Post Session: Quick Review

Indian equity benchmarks continued their winning run for third straight day on Wednesday, with Nifty approaching 11,350-level led by banking and financial stocks despite negative global cues. After making a cautious start, markets gained traction and traded in fine fettle, as traders reacted positively to the report that the Reserve Bank of India (RBI) would infuse Rs 12,500 crore into the system through open market operations (OMOs) on March 14. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of the government securities under OMOs. But, key indices trimmed most of their gains to trade flat on weak macro-economic data. The latest data from Central Statistics Office (CSO) showed that India’s Index of Industrial Production (IIP) slipped to 1.7% in January from 7.5% a year ago. Subdued performance of the manufacturing sector, especially capital and consumer goods, mainly pulled down the growth in industrial production. Besides, Retail inflation rose to four-month high of 2.57% in February. Consumer Price Index (CPI) stood at 1.97% in January and 4.44% in February 2018.

In the afternoon deals, markets witnessed some buying and managed to keep their heads above water, as traders found some solace with private report that foreign investments will continue to increase in the Indian market. It noted that there is nothing wrong with the economic outlook in India with inflationary pressure and the number of houses forecasting that the RBI will cut the repo rate a number of times this year, one should be sanguine about the economic outlook in India. Bourses extended their gains in last leg of trade, taking support from strengthening of rupee against the dollar. Meanwhile, the Goods and Services Tax Network (GSTN) has come up with a facility for businesses registered under GST to view and download a report on tax liability as declared in their form GSTR- 1 (final sales return) and as declared and paid in their return filed in form GSTR-3B (summary sales return). 

On the global front, Asian markets ended mostly lower on Wednesday on report that British Prime Minister Theresa May lost voting on her second Brexit proposal in a parliamentary showdown. European markets were trading mostly in green, ahead of signs of progress on the US-China trade dispute, with Robert Lighthizer, the US trade representative, saying that 'major issues' must still be resolved for a successful US-China trade deal.

The BSE Sensex ended at 37784.95, up by 249.29 points or 0.66% after trading in a range of 37478.87 and 37789.33. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.46%, while Small cap index was down by 0.32%. (Provisional)

The only gaining sectoral indices on the BSE were Bankex up by 1.58%, Energy up by 0.64%, Realty up by 0.60% and FMCG up by 0.05%, while Telecom down by 2.40%, Metal down by 1.76%, Healthcare down by 1.57%, Utilities down by 1.06% and Power down by 1.00% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 4.22%, Yes Bank up by 3.78%, Bajaj Finance up by 2.72%, HDFC Bank up by 2.66% and SBI up by 2.34%. (Provisional)

On the flip side, Bharti Airtel down by 3.45%, Vedanta down by 3.39%, Sun Pharma down by 2.88%, NTPC down by 2.71% and Tata Motors - DVR down by 2.20% were the top losers. (Provisional)

Meanwhile, in order to increase liquidity into the market, the Reserve Bank of India (RBI) is going to infuse Rs 12,500 crore into the system through open market operations on March 14, 2019. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of the government securities under open market operations (OMOs).

The RBI stated that the purchase would happen through multi-security auction using the multiple price method. There is an overall aggregate ceiling of Rs 12,500 crore for all the securities in the basket put together. There is no security-wise notified amount.

Further, the RBI said it reserves the right to decide on the quantum of purchase of individual securities and accept offers for less than the aggregate amount of Rs 12,500 crore or purchase marginally higher than the aggregate amount due to rounding-off effects. It can also accept or reject any or all the offers either wholly or partially without assigning any reason.

OMOs are money market tools to infuse or suck out liquidity from the system. Where there is liquidity surplus, it sells securities to suck out money, while the reverse happens when there is a liquidity crunch in the system.

The CNX Nifty ended at 11350.10, up by 48.90 points or 0.43% after trading in a range of 11276.60 and 11351.10. There were 19 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indusind Bank up by 4.24%, Yes Bank up by 3.75%, Bajaj Finance up by 2.98%, HDFC Bank up by 2.69% and SBI up by 2.47%. (Provisional)

On the flip side, Vedanta down by 3.73%, Bharti Airtel down by 3.68%, Indian Oil Corp. down by 3.47%, Zee Entertainment down by 3.17% and Sun Pharma down by 2.90% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 9.29 points or 0.13% to 7,160.44 and France’s CAC was up by 16.96 points or 0.32% to 5,287.21, while Germany’s DAX decreased 6.92 points or 0.06% to 11,517.25.

Asian markets ended mostly lower on Wednesday after British Prime Minister Theresa May lost voting on her second Brexit proposal in a parliamentary showdown. A ‘free vote’ will take place on March 13, on a no-deal Brexit. If that fails, a further vote on March 14, will decide whether to extend the Brexit deadline. Sentiment was also dented after Robert Lighthizer, the US trade representative, said that ‘major issues’ must still be resolved for a successful US-China trade deal. Chinese shares ended lower on uncertainty over the trade dispute with the United States. Further, Japanese shares ended down as the yen strengthened amid continuing global uncertainties and a report showed Japan's machinery orders fell in January at the fastest pace in four months. The total value of core machine orders in Japan dropped a seasonally adjusted 5.4 percent in January, missing expectations for a decline of 1.5 percent following the downwardly revised 0.3 percent fall in December.