Bulls tighten grip on Dalal Street; Sensex surpasses 37,700 mark

Extending their northward journey for third straight session, Indian equity benchmarks ended the Wednesday’s trade with a gain of around half a percent, surpassing their crucial 37,700 (Sensex) and 11,300 (Nifty) levels. Markets started the session on cautious note as traders remained concern with 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. Market participants also remained anxious as former RBI governor Raghuram Rajan warned that capitalism is under ‘serious threat’ of a ‘revolt’ as the economic and political system has stopped providing for the people, especially after the 2008 global financial meltdown.

Markets gained traction and entered into green terrain with 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. Key gauges extended gains in late trade 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. Traders took note of report that markets regulator SEBI has withdrew the 20% limit on investments by Foreign Portfolio Investors in corporate bonds of an entity. In a notification, the regulator said the restriction is being withdrawn in accordance with a circular issued by the Reserve Bank of India (RBI). 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 ,European counters exhibiting mixed trend as traders remained on sidelines 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. Asian markets ended mostly in red on report that British Prime Minister Theresa May lost voting on her second Brexit proposal in a parliamentary showdown.

Back home, the rating agency ICRA in its latest report has said that delay in tariff petition filings coupled with inadequate tariff revision proposals are likely to remain an area of concern for distribution companies (Discoms) in the financial year 2020. It noted that Discoms have already managed to reduce its losses and debt levels significantly under the Ujwal DISCOM Assurance Yojana (UDAY) scheme. Stocks related to media and entertainment (M&E) industry remained in focus with Ficci-EY report stating that the M&E industry is expected to cross the Rs 2.35-lakh-crore mark (around $ 33.6 billion) by 2021, clipping at 11.6% annually.

Finally, the BSE Sensex gained 216.51 points or 0.58% to 37,752.17, while the CNX Nifty was up by 40.50 points or 0.36% to 11,341.70.

The BSE Sensex touched a high and a low of 37,797.29 and 37,478.87, respectively and there were 13 stocks advancing against 18 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.43%, while Small cap index was down by 0.31%.

The few gaining sectoral indices on the BSE were Bankex up by 1.42%, Realty up by 0.65%, Energy up by 0.56% and FMCG up by 0.05%, while Telecom down by 2.60%, Metal down by 1.86%, Healthcare down by 1.63%, Basic Materials down by 0.95% and Utilities was down by 0.93% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 4.15%, Yes Bank up by 3.67%, Bajaj Finance up by 2.63%, HDFC Bank up by 2.56% and SBI up by 2.15%. On the flip side, Bharti Airtel down by 4.08%, Vedanta down by 3.48%, Sun Pharma down by 2.98%, Tata Steel down by 2.01% and Tata Motors - DVR down by 1.93% were the top losers.

Meanwhile, halting four-month easing trend, India’s retail inflation based on Consumer Price Index (CPI) surged to 2.57% in the month of February 2019 higher from 1.97% posted in January 2019, but lower compared to 4.44% in the same month of previous year. The earlier lowest inflation was 2.33% in November 2018. Besides, the inflation, which measures changes in shop-end prices, remained comfortably within Reserve Bank of India’s (RBI's) target level of 4%. On the other hand, the Consumer Food Price Index (CFPI) inflation came in at deflation narrowed to (-) 0.66% in February 2019, compared to (-) 2.24% from previous month, while food inflation was at 3.26% in February 2018.

As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the CPI (Rural, Urban, Combined) on Base2012=100 for February 2019, stood at 1.81%, 3.43% and 2.57% respectively, compared to 4.45%, 4.52% and 4.44%, respectively in February 2018. The index value of CPI for combined stood at 139.9. The data also showed that CFPI for all India Rural and Urban for February 2019 stood at (-) 1.75% and 1.27%, respectively, compared to 3.70% and 2.45%, respectively in February 2018. The index value of CFPI for combined stood at 135.2 for the month of February.

Among the CPI components, inflation of food and beverages increased to (-) 0.07% in February 2019 from (-) 1.29% in January 2019. Within the food items, the inflation moved up for vegetables to (-) 7.69%, cereals and products 1.32%, pulses and products (-) 3.82%, meat and fish 5.92% and oils and fats 1.41%. Further, the inflation also moved up for sugar and confectionery (-) 6.92%, egg 0.86%, milk and products 0.92%, spices 1.82% and prepared meals, snacks, sweets etc 3.54%. However, the inflation declined for non-alcoholic beverages to 3.89% in February 2019.

The inflation for housing eased to 5.10%, while that for miscellaneous items was flat at 6.02% in February 2019. Within the miscellaneous items, the inflation for personal care and effects rose to 5.01%, education 8.13% and recreation and amusement 5.54%, while it eased for health to 8.82%, household goods and services 6.29% and transport and communication 3.08% in February 2019. The inflation for clothing and footwear declined to 2.73%, while the CPI inflation of fuel and light dipped to 1.24% in February 2019.

The CNX Nifty traded in a range of 11,352.30 and 11,276.60. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 4.32%, Yes Bank up by 3.56%, Bajaj Finance up by 2.87%, HDFC Bank up by 2.67% and SBI up by 2.42%. On the flip side, Bharti Airtel down by 4.28%, Indian Oil Corporation down by 3.67%, Zee Entertainment down by 3.41%, Sun Pharma down by 3.13% and Vedanta down by 2.60% were the top losers.

European markets were trading mixed; UK’s FTSE 100 decreased 4.39 points or 0.06% to 7,146.76 and Germany’s DAX was down by 7.06 points or 0.06% to 11,517.11, while France’s CAC increased 11.82 points or 0.22% to 5,282.07.

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.