HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Bourses end flat after seven days rally
Mar-20-2019

Indian equity benchmarks ended flat on Wednesday after seven days rally. The markets made a cautious start but managed to keep their heads above water for the most part of the session, amid reports that the government has given a major relief to startups by enhancing definition of startups. It has decided to relax angel tax norms for startups, including increasing the investment limit to Rs 25 crore for availing income tax concessions by startups. Traders were positive, as the Vice President of India, M. Venkaiah Naidu expressed the hope that ‘in all our countries, we would be able to translate economic growth into inclusive, sustainable development’ and referred to Indian government’s resolve to transform governance and ultimately the lives of the people. Adding relief on the street, India's Ambassador to the US Harsh Vardhan Shringla said that India's growth in last five years has been transformational and the country is all set to emerge as a $5 trillion economy in the next five years.

But, key equity indices remain volatile during session and finally ended flat, impacted by a report that there is a 70% chance of El Nino climate cycle forming towards the second half of this year, a forecast that does not augur well for the monsoon season in India. Weak cues from global markets also weighed on the domestic sentiments. Investors got cautious as Reserve Bank of India (RBI) governor Shaktikanta Das expressed need to stick to the fiscal roadmap by adopting a commonly agreed expenditure code-based spending plan to address the socioeconomic challenges. He also advocated giving permanent status to the finance commission. Further, the market participants took a note of the report showing that Indian mutual funds and insurance firms, which scooped up shares while foreign institutional investors (FIIs) stayed away, turned net sellers of Rs 10,247.9 crore in March, even as FIIs returned to Indian markets.

On the global front, European markets were trading in red, as Eurozone construction output fell in January after rising in the previous two months, reflecting declines in both building and civil engineering segments. The data from the statistical office Eurostat showed that construction output declined a calendar and seasonally adjusted 1.4 percent month-on-month in January, reversing a 1.1 percent rise in December. Output grew 0.3 percent in November. Asian markets ended mixed, as investors awaited a US Federal Reserve policy statement and a media report on Sino-US trade talks dented sentiment.

Back home, stocks related to the healthcare and agriculture sector remained focus, after Finance Minister Arun Jaitley made a case for setting up GST Council-like federal institutions to promote healthcare, rural development and agriculture sectors by optimally utilising resources of the centre and states. Besides, real estate sector stocks remained in limelight, as the all-powerful Goods and Services Tax (GST) Council approved a transition plan for the implementation of new tax structure for housing units. It has decided that builders can pick between paying 12% for non-affordable houses with ITC benefits or 5% without the tax rebates for under-construction houses. Likewise, for affordable housing projects, builders can choose between 8% with tax rebates or 1% without it. The new rates, without ITC benefits, will apply for all projects that begin construction only after April 1.

Finally, the BSE Sensex rose 23.28 points or 0.06% to 38,386.75, while the CNX Nifty was down by 11.35 points or 0.10% to 11,521.05.

The BSE Sensex touched a high and a low of 38,489.81 and 38,316.21, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.36%, while Small cap index was down by 0.33%.

The top gaining sectoral indices on the BSE were Realty up by 2.21%, IT up by 0.93%, TECK up by 0.55%, Capital Goods up by 0.48% and Healthcare up by 0.08%, while Oil & Gas down by 2.26%, Utilities down by 1.84%, PSU down by 1.75%, Power down by 1.54% and Auto down by 1.41% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.36%, HDFC Bank up by 1.39%, Yes Bank up by 1.27%, Larsen & Toubro up by 1.19% and Sun Pharma up by 1.07%. On the flip side, NTPC down by 4.29%, ONGC down by 3.28%, Coal India down by 2.43%, Tata Steel down by 2.41% and Maruti Suzuki down by 2.22% were the top losers.

Meanwhile, Reserve Bank of India (RBI) governor Shakthikanta Das has stated the recent decision to inject rupee liquidity through long-term foreign exchange swap has received quite well response from market. In an unprecedented move, the Central Bank on March 13 announced a US dollar/rupee buy/sell swap auction worth $5 billion on March 26 to inject rupee liquidity for longer duration. This is first time that such a tool has been deployed by the RBI, which has been normally using OMOs to inject liquidity into the system. But the targeted liquidity will reach the system only next fiscal year when the government starts spending.

Under the buy/sell forex swap, a bank will sell dollars to the RBI and simultaneously agree to buy the same amount of dollars at the end of the swap period, which in this case is three years, and the additional liquidity flowing into the system can support credit growth and soften bond yields. The auction will begin on March 26, 2049 and will run up to March 28, 2022, which means the instrument has a three-year tenor with no liability on the RBI unlike in the 2013 when the then governor Raghuram Rajan allowed banks to mop up $ 30 billion through NRI deposits offering them to cover their hedging risks.

However, Das parried a query whether the scheme will be repeated if the maiden attempt is successful. The central bank statement on March 13 also said the dollar amount mobilised through the auction will reflect in the forex reserves for the tenor of the swap, and also reflect in RBI's forward dollar liabilities. This means that the forex kitty, which is $402 billion now, will swell by $5 billion and similar will be the jump in the central bank's forward sell position.

The CNX Nifty traded in a range of 11,556.10 and 11,503.10. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 5.09%, Hindalco up by 2.40%, Infosys up by 2.15%, Dr. Reddy’s Lab up by 1.81% and LT up by 1.70%. On the flip side, HPCL down by 5.52%, Zee Entertainment down by 5.10%, BPCL down by 4.98%, NTPC down by 3.67% and ONGC down by 2.87% were the top losers.

All the European markets were trading in red; UK’s FTSE 100 decreased 4.18 points or 0.06% to 7,319.82, France’s CAC slipped 5.79 points or 0.11% to 5,420.11 and Germany’s DAX was down by 133.56 points or 1.13% to 11,654.85.

Asian markets ended mixed on Wednesday as investors fretted about Sino-US trade relations and looked ahead to the Fed's policy decision later in the day, with many expecting the central bank to reaffirm its dovish stance. Chinese shares closed lower in view of uncertainty over progress on the US-China trade talks. Meanwhile, Japanese shares ended modestly higher ahead of the Fed's policy decision later in the day and a public holiday on Thursday.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,090.64
-0.34
-0.01

Hang Seng

29,320.97
-145.31
-0.49

Jakarta Composite

6,482.71
2.43
0.04

KLSE Composite

1,684.21

-3.47

-0.21

Nikkei 225

21,608.92
42.07
0.20

Straits Times

3,207.66
-13.26
-0.41

KOSPI Composite

2,177.10
-0.52
-0.02

Taiwan Weighted

10,551.56
39.24
0.37
  RELATED NEWS >>
Most Viewed >>
April 19 , 2024
JPMorgan bullish on Indian stocks, suggests ma
April 19 , 2024
Is it time to take small bets in FMCG stocks?
April 18 , 2024
Mutual fund industry assets grow 35% in FY24
April 19 , 2024
Lok Sabha Elections 2024: How will they impact
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.