Benchmarks eke out slender gains

Indian equity benchmarks ended the volatile day of trade with slender gains on Thursday. Markets started the session on an optimistic note with the Reserve Bank of India’s (RBI) statement that it will inject long-term liquidity worth $5 billion into the system through foreign exchange swap arrangement with banks for three years, in order to meet the durable liquidity needs of the system. Some support also came with report that the private companies in manufacturing sector posted a 24.9% growth in net profit in the October-December quarter of the current fiscal on annual basis, benefitting from lower tax provisions. Traders also took some comfort with report that the RBI has relaxed norms for imports of capital and non-capital goods by raising the trade credit limit to $150 million under the automatic route. Providing some support to the markets, ICRA in its report stated that Small finance banks (SFBS) are likely to grow at 25-30 percent over the medium-term and if they can arrange additional external capital of Rs 4,000-6,000 crore till FY23.

However, markets lost momentum and parted all of their initial gains to end almost flat with Reserve Bank of India’s (RBI) report that private corporate investment plans have fallen for the seventh year in a row on account of economic slowdown, poor project appraisals and huge corporate leveraging. Sentiments also remain dampened with report that India's annual wholesale price inflation (WPI) in the month of February surged to 2.93 percent, on account of rise in the prices of food and fuel products, after falling to a 10-month low of 2.76 percent in January. Traders also took a note of the chairman of RBI Committee on Digital Payments, Nandan Nilekani’s statements that India is still very far away from being a less-cash economy and security issues around digital payments system needed to be addressed to make the mode more acceptable.

On the global front, European markets were trading in green, as investors monitored the latest flurry of corporate results and reacted to the latest Brexit amendment vote in the U.K. Asian markets ended mixed on Thursday, as investors reacted cautiously to mixed data from China. The country’s industrial output expanded at the slowest pace in 17 years, although retail sales and fixed asset investment grew by more than expected.

Back home, the auto sector stocks edged lower with the Federation of Automobile Dealers Associations (FADA) of India’s data stating that the auto industry’s retail sales in February dropped 8.06%, as weak consumer demand continues for the sixth straight month. The total auto sales in February were 1,452,078, compared to 1,579,349 units last year. Stocks related to the food processing sector remained in focus with report that Union Food Processing Minister Harsimrat Kaur Badal expects more than $28 billion worth of foreign direct investments (FDI) in the food processing sector in 2019. The ministry is eyeing the next edition of its flagship investment show World Food India, set to take place in November, 2019, to reach that level.

Finally, the BSE Sensex rose 2.72 points or 0.01% to 37,754.89, while the CNX Nifty was up by 1.55 points or 0.01% to 11,343.25.

The BSE Sensex touched a high and a low of 37,907.78 and 37,693.69, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in mixed; the BSE Mid cap index lost 0.26%, while Small cap index was up by 0.09%.

The gaining sectoral indices on the BSE were Realty up by 2.09%, Healthcare up by 0.81%, Metal up by 0.62%, Telecom up by 0.51% and Oil & Gas was up by 0.32%, while IT down by 0.42%, Auto down by 0.41%, Basic Materials down by 0.33%, TECK down by 0.29% and Industrials was down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.53%, Indusind Bank up by 2.84%, Sun Pharma up by 2.41%, Yes Bank up by 2.25% and Coal India up by 2.03%. On the flip side, Power Grid Corporation down by 3.65%, HCL Tech down by 2.11%, Hero MotoCorp down by 1.81%, Tata Motors - DVR down by 1.26% and Tata Motors down by 1.05% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has relaxed norms for imports of capital and non-capital goods by raising the trade credit (TC) limit of up to $150 million or equivalent per import transaction under the automatic route. Announcing the modified revised framework for 'Trade Credit Policy', the RBI, however, reduced the all-inclusive cost (all-in-cost) for overseas loans to benchmark rate plus 250 basis points from the previous 350 bps.

Trade credits (TCs) refer to the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for maturity for imports of capital and non-capital goods permissible. As per to the revised framework, TCs up to $150 million or equivalent per import transaction for oil and gas refining & marketing, airline and shipping companies can be availed under the automatic route. For others, the limit is set at $50 million or equivalent per import transaction.

The RBI said that the revised framework comes into force with immediate effect. All-in costs refer to the sum of all fees, interest, and charges. Withholding tax payable in Indian currency is not part of all-in-cost. Earlier, under the automatic route, banks were permitted to approve trade credit up to $20 million. TCs exceeding $20 million per import transaction were required the prior approval of the RBI.

The CNX Nifty traded in a range of 11,383.45 and 11,313.75. There were 27 stocks advancing against 21 stocks declining, while 2 stocks remain unchanged on the index.

The top gainers on Nifty were NTPC up by 3.58%, Indusind Bank up by 2.78%, Bharti Airtel up by 2.43%, Yes Bank up by 2.39% and Sun Pharma up by 2.17%. On the flip side, HCL Tech down by 2.17%, Hero MotoCorp down by 1.81%, Ultratech Cement down by 1.61%, Tata Motors down by 1.27% and ICICI Bank down by 1.00% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 rose 35.80 points or 0.50% to 7,194.99 and France’s CAC gained 26.14 points or 0.49% to 5,332.52, while Germany’s DAX was down by 1.49 points or 0.01% to 11,570.92.

Asian markets ended mixed on Thursday after British lawmakers rejected a possible no-deal Brexit, forcing Prime Minister Theresa May to give MPs another chance to vote on delaying Brexit. Chinese data signaled further weakness in the world's second-biggest economy, but at the same time raised hopes for more policy support. Chinese shares ended lower as mixed economic readings rekindled growth worries. China's industrial output grew an annual 5.3 percent in the first two months of 2019, a government report showed. This marked the slowest pace of growth in 17 years and fell short of expectations for a score of 5.5 percent. At the same time, retail sales climbed 8.2 percent and fixed asset investment rose 6.1 percent in the same period, beating expectations. Meanwhile, Japanese shares ended largely unchanged after a slew of China data proved to be a mixed bag.