Local bourses maintain positive momentum in afternoon deals

The local barometer gauges maintained their positive momentum in afternoon session, on continued buying in select bluechips by domestic investors, tracking advances in Asian peers. Sentiments on the street remained positive with a private report that financing deals for Indian infrastructure projects are surging on market expectations that the next government will come through with at least some of the spending that politicians are promising now during a heated election campaign. Traders took note of Commerce and Industry minister Suresh Prabhu’s statement that the trade deficit between India and China has seen a ‘whopping reduction’ as a result of ‘high-level engagement, strategic planning, coordination with stakeholders, market research, sustained efforts, constant monitoring, (and) handholding with exporters. However, further up move got restricted as anxiety remained among the local traders with data showing that Wholesale price-based inflation rose for the second consecutive month to 3.18 percent in March on costlier food and fuel. The Wholesale Price Index (WPI) based inflation was at 2.93 percent in February. It was 2.74 per cent in March 2018.

On the global front, Asian markets were trading mostly in green, with sentiment supported by strong Chinese export and bank loan data, along with positive headlines on the Sino-US trade talks. Back home, the BSE Sensex is currently trading at 38874.96, up by 107.85 points or 0.28% after trading in a range of 38780.08 and 38900.44. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.53%, while Small cap index was up by 0.78%.

The top gaining sectoral indices on the BSE were Metal up by 2.26%, Realty up by 1.35%, Auto up by 1.21%, Basic Materials up by 1.09% and Industrials up by 0.88%, while Oil & Gas down by 0.29%, Telecom down by 0.23%, Energy down by 0.10% and Healthcare was down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 5.75%, Tata Motors up by 5.68%, Coal India up by 3.94%, TCS up by 3.09% and Tata Steel was up by 3.02%. On the flip side, Infosys down by 3.06%, Sun Pharma down by 0.74%, ONGC down by 0.70%, Bharti Airtel down by 0.45% and HDFC was down by 0.32% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das has observed that the global financial crisis are exposing several limitations of conventional and unconventional monetary policy tools. Therefore, he suggested that monetary economics in emerging markets needs a rethink. He noted that this includes challenging the conventional wisdom of modern central banks to hike or reduce their interest rates by 25 basis points or multiples thereof.

Das has stated that unconventional monetary policies of advanced economies have resulted in risks and spillovers for the emerging markets. According to him, monetary policy must touch the real economy, spur investments and maintain monetary and financial stability. Therefore, he said that the time has come to think out of the box, including challenging the conventional wisdom. Adding further, he said that modern central banks generally announce a stance of tightening, neutrality or accommodative to guide the markets and the public on the future course of policy along with any changes in the rate.

The RBI Governor said “one thought that comes to my mind is that if the unit of 25 basis points is not sacrosanct and just a convention, monetary policy can be well served by calibrating the size of the policy rate to the dynamics of the situation and the size of the change itself can convey the stance of policy.” He also explained that in a situation in which the central bank prefers to be accommodative but not overly so, it could announce a cut in the policy rate by 35 basis points if it has judged that the standard 25 basis points is too little, but its multiple, that is 50 basis points, is too much. He added that this approach can also be useful when the central bank is on a tightening mode and potentially help avoid policy turnaround from forward guidance via stance too far into the future, which in a highly volatile global scenario, may not even be a year.

The CNX Nifty is currently trading at 11678.35, up by 34.90 points or 0.30% after trading in a range of 11648.25 and 11686.40. There were 33 stocks advancing against 17 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 5.60%, Coal India up by 3.55%, Tata Steel up by 3.13%, TCS up by 3.08% and Hero MotoCorp was up by 2.26%. On the flip side, Infosys down by 3.05%, Indian Oil Corporation down by 1.00%, Sun Pharma down by 0.99%, Dr. Reddys Lab down by 0.72% and Bharti Infratel was down by 0.72% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 surged 298.55 points or 1.37% to 22,169.11, Taiwan Weighted strengthened 70.30 points or 0.65% to 10,875.60, Jakarta Composite soared 28.28 points or 0.44% to 6,434.15, KOSPI rose 9.43 points or 0.42% to 2,242.88 and Shanghai Composite was up by 8.18 points or 0.26% to 3,196.81.

On the flip side, Straits Times trembled 2.82 points or 0.08% to 3,329.16 and Hang Seng was down by 6.21 points or 0.02% to 29,903.55.