 50 kg in February as compared to the previous month amid falling cost and rising demand growth. It added that the hike in the cement prices came after a ‘protracted stall’ following the rollout of the goods and services tax (GST).

According to the report, 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. It also said that the sustainability of these prices beyond the current quarter appears uncertain as demand momentum is seen coming off in the first half of next fiscal given the impending elections. However, it noted that price cuts on these massive hikes would still ensure reasonable price growth of 3-5 percent through fiscal 2020.

Ratings agency further said that even in the current fiscal, cement prices had seen a sedate run, declining 2.5 percent over April and January despite healthy demand growth of 12.5-13 percent in the nine months period. It added that a slew of capacity additions totalling 27 million tonnes (MT) between the March quarter last fiscal and the third quarter this fiscal, coupled with ramp-up of acquired assets kept price hikes away despite robust rise in volumes during this period. In FY20, it expects incremental demand to outpace incremental supply by 5-5.5 MT, aiding modest price hikes. It also expects 22-24 MT of gross capacity additions next fiscal, with almost 65-70 percent of these commissioning in highly competitive markets of the south and the east.

The CNX Nifty is currently trading at 11046.65, up by 59.20 points or 0.54% after trading in a range of 10998.85 and 11052.45. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Wipro up by 3.37%, Bharti Infratel up by 2.68%, Vedanta up by 2.34%, Titan Co up by 2.30% and Bajaj Finance up by 2.04%. On the flip side, Zee Entertainment down by 1.70%, Hero MotoCorp down by 1.45%, Tata Motors down by 1.34%, Axis Bank down by 1.17% and Yes Bank down by 0.88% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted strengthened 51.89 points or 0.5% to 10,357.15, Hang Seng increased 49.32 points or 0.17% to 29,010.92, Shanghai Composite gained 43.84 points or 1.44% to 3,098.09 and Jakarta Composite soared 17.85 points or 0.28% to 6,459.13.

On the flip side, Straits Times trembled 1.09 points or 0.03% to 3,232.98, KOSPI fell 3.63 points or 0.17% to 2,175.60 and Nikkei 225 was down by 129.47 points or 0.6% to 21,596.81.