Markets make positive start on the final day of March F&O series

After scaling all-time closing highs in previous session, Indian equity benchmarks have made a positive start. Though, gains on the up-side remained capped as it remained the final day of March F&O series. Overall sentiments remained up-beat on rating agency Moody’s report, which said that the sharp fall in India's current account deficit (CAD), will limit its vulnerability to global financial market volatility, though persistently high inflation remains a major risk. India’s CAD dropped sharply to $4.2 billion or 0.9% of GDP during October-December 2013 from $31.9 billion or 6.5% of GDP in the same quarter last year.

On the global front, the US markets failed to sustain their early momentum and major indices ended lower by over half a percent amid renewed worries from Ukraine after Obama warned the international community against adopting a complacent attitude toward Russia. Asian markets were trading mixed at this point of time with Japanese market leading the losers list after yen surged against dollar amid concern President Barack Obama will step up pressure on Russia.

Back home, buying in metals and mining sector stocks too supported the sentiments after a panel set up by Supreme Court recommended lifting a ban on iron ore mining in Goa, albeit limiting output to 20 million tonnes, about 40 per cent of what the state use to produce before the mining ban. The court will consider the panel’s suggestions today. On the sectoral front, FMCG, oil and gas and auto witnessed the maximum gains, while software and healthcare remained the only losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1100 shares on the gaining side against 511 shares on the losing side while 75 shares remain unchanged.

The BSE Sensex opened at 22,116.23; about 21 points higher compared to its previous closing of 22,095.30, and touched a high and a low of 22,188.63 and 22,094.29 respectively. The index is currently trading at 22,172.41, up by 77.11 points or 0.35%. There were 21 stocks advancing against 9 declines on the index.

The overall market breadth has made a strong start with 65.24% stocks advancing against 30.31% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.60% and Small cap gained 0.93%. 

The top gaining sectoral indices on the BSE were, FMCG up by 0.70%, Oil & Gas up by 0.68%, Auto up by 0.67%, Realty up by 0.60% and Power up by 0.59%, while IT down by 0.24% and Healthcare down by 0.07% were the only losers on the sectoral index.

The top gainers on the Sensex were SBI up by 1.60%, Bharti Airtel up by 1.56%, RIL up by 1.19%, Hindustan Unilever up by 0.91% and Cipla up by 0.81%. On the flip side, Coal India was down by 1.05%, TCS was down by 1.02%, ONGC was down by 0.92%, Tata Power was down by 0.86% and Dr Reddys Lab was down by 0.74% were the top losers on the Sensex.

Meanwhile, the International Monetary Fund (IMF) has attributed slump in infrastructure and corporate investment a major reason for India's recent growth slowdown. Indian economy’s growth declined to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarter of FY14.

IMF noted that the recent investment gloom in India is mainly due to deteriorating business confidence and heightened uncertainty regarding the future course of broader economic policies. Though, a portion of the recent investment slowdown can also be attributed to the increase in financing costs. IMF further added that country’s economic policy is directly correlated to investment and heightened policy uncertainty over the recent years has led to decline in new investments and increase value of investments. Therefore, these investments have either been postponed or cancelled on account of rising value.

Referring to Indian economy’s outlook, the IMF said that in the near term, lowering nominal interest rates may provide some relief in terms of a reduced interest burden, especially to corporates with high leverage. However, in the medium term, lower rates with little slack in the economy would stoke inflation further and exacerbate inflation trends across sectors, hurting investment.

The CNX Nifty opened at 6,613.10; about 11 point higher as compared to its previous closing of 6,601.40, and has touched a high and a low of 6,631.10 and 6,599.50 respectively. The index is currently trading at 6,626.60, up by 25.20 points or 0.38%. There were 36 stocks advancing against 14 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were IDFC up by 2.52%, BPCL up by 2.17%, Asian Paint up by 1.94%, UltraTech Cement up by 1.84% and SBI up by 1.69%. On the flip side, Coal India down by 1.28%, ONGC down by 0.94%, Kotak Bank down by 0.84%, JP Associate down by 0.83% and TCS down by 0.79% were the top losers on the index.

Most of the Asian equity indices were trading in green; Jakarta Composite strengthened by 18.72 points or 0.40% to 4,747.06, Nikkei 225 soared Up 35.75 points or 0.25% to 14,507.26, Straits Times rose 11.44 points or 0.36% to 3,154.76, Seoul Composite surged by 3.24 points or 0.17% to 1,967.66, Taiwan Weighted was up by 19.74 points or 0.18% to 8,752.98 and KLSE Composite was up by 0.24 points or 0.02% to 1,839.48.

On the flip side, Hang Seng down by 101.89 points or 0.47% to 21,785.86 and Shanghai Composite declined by 15.38 points or 0.75% to 2,048.29.