Indian equity benchmarks continued their firm trade with modest gains in late morning session on account of buying in frontline blue chip counters ahead of the US Federal Reserve’s monetary policy meeting, where it is widely expected to increase rates. The rupee opened higher against dollar and hit its highest level since November 2015 in early trade. The unwinding of the US currency followed by BJP’s landslide victory in Uttar Pradesh supported the local currency. Foreign institutional investors stood net buyers in domestic equity markets on Tuesday as they bought shares worth Rs 344 crore with gross purchases and gross sales of Rs 4,717.41 crore and Rs 4,373.40 crore, respectively. Investors maintained a cautious approach as the likelihood of a repo rate cut in April 2017 remains subdued. Those hoping that the Reserve Bank of India (RBI) would slash interest rates going ahead may just have to wait further as the inflation may have come back to haunt the economy. Higher food, fuel, non-fuel commodities and power prices, and playing out of base effect in February had led to both Wholesale Price Index (WPI) and Consumer Price Index (CPI) or retail inflation soaring northwards to 6.55% and 3.65%, respectively. The WPI inflation was highest in 39 months, while the retail inflation was at a 4-month high. Meanwhile, Chief Economic Adviser Arvind Subramanian said that recent election results came as a surprise to him, and the outcome has given the Modi government a political mandate to carry out its economic agenda. Subramanian said that demonetization can be called successful only if the amount of currency in circulation comes down over time and there is an increase in tax compliance.
Traders were seen piling position in Telecom, Metal and Energy stocks, while selling was witnessed in IT, TECK and Capital Goods sector stocks. Information Technology (IT) companies were trading weak as the Indian rupee strengthens further against US dollar. A firm rupee adversely impacts the operating profit margin of IT firms as the sector derives a lion’s share of revenue from exports. In scrip specific development, Tata Chemicals was trading in red after the company on Tuesday informed bourses that it has received a notice from the Central Pollution Control Board directing the company under Section 5 of the Environment Protection Act, 1986 to shut down plant operations at Haldia, West Bengal for alleged non-compliance with the prescribed norms for liquid affluent discharge.
On the global front, Asian shares were trading mostly in red, as investors took profits before a US central bank policy meeting. China’s Premier Li Keqiang said that forecasts of a hard landing for the world’s second largest economy should stop, though domestic and external risks remain and meeting the target of 6.5 percent growth for this year won’t be easy. Li said the economy faces risks this year, but added the country has many policy tools to cope with them. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 9,050 and 29,400 levels respectively. The market breadth on BSE was positive in the ratio of 1344:920, while 126 scrips remained unchanged.
The BSE Sensex is currently trading at 29464.84, up by 22.21 points or 0.08% after trading in a range of 29405.23 and 29500.08. There were 17 stocks advancing against 13 stocks declining on the index.
The broader indices were trading in green; the BSE Mid cap index was up by 0.73%, while Small cap index was up by 0.69%.
The top gaining sectoral indices on the BSE were Telecom up by 1.80%, Metal up by 0.86%, Energy up by 0.79%, Consumer Durables up by 0.59% and PSU up by 0.54%, while IT down by 1.24%, TECK down by 0.75%, Capital Goods down by 0.12% and Utilities down by 0.03% were the losing indices on BSE.
The top gainers on the Sensex were SBI up by 1.47%, Reliance Industries up by 1.45%, Tata Steel up by 1.12%, Adani Ports & Special Economic Zone up by 1.09% and Bharti Airtel up by 0.69%.
On the flip side, TCS down by 1.71%, Infosys down by 1.41%, Larsen & Toubro down by 0.70%, Wipro down by 0.69% and Hindustan Unilever down by 0.65% were the top losers.
Meanwhile, snapping an easing trend of last four months, India’s Retail inflation, measured by the consumer price index rose to 3.65% in February 2017, as against 3.17% in January 2017 and 5.26% in February 2016. Though, it was still below the Reserve Bank of India’s forecast for an average of 5 percent inflation for this financial year. The upswing in retail inflation has been mainly due to surge in price of food items like fruits, sugar and confectionery as remonetisation picked up pace and spurred consumption demand.
As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the Consumer Price Index (CPI) (Rural, Urban, Combined) on Base 2012=100 for February 2017, stood at 3.67 percent, 3.55 percent and 3.65 percent respectively compared to 3.36 percent, 2.90 percent and 3.17 percent respectively in January 2017 and 6.05 percent 4.31 percent 5.26 percent respectively in February 2016.
The data also showed that Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for January 2017 increased considerably to 2.08 percent 1.87 percent and 2.01 percent respectively, compared to 1.14 percent, (-) 0.31 percent, 0.61 percent respectively in January 2017 and 5.96 percent 4.23 percent and 5.30 percent in February 2016.
According to the data, inflation in fruits was higher at 8.33 percent in February as compared to 5.81 percent in previous month. Fuel and light was at 3.9 percent in February as against 3.42 percent in previous month. The rate of price rise in meat and fish was 3.5 percent in February. Prices of sugar and confectionery items rose by 18.83 percent in February, while inflation in milk and milk product increased by 4.22 percent.
The rate of inflation in household goods and services was 4.09 percent, while in health segment it was 4 percent. The transport and communication became expensive by 5.39 percent. The personal care and effects segment rose by 5.15 percent, while the education became more expensive by 5.37 percent in February this year. The inflation rate was 4.38 percent in clothing and footware segment, while it was 4.9 percent in housing segment. However, the prices of vegetables and pulses declined by 8.29 percent and 9.02 percent respectively.
The CNX Nifty is currently trading at 9098.35, up by 11.35 points or 0.12% after trading in a range of 9076.25 and 9105.35. There were 32 stocks advancing against 19 stocks declining on the index.
The top gainers on Nifty were Idea Cellular up by 8.39%, Bank of Baroda up by 3.48%, Grasim Industries up by 2.08%, Aurobindo Pharma up by 1.53% and SBI up by 1.47%.
On the flip side, TCS down by 1.96%, HCL Tech. down by 1.47%, Infosys down by 1.45%, Tech Mahindra down by 1.02% and Wipro down by 0.86% were the top losers.
The Asian markets were trading mostly in red; Nikkei 225 decreased 56.97 points or 0.29% to 19,552.53, Taiwan Weighted decreased 10.43 points or 0.11% to 9,733.78, FTSE Bursa Malaysia KLCI decreased 5.62 points or 0.33% to 1,716.85, Hang Seng decreased 3.43 points or 0.01% to 23,824.52 and KOSPI Index decreased 2.56 points or 0.12% to 2,131.22.
On the other hand, Jakarta Composite increased 0.82 points or 0.02% to 5,432.40 and Shanghai Composite increased 2.4 points or 0.07% to 3,241.73.