Benchmarks manage to trade above water in morning deals

Indian equity benchmarks made a cautious start and are trading tad above their neutral lines ahead of data of Purchasing Managers' Index (PMI) for manufacturing for March to be out later in the day. Traders are getting some support with report that the Reserve Bank of India (RBI) will again swap up to $5 billion to infuse durable liquidity in the system, a month after the first swaps saw a massive response from banks. Market participants offered up to $16.31 billion against the notified amount of $5 billion in the auction held on March 26. The next auction for three-year tenure will be held on April 23. Some support also came with a private report that the government has been able to contain its fiscal deficit around 3.4% of the GDP in 2018-2019 by resorting to withdrawals/cash support from public accounts and savings on expenditure. However, gains remain capped with the Commerce Ministry’s data showing that the growth of eight core sectors slowed down to 2.1% in February 2019 as compared to 5.4% in February 2018, due to fall in output of crude oil and refinery products. Production of crude oil and refinery products contracted by 6.1%, and 0.8%, respectively, in February.

On the global front, all the Asian counters are trading in green at this point of time, as concerns over a possible global economic slowdown eased. The US markets rose on Monday as strong manufacturing data out of the US and China eased worries of a possible global economic slowdown.

Back home, auto sector stocks remained in focus with report that auto majors Maruti Suzuki India, Hyundai and Mahindra & Mahindra reported single digit sales growth in the financial year ended March 31, as slowdown hit passenger vehicles demand for almost nine months of the year. In scrip specific developments, SSWL gained on reporting total wheel rim sales of 10.83 lakh in March and PVR edged higher on opening multiplex in Punjab and Assam.

The BSE Sensex is currently trading at 38931.95, up by 60.08 points or 0.15% after trading in a range of 38846.96 and 39017.24. There were 20 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.36%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were Realty up by 1.81%, Power up by 1.09%, PSU up by 0.87%, Utilities up by 0.87% and Auto was up by 0.62%, while FMCG down by 0.23%, Energy down by 0.21%, Basic Materials down by 0.17%, Oil & Gas down by 0.08% and Healthcare was down by 0.01% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 2.12%, Tata Motors - DVR up by 2.11%, Tata Motors up by 2.06%, Bharti Airtel up by 1.84% and SBI up by 1.61%. On the flip side, HCL Tech down by 0.97%, ITC down by 0.61%, HDFC Bank down by 0.44%, ICICI Bank down by 0.38% and Tata Steel down by 0.36% were the top losers.

Meanwhile, in order to meet the durable liquidity needs of the system, the Reserve Bank of India (RBI) has said that it will inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years. The swap auction will be held on April 23, 2019. This will be the second such auction within a month. Earlier, on March 26, the central bank had bought $5 billion through similar swap auction in a bid to ease liquidity ahead of elections.

The RBI has decided to inject Rupee liquidity for longer duration through long-term foreign exchange Buy/Sell swap in terms of its extant Liquidity Management Framework. The swap will be in the nature of a simple buy/sell foreign exchange swap from the Reserve Bank side. Under the swap, a bank would sell US dollars to the RBI and simultaneously agree to buy the same amount of US dollars at the end of the swap period.

The US Dollar amount mobilised through this auction would also reflect in RBI's foreign exchange reserves for the tenor of the swap while also reflecting in RBI's forward liabilities. It further said the market participants would be required to place their bids in terms of the premium that they are willing to pay to the RBI for the tenor of the swap, expressed in paisa terms up to two decimal places. The auction would be a multiple-price based auction -- successful bids will get accepted at their respective quoted premium.

The minimum size of each bid should be $10 million and in multiples of $1 million thereafter. The swap will increase India's foreign exchange reserves while injecting liquidity into the financial system. The auction is meant to give RBI greater flexibility in managing banking system cash while helping absorb any potential large dollar inflows, which could make the rupee rise sharply.

The CNX Nifty is currently trading at 11675.65, up by 6.50 points or 0.06% after trading in a range of 11655.85 and 11711.55. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 3.90%, Tata Motors up by 2.27%, Power Grid Corporation up by 2.25%, Bharti Airtel up by 1.78% and SBI up by 1.58%. On the flip side, Grasim Industries down by 1.19%, HCL Tech. down by 0.99%, BPCL down by 0.93%, Ultratech Cement down by 0.85% and Adani Ports & SEZ down by 0.81% were the top losers.

All the Asian markets are trading in green; Nikkei 225 rose 38.68 points or 0.18% to 21,547.71, Straits Times jumped 16.90 points or 0.52% to 3,267.41, Hang Seng gained 28.03 points or 0.09% to 29,590.05, Taiwan Weighted surged 43.93 points or 0.41% to 10,686.56, KOSPI added 5.77 points or 0.27% to 2,174.05, Jakarta Composite advanced 9.68 points or 0.15% to 6,462.29 and Shanghai Composite was up by 12.95 points or 0.41% to 3,183.31.