Local equities turn positive; Sensex above 37,500 mark

After a slightly negative opening, local equity benchmarks have gathered pace to trade in green in morning session due to increased buying by funds. Traders got some solace with RBI’s data showing that the country’s foreign exchange reserves increased by $171.9 million to $418.687 billion in the week to May 3, mainly on account of a rise in foreign currency assets. In the previous week, the reserves had swelled by $4.368 billion to $418.515 billion, helped by the second dollar-rupee swap auction held on April 23. However, gains remain capped on private report that even as factory output fell to a 21-month low in March, the situation may not improve in the first few months of FY20 on account of the increased likelihood of lower investment activity and uncertainties around the elections. Some cautiousness also came with a private report that the global growth will take a hit of as much as 30-40 basis points if the re-escalation of trade tensions between two superpower economies the US and China persist. It added the re-escalation would be temporary as the market weakness would help bring both sides together. Besides, finance ministry has sought to underplay GDP growth overestimates due to a ‘black hole’ in the MCA database used for the computation of national income. It said only 16.4% of the companies in the database of service-sector firms are either closed or non-traceable, against 38.7%.

On the global front, Asian markets were trading in red as the lack of a US-China trade deal cast a cloud over the market. Investors watched the latest developments warily in the trade war between the world's top two economies, ended without agreement and a tariff hike on Chinese imports went into effect. Back home, FICCI’s report stated that sentiment in the manufacturing sector remains positive as overall capacity utilisation rose to 80% in the fourth quarter. The overall sentiment in the manufacturing sector remains positive as the proportion of respondents reporting higher output growth around 54% during the January-March 2018-19 remained the same as compared to the third quarter.

The BSE Sensex is currently trading at 37544.60, up by 81.61 points or 0.22% after trading in a range of 37319.00 and 37583.57. There were 16 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.54%, while Small cap index was down by 0.59%.

The top gaining sectoral indices on the BSE were FMCG up by 0.98%, IT up by 0.79%, Telecom up by 0.72%, TECK up by 0.72% and Energy was up by 0.22%, while Capital Goods down by 1.52%, Healthcare down by 1.10%, Industrials down by 1.01%, Metal down by 0.67% and Auto was down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.56%, Hindustan Unilever up by 1.27%, SBI up by 1.20%, TCS up by 1.19% and HCL Tech up by 0.96%. On the flip side, Larsen & Toubro down by 2.18%, Yes Bank down by 1.71%, Sun Pharma down by 1.46%, Tata Steel down by 1.34% and Tata Motors - DVR was down by 1.29% were the top losers.

Meanwhile, the government has decided to constitute a committee under the Director General of Foreign Trade (DGFT) to look into availability of steel at competitive prices for engineering goods exporters. The committee will submit its report to steel and commerce ministries within two months. The committee will also have members from the engineering sector. It will suggest measures which will be a win-win situation for both steel producers and engineering exporters.

Engineering goods exporters are demanding that they should get steel at global prices as domestic rates are higher. They also said steel should be made available at competitive rates so that outbound shipments can be pushed further. However, steel producers state that freight charges and cost of production is high in the country, which push up prices.

India’s engineering exports surged by 6.36 percent to $83.7 billion in 2018-19 as compared to $78.7 billion in 2017-18. These exports accounts for over 25 percent of the country's total merchandise exports, which stood at $331 billion last fiscal. Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners.

The CNX Nifty is currently trading at 11290.60, up by 11.70 points or 0.10% after trading in a range of 11230.70 and 11300.20. There were 22 stocks advancing against 27 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Tech Mahindra up by 1.87%, Bharti Infratel up by 1.81%, ITC up by 1.53%, SBI up by 1.30% and Hindustan Unilever was up by 1.28%. On the flip side, Eicher Motors down by 5.18%, Indiabulls Housing Finance down by 2.59%, Larsen & Toubro down by 2.06%, Zee Entertainment down by 1.86% and Yes Bank was down by 1.59% were the top losers.

Asian markets were trading in red; Nikkei 225 slipped 143.37 points or 0.67% to 21,201.55, Taiwan Weighted dropped 145.06 points or 1.35% to 10,567.93, Jakarta Composite lost 14.76 points or 0.24% to 6,194.36, KOSPI fell 23.01 points or 1.09% to 2,085.03, Straits Times trembled 38.35 points or 1.17% to 3,235.15 and Shanghai Composite declined 29.17 points or 0.99% to 2,910.04.