Banks, cap goods drive markets higher

Today's volatile session came to an end with the BSE-Sensex gaining about 98 points and NSE-Nifty gaining about 55 points. S&P BSE Midcap and S&P BSE Smallcap indices garnered gains of 1.3% and 0.9%, respectively. Indian Rupee is trading at 61.95, up 0.2% while crude oil is trading higher by Rs 10 at Rs 3,073 per barrel. Gold and Silver gained positive momentum with gains of about 0.8% each.

Investor sentiment towards European market has gained traction as better than expected economic numbers impressed investors. These economic numbers includes unemployment and inflation numbers that directly affects the Eurozone's economy. The DAX and FTSE have gained about 0.3% each.

Banks, oil and gas and cement stocks were the major gainers of today's session. Banks namely Axis Bank and Yes Bank gained 5% and 2.3%, respectively. The Finance Minister, Mr. Arun Jaitley had proposed to do away with the difference between Foreign Direct Investment (FDI) and foreign institutional investors (FIIs). With this move, Axis Bank awaits approval of its shareholders to allow the bank increase the FII limit to 74%. FDI, in terms of percentage, in Axis Bank is 52% and the FII limit is 62%.

In a move that could potentially bring in significant domestic funds into the markets, the government has stated that all non-government provident funds will compulsorily have to invest 5% of their corpus in to equities. The finance ministry is in the process of modifying its rules in this regard. The new rules when notified, will apply to all non-government PFs, Superannuation funds and Gratuity funds.

Indian markets recover sharply
03:30 pm

BSE Sensex and NSE-Nifty gained momentum in the second half of the trading session after remaining flattish for most part of the trading day. While BSE Sensex gained 0.41% or 120 points, the NSE Nifty gained 0.71% or 66 points. BSE Mid Cap and BSE Small Cap clearly outperformed the market today. The midcap and smallcap indices gained 1.6% and 1% respectively. Precious metals, gold and silver retreated from their day highs and are now trading with a gain of about 0.70% each. While gold is trading at Rs 26,659 per 10 grams, silver is trading at Rs 36,965 per kilogram. The value of Indian Rupee against the U.S. Dollar has increased 0.20% to 61.95.

Like the Asian stock markets Germany's DAX and FTSE too are trading in the green with gains of 0.30% and 0.35%, respectively. While the Asian markets closed in the green as China decided to cut the primary interest rates, European markets are trading positively because of the stimulus measures are just days ahead.

Automobile sector witnessed a sell-off owing to weak numbers revealed by a major automobile company. Shares of Bajaj Auto fell nearly 4% after the company said that the sale volumes of motorcycles for the month of February declined by 21% YoY. The sales figure of the company stood at 216,077 units for the month of February. Furthermore, the company also said that it export figures have fallen by 20% YoY to 112,909.

Construction sector remained flat during today's session. However, stock price of GMR Infrastructure crashed by as much as 7% as the board members of GMR decided to raise capital to the tune of Rs 14 bn via rights issue. The issue price of the shares has been decided at Rs 15 per share with a Face Value of Re 1. In July last year, the company had raised capital of about Rs 14.8 bn via a different route.

Indian share markets slip
01:30 pm

Indian share markets remained volatile and slipped in the red in the post-noon trading session after a report revealed that HSBC PMI for manufacturing activity fell to a five-month low to 51.2 for the month of February. Majority of the sectoral indices are trading in the red with FMCG and consumer durable being the major losers. Capital goods and banking stocks are the biggest gainers today.

BSE Sensex is down 40 points and NSE-Nifty is marginally up. BSE Mid Cap and BSE Small Cap indices have outperformed the market today with gains of 0.60% and 0.30%, respectively. The Indian Rupee is trading marginally higher by 0.05 at 61.88 against the U.S. Dollar.

Majority of the energy stocks are trading strong as petrol and diesel prices were increased throughout India. The major gainers are Indian Oil Corporation and Gujarat Gas. The hike in prices was the consequent result of increase in the international crude oil prices. Petrol prices were raised by Rs 3.18 while diesel prices were hiked by Rs 3.09.

Automobile stocks remained mixed in today's trading session, however Maruti Suzuki India has gained over 2% as it reported positive sales for the month of February. The company said that sales of automobiles increased 8.7% year over year to 1,18,551 units. Domestic sales of the company increased 8.2% to 1,07,892 units while exports of the company improved by 14% to 10.659 units.

Indian stock markets open firm
09:30 am

The major Asian stock markets have opened the day on mixed note with Taiwan market (down 0.3%) and Singapore market (down 0.1%), leading the losses. However, stock markets in Japan (up 0.3%) and China (up 0.3%) have opened on a positive note.

The Indian share markets have opened the day on a firm note post the Budget day. The sectoral indices have opened mixed with, capital goods, banking stocks and oil and gas stocks being the leading gainers. However stocks from FMCG and consumer durables are witnessing selling pressures

The Sensex today is up by around 200 points (0.7%), while the NSE-Nifty is up by about 67 points (0.7%). Both mid cap and small cap stocks have too opened firm. The BSE Mid Cap and BSE Small Cap index are up by around 0.4% each. The rupee is currently trading at Rs 61.79 to the US dollar.

The price of aviation turbine fuel (ATF) was increased by 8.2% on Sunday due to an increase in international oil prices. This hike has come after 7 consecutive cuts since the month of August 2014. It may be noted that ATF constitutes about 40% of any airlines' operating cost and hence an increase in the fuel price is likely to hurt an already cash strapped industry. Apart from an increase in ATF, prices of non- subsidized LPG cylinders have also been increased by Rs 5 in Delhi. This may not have much of an impact on consumers considering that a quota of 12 odd cylinders is available at subsidized rates to every household. Only those who consume more than the prescribed quota will be impacted by the hike.

Food and Tobacco stocks have opened mixed with Tata Global Beverages and Golden Tobbaco leading among gainers. On the hand Godfrey Philips and VST industries are the biggest losers in the pack. ITC turned out to be the biggest loser on the Budget day trading session. The stock lost about 9% of its value as the fresh taxes were imposed on cigarettes. The excise duty has been increased by 25%. However, this is applicable on those cigarette products whose length does not exceed 65mm. On other cigarette products, the excise duty has been increased by 15%. The excise duty on tobacco has increased to Rs 70 per kg from Rs 60 per kg. The stock has opened down by 2% today.

FY15 economic survey: The key points

In the midst of the noise and analysis of the Union Budget, the economic survey tends to get forgotten. Yet this is the flagship annual economic document of the Ministry of Finance. It contains a lot of economic data for the year as well as solutions to the challenges facing the economy. Despite its importance, the findings and suggestions of the survey tends to be ignored by finance ministers. The reason is simple. Being politicians, they have to keep political considerations in mind along with economic ones.

This year's economic survey however, has strayed off the beaten path. It is more pragmatic and simpler to understand from a common man's point of view. The survey paints a very realistic picture of the economy. All the challenges facing the economy; inflation, infrastructure bottlenecks etc have been mentioned clearly. However, the most interesting takeaway from it is that big bang reforms are not really required for the economy to grow at a good pace. The survey states that a series of well thought out incremental reforms, if done creatively, can be equivalent to a big bang reform.

The other key takeaways are; firming up of India's forex reserves to US$ 1 trillion, significantly boosting investment in infrastructure, rationalising subsidies, accelerating disinvestment of PSUs and setting up a clear and predictable tax policy. These are all indeed welcome recommendations. If acted upon, these alone will go a long way to boost employment, fix the fiscal deficit, improve the productivity in the economy and protect the nation from external shocks.

Of course it won't be an easy task. Inflation has yet to be properly controlled, subsidy rationalisation via direct transfers has not yet taken off, effective infrastructure financing is still stuck due to bank NPAs and policy bottlenecks and the government doesn't have the fiscal room for a lot of big bang infra spending. Thus it remains to be seen how these challenges can be overcome. Despite these difficulties, we believe that after considering the contents of both the budget and the economic survey, the government does seem to be heading in the right direction. We may not be satisfied by the progress made by the government yet but it cannot be denied that the economy is slowly getting back on track.