Benchmarks witness consolidation on Wednesday

Indian equity benchmarks witnessed consolidation near their all time high levels on Wednesday amid profit booking in software and technology counters. Investors also remained on sidelines ahead of the US Federal Reserve policy review. Earlier, bucking sluggish trend in regional counterparts, domestic bourses made a positive start as sentiments remained up-beat on report of Standard & Poor’s Ratings Services that Indian companies are improving their credit profiles by selling equity and assets, or using free operating cash flows to reduce debt.

Some support also came on report that foreign institutional investors continue to remain positive on Indian equities after they remained net buyers to the tune of Rs 1,012 crore on March 18, 2014, as per the provisional data on the stock exchanges. Appreciation in Indian rupee too aided sentiments. The rupee was trading higher at 61.02/03 at the time of equity markets closing versus previous session’s close of 61.19/20 with dollar selling cited by two large foreign banks.

However, sentiments got dampened in last leg of trade as investors resorted to profit booking especially from selling in software and technology pockets, which remained in somber mood since beginning, after sector major Tata Consultancy Services (TCS) hinted a subdued Q4 growth based on potential impact from seasonally slower demand in its biggest markets and continued demand volatility at home that the company flagged back in November. Moreover, the company’s CFO Rajesh Gopinathan in an analyst meet indicated that EBIT margins of the company could fall by 40-50 bps quarter-on-quarter and apart from softness in overseas revenues, the Lok Sabha polls would impact domestic revenue.

Global cues too remained subdued as European counters made a sluggish start with CAC and FTSE trading lower in early deals. Asian markets too ended mostly in red as investors remained concerned about the company earnings and awaited the Federal Reserve’s policy statement. 

Back home, stocks of public sector oil marketing companies viz. BPCL, HPCL and IOC edged lower despite report that the loss on sales of diesel has been trimmed by more than Re 1 to Rs 7.16 per litre on the back of softening international oil rates. On the other hand, stocks related to Metal sector remained on buyers’ radar for yet another day as institutional investors have started showing interest in the sector after its severe fall in the beginning of the year. Additionally, select stocks from Infra space edged higher, as the Planning Commission Deputy Chairman Montek Singh Ahluwalia said that efforts to revive infrastructure investment would help in reverting to 8 percent growth in next three years.

The NSE’s 50-share broadly followed index Nifty rose by just over seven points to hold its psychological 6,500 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained marginal gains to hold the psychological 21,800 mark. Broader markets, however, outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1,342 shares on the gaining side against 1,458 shares on the losing side, while 152 shares remained unchanged.

Finally, the BSE Sensex added 0.25 points to settle at 21832.86, while the CNX Nifty was up by 7.40 points or 0.11% to settle at 6,524.05.

The BSE Sensex touched a high and a low of 21895.83 and 21782.01, respectively. The BSE Mid cap index was up by 0.30%, while the Small cap index gained 0.46%.

The top gainers on the Sensex were Tata Steel up by 4.58%, Hindalco Inds up by 4.44%, Axis Bank up by 2.78%, SSLT up by 2.09% and HDFC up by 1.77%, while TCS down by 3.84%, ONGC down by 3.22%, Mahindra & Mahindra down by 2.79%, Coal India down by 2.63% and Gail India down 2.53% were the top losers in the index.

On the BSE Sectoral front, Metal up by 2.12%, FMCG up by 1.21%, Bankex up by 0.61%, Capital Goods up by 0.48% and Healthcare up by 0.45% were the top gainers, while IT down 2.24%, Teck down by 1.63%, PSU down by 1.07%, Oil & Gas down by 0.49% and Realty down by 0.36% were the top losers in the space.

Meanwhile, attributing prevailing economic slowdown to sluggish global and domestic factors, Planning Commission Deputy Chairman Montek Singh Ahluwalia has stated that efforts to revive infrastructure investment would help the domestic economy to achieve its potential 8 percent growth rate in the next three years. Ahluwalia added that fundamentals of Indian economy are strong and providing impetus to the economic growth.

Ahluwalia further asserted that India is currently working to revive the pace of investment in infrastructure and also addressing certain domestic constraints like high inflation.  Indian economy’s growth slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarters of FY14. The Government expected India’s GDP to grow by 4.9% in FY14, however, to reach the expected target, GDP needs to expand by 5.5% in Q4 FY14 that will be the highest growth rate since the Q3 FY12.

The infrastructure development is a most critical prerequisite to boost the economic growth. Meanwhile in order to expedite the implementation of infra projects, the government has been taking various measures. Recently, it has set up Cabinet Committee on Investment (CCI) to accord fast track clearances to large projects. Till now, the CCI had cleared around 210 projects worth Rs 3.84 lakh crore. During the 12th Five Year Plan (2012-17), the government has set the $1-trillion investment target for the infrastructure sector.

The CNX Nifty touched a high and low of 6,541.20 and 6,506.00 respectively.

The top gainers of the Nifty were Tata Steel up by 4.61%, Hindalco Industries up by 4.31%, Ambuja Cements up by 3.26%, PNB up by 2.38% and Asian Paints up by 2.27%. On the other hand, TCS down by 3.97%, ONGC down by 3.29%, Mahindra & Mahindra down by 2.92%, Coal India down by 2.86% and Tata Power Company down 2.52% were the top losers.

Most of the European markets were trading in red, France's CAC 40 was down by 0.08% and United Kingdom's FTSE 100 was down by 0.10%, while Germany's DAX was up by 0.50%.

The Asian markets concluded Wednesday’s trade mostly in red as investors turned attention to the US Federal Reserve’s policy meeting later in the day. The World Bank backed its growth target for Indonesia in 2014, but warns the country against possible headwinds from slowing investment. The organization had maintained its economic growth target for Indonesia at 5.3% this year, supported by private consumption and improving exports. Bank Indonesia, the central bank, is estimating a range of 5.5% to 5.9%, from 5.8% last year. In another sign of investor confidence in Indonesia’s bond market, the government managed to raise Rp 10 trillion ($895.8 million) from the sale of treasury bonds and bills. Japan’s All Industries Activity Index rose to a seasonally adjusted 1.0%, from -0.1% in the preceding month while Japan’s trade balance rose to a seasonally adjusted -1.13T, from -1.76T in the preceding month whose figure was revised up from -1.82T.

Shanghai’s economic growth slowed at the start of this year, with industrial production, fixed asset investment and trade all moderating. The industrial production rose 3.8% from a year earlier to reach 502 billion yuan ($81.6 billion) in the first two months. The number of Chinese cities seeing month-on-month price growth declined for another month in February amid continuous easing sentiment among buyers. Excluding government-subsidized affordable housing, prices of new residential properties rose in 57 cities around the country last month.