Key gauges erase gains to end flat on Tuesday

Indian equity benchmarks erased most of their initial gains and ended flat with positive bias on Tuesday as markets witnessed profit-booking after the recent sharp gains. Investors traded with caution ahead of F&O expiry, with selling seen in Consumer Durables, Realty and Energy shares.

Some of the important factors in today’s trade:

Foreign fund inflows: Foreign Institutional Investors (FIIs) remained net buyers for the third straight session on Monday as they bought equities worth Rs 3,055.8 crore, according to exchange data.

Rupee falls against US Dollar: Indian rupee snapped its seven-session rally and settled with losses against the US dollar, as increased demand for dollars from importers, coupled with the greenback's recovery against major currencies, weighed on the rupee. 

India, US to expand bilateral trade ties: The commerce ministry has said that Indian and US officials will hold discussions this week to expand and deepen bilateral trade ties in a mutually beneficial manner and enhance supply chain integration. 

Private capex in India hits decade-low at 33% in FY24: ICRA report stated that private capital expenditure in India dropped to a decade-low 33% of total investments in FY24, with unlisted companies showing subdued investment compared to listed ones. The private sector focused on reducing debt instead of expanding.

Strong global cues: Asian markets settled mostly higher on Tuesday, as markets breathe a temporary sigh of relief amid reports that US President Donald Trump may hold back some of the reciprocal tariffs set to take effect on April 2. European markets were trading higher as a survey showed German business morale rose in line with forecasts in March after a successful vote on an historic change to the country's debt borrowing rules. 

Finally, the BSE Sensex rose 32.81 points or 0.04% to 78,017.19, and the CNX Nifty was up by 10.30 points or 0.04% to 23,668.65.  

The BSE Sensex touched high and low of 78,741.69 and 77,745.63 respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.13%, while Small cap index was down by 1.63%.

The few gaining sectoral indices on the BSE were IT up by 1.17% and TECK up by 0.97%, while Consumer Durables down by 1.89%, Realty down by 1.51%, Energy down by 1.43%, Utilities down by 1.39% and Metal down by 1.33% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 3.41%, Bajaj Finserv up by 2.71%, Infosys up by 2.48%, Axis Bank up by 1.97% and HDFC Bank up by 1.13%. On the flip side, Zomato down by 5.79%, Indusind Bank down by 4.76%, Adani Ports &SEZ down by 1.44%, Mahindra & Mahindra down by 1.39% and Reliance Industries down by 1.23% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its latest report has said that the Indian financial system has become more resilient and diverse, driven by rapid economic growth and withstood the pandemic well. The Financial Sector Assessment Program (FSAP), a joint programme of the IMF and the World Bank (WB), undertakes a comprehensive and in-depth analysis of a country's financial sector. IMF has released the latest India-FSSA report, based on the assessment carried out during 2024, while WB's Financial Sector Assessment (FSA) report is due for publication.

The IMF report said that since the last FSAP in 2017, India's financial system has become more resilient and diverse, driven by rapid economic growth. It said ‘The system recovered from the distress episodes of the 2010s and withstood the pandemic well. NBFIs and market financing have grown, making the financial system more diverse and interconnected. State-owned financial institutions' share remains significant’. It further said that stress tests show that the main lending sectors are broadly resilient to macrofinancial shocks, despite some weak tails. Banks and NBFCs have sufficient aggregate capital to support moderate lending even in severe macro-financial scenarios.

The report said ‘But several banks, particularly PSBs, may need to strengthen their capital base to support lending in such situations. Weak tails comprise a few non-systemic NBFCs and urban cooperative banks (UCBs) that report below minimum or negative capital even in the baseline. Vulnerability to short-term liquidity stress is generally contained’. On regulation and supervision of NBFCs, the IMF acknowledged India's systematic approach to prudential requirements of NBFCs with the scale-based regulatory framework. IMF appreciated India's approach to the introduction of a bank-like Liquidity Coverage Ratio (LCR) for large NBFCs. IMF also acknowledged that the regulatory framework in securities markets has been enhanced in line with international practice to manage and prevent emerging risks. Notable improvements include establishing the Corporate Debt Market Development Fund (CDMDF). 

The report observed that India's insurance sector is strong and growing, with a significant presence in both life and general insurance. The sector has remained stable, supported by better regulations and digital innovations. IMF also analysed cyber security frameworks in the banking sector, financial market infrastructure (FMI), critical information systems, and other relevant players in the securities market. It found that Indian authorities have advanced cybersecurity risk oversight, especially for banks. However, it stated that extensive cybersecurity crisis simulations and stress tests for banks could be expanded for cross-sectoral and market-wide events to further strengthen cybersecurity resilience.

The CNX Nifty traded in a range of 23,869.60 and 23,601.40. There were 16 stocks advancing against 34 stocks declining on the index.  

The top gainers on Nifty were Ultratech Cement up by 3.21%, Trent up by 2.54%, Bajaj Finserv up by 2.18%, Grasim Industries up by 2.12% and Infosys up by 1.66%. On the flip side, Indusind Bank down by 5.12%, Dr. Reddy's Lab down by 3.04%, Adani Enterprises down by 2.08%, Coal India down by 2.00% and Adani Ports &SEZ down by 1.76% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 43.11 points or 0.5% to 8,681.12, France’s CAC rose 69.5 points or 0.86% to 8,091.83 and Germany’s DAX gained 160.13 points or 0.7% to 23,012.79.

Asian markets settled mostly higher on Tuesday tracking Wall Street’s gains overnight after reports emerged that US President Donald Trump is narrowing his approach to tariffs set to take effect on April 2nd, likely omitting a set of industry-specific tariffs. Japanese shares gained after the yen weakened versus other major currencies, even as minutes from BoJ's January policy meeting revealed a growing consensus among policymakers that further tightening would be appropriate. However, Hong Kong shares fell as technology shares came under selling pressure following Xiaomi Corp's $5.5 billion share sale. Chinese shares settled flat in negative territory due to concerns over the effectiveness of China's stimulus measures in offsetting new US tariffs. The People's Bank of China (PBoC) said that it would allow qualified banks to pay different interest rates for the loans, known as the medium-term lending facility (MLF), signaling a greater willingness to ease monetary policy.