Post Session: Quick Review

Extending northward journey for fourth straight session, Indian equity benchmarks ended Monday’s trade on optimistic note, buoyed by positive movement in global markets. Sensex closed at record high and Nifty settled above 11,700 for the first time since August 28, 2018. Markets started off with marginal gains, as traders took 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. But traders soon turned cautious with a report that the growth of eight core sectors slowed down to 2.1% in February due to fall in output of crude oil and refinery products. Some pessimism also spread among the investors with a report that apart from a shortfall of nearly Rs 35,000 crore in direct tax revenue, the Centre seems to have suffered a larger deficit of Rs 60,000 crore or thereabouts in its share of goods and services tax (GST) revenue also for the fiscal year (FY19).

After that, markets witnessed buying in the early noon session, as traders found some solace 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. Domestic sentiments were also buoyed with Ratings agency Crisil in its half-yearly report on credit movements has said that system wide non-performing asset (NPA) ratios will improve by 180 basis points (bps) to 8.5 percent in March 2020 from FY19 levels on the back of moderation in slippages coupled with recoveries from the bankruptcy resolutions. It also noted that public sector banks (PSBs) will turn more profitable for first time in four years. Traders remained optimistic as GST collection in March 2018-19 has been the highest ever since the introduction of the indirect tax regime with the government recording a 15.6 percent growth in revenue over 2017-18.

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading in green, after stronger-than-anticipated factory activity surveys from the U.S. and China eased concerns over the global economy. Back home, select Auto sector stocks ended in red with private report indicating that lower demand in rural markets slowed down the auto industry towards the end of 2018-19 as car, SUV and two-wheeler makers faced tough times, with the outlook looking more challenging over the coming months.

The BSE Sensex ended at 39088.09, up by 216.22 points or 0.56% after trading in a range of 38846.96 and 39121.69. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index rose 0.02%, while Small cap index was down by 0.20%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.64%, Telecom up by 1.42%, Auto up by 1.08%, Utilities up by 0.82% and Power up by 0.82%, while Healthcare down by 0.59%, Consumer Durables down by 0.53%, Oil & Gas down by 0.48%, FMCG down by 0.41% and Energy down by 0.41% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 8.90%, Tata Motors - DVR up by 6.17%, Bharti Airtel up by 5.17%, TCS up by 2.33% and Bajaj Finance up by 2.21%. (Provisional)

On the flip side, Bajaj Auto down by 2.04%, Sun Pharma down by 1.85%, Vedanta down by 0.79%, Tata Steel down by 0.68% and HDFC Bank down by 0.48% were the top losers. (Provisional)

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 ended at 11722.45, up by 53.30 points or 0.46% after trading in a range of 11655.85 and 11729.35. There were 26 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 8.73%, Bharti Airtel up by 4.71%, Eicher Motors up by 2.54%, Bajaj Finance up by 2.36% and TCS up by 2.36%. (Provisional)

On the flip side, Zee Entertainment down by 3.02%, BPCL down by 2.54%, Bajaj Auto down by 2.09%, Sun Pharma down by 1.91% and JSW Steel down by 1.83% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 33.30 points or 0.46% to 7,350.68, France’s CAC rose 2.18 points or 0.04% to 5,407.71 and Germany’s DAX was up by 7.40 points or 0.06% to 11,689.39.

Asian markets ended mostly higher on Tuesday as upbeat manufacturing data from China and the United States bolstered investor confidence in the global economy. Chinese shares advanced on optimism about policy easing and signs of progress in trade talks. However, the upside movement was capped by concerns surrounding Brexit after British lawmakers rejected all the options to replace Prime Minister Theresa May's divorce deal. Japanese shares ended down as investors locked in profits following two days of gains.