Engg stocks lead the decline

Indian markets ended today's day with moderate losses. Markets hopped in between small gains and declines throughout the day but due to constant selling pressure, ended the day in the red. BSE-Sensex lost about 65 points while NSE-Nifty lost about 15 points. Among sectoral indices, capital goods and metals lost the maximum while IT and pharma stocks balanced the losses with some gains.

The S&P BSE Midcap and S&P BSE Smallcap indices were volatile during today's trading session. While the midcap index lost 0.3%, the smallcap index lost about 0.9%. Commodities, continued to face selling pressure. Gold prices, per 10 grams declined about 0.2% or Rs 50 and is trading at Rs 25,830 while Silver prices pared early gains is trading with small profits. Silver prices, per kilogram, gained Rs 70 or 0.2% and is trading at Rs 35,600 levels. The Indian rupee against the U.S. Dollar declined 0.2% or 0.15 and is trading at Rs 62.82.

European markets gained on the back of ECB decision of initiating the bond-purchase program early this month. The European indices DAX, CAC and FTSE are trading with robust gains of 1%, 0.9% and 0.5% respectively.

The consumer durables sector registered gains of about 0.4%. However, Blue Star closed today session with 0.8% losses after gaining earlier in the day. The company has announced that it would be shifting one of its arms in to a wholly-owned subsidiary. The company's business arm named Professional Electronics & Industrial Systems (PE&IS) will be shifted to Blue Start Engineering & Electronics. This transition would be valued at Rs 1.1 billion. The transition is expected to churn more revenues for PE&IS. Revenues for the arm for financial year 2013-14 stood at Rs 1.22 billion.

Although IT was today's biggest gainer, Persistent systems lost over 5% during today's trading session. Investor confidence towards the company was shaken after the software firm provided guidance below the investors' expectation. The company informed its shareholders that the company's dollar revenue might be impacted in fiscal 2015 as its one of the biggest customers had changed its business. The company further said that margins might also be hit owing to fall in the dollar income. However, the company is optimistic about its opportunities and market positioning in fiscal 2016.

Marginally below the dotted line
03:30 pm

Indian markets pared losses and showed some strength in the second half of the trading session. BSE-Sensex lost about 20 points while NSE-Nifty has lost about 3 points. S&P BSE Midcap stocks has shown a movement towards moderate losses while S&P BSE Smallcap remained the most out of favour. S&P BSE Midcap and S&P BSE Smallcap lost over 0.3% and 1%, respectively. Commodities pared early gains. Gold price is trading on a flat note with minor losses of 0.10% or Rs 25 at Rs 25,860 levels per 10 grams. However, silver prices continue to show strength. Price per kilogram has increased about 0.60% or Rs 188 and is trading at Rs 35,700 levels. Value of the Indian Rupee against the US Dollar declined by 0.3% or 0.16 and is trading at Rs 62.80 levels.

Investor confidence towards the European markets increased as ECB's bond Purchase Program continue to infuse optimism among investors. European markets like DAX and FTSE are trading in the green with gains of 0.9% and 0.5%, respectively.

The pharmaceutical sector has advanced moderately in today's trading session. Suven Life Science led from the front with respect to gains. Shares of the company gained over 10% after it received 2 product patents or chemical entities from the US and New Zealand. According to the company the chemical entity is for central nervous system therapy. This therapy has been acquired through an innovative mechanism known as H3 Inverse agonist. There a series of discover made by Suven Life Sciences under the name of H3 ligands. Including these, Suven now has 20 patents approved by the USA and 23 approved by New Zealand.

Power stocks has traded with volatility today. However, shares of Diamond Power gained 20% after the company acquired an order from Assam and Nagaland Government. The order is reported to be worth Rs 3.32 billion. Company said that in last 12 months Diamond Power has received orders worth aggregating to Rs 20.34 billion.

Indian Market Extend Losses
01:30 pm

Indian markets continue to remain volatile but trading mostly in the red. BSE-Sensex is trading with a loss of 90 points while NSE-Nifty is trading with a loss of 20 points. S&P BSE Midcap and S&P BSE Smallcap are trading with moderate losses of 0.2%, and 0.6%, respectively.

Commodities have gained ground with gains. Gold prices increased 0.1% or Rs 30 and is trading at Rs 25,900 levels per 10 grams while Silver prices have increased over 0.7% or Rs 262 and is trading at Rs 35,800 levels. Crude oil prices extended the sell and is trading lower by 2.5%. Crude oil prices is trading a tad below Rs 2800 per barrel. The value of Indian Rupee against the US Dollar declined today. The Indian rupee fell 0.2% or 0.13 and is trading at Rs. 62.83 levels.

Asian markets closed today's trading session on a mixed note as investors await the outcome of the 2-day Fed Meet. Japanese and Taiwanese markets ended the day in the red with 0.04% and 0.7%, respective losses while Chinese, Hong Kong and Korean markets showed strength with gains of 2%, 0.40% and 0.1%, respectively.

The Wholesale Price Index (WPI) for the month of February touched an all-time low with -2.06%. This is the fourth consecutive instance when there has been a deflation in prices. Three groups namely primary articles, fuel & power and manufactured products are primarily responsible for the decline in prices. Primary articles (index weight - 20%) fell 1.9% while fuel & power (index weight - 15%) fell 4.5% and manufactured products (index weight - 65%) fell 0.3%.

Airline stocks were one of the most active stocks today. Shares of Jet Airways and SpiceJet increased in the range of 3% and 4% as the Government may issue new rules pertaining to domestic and international flights. According to the government, the rule will be "simple and clear". The changes will be brought about in the 5/20 rule. As per the 5/20 rule only those international flights are allowed to go international whose fleet is more than 20 and have stayed in operation for more than 5 years. According to the new rule, an airline will be allowed to go international once it completes two and a half years of domestic operations. Additionally, the domestic flight should also possess 200 domestic flight credits with flying time of less than 6 hours. On completion of 300 domestic flying credits, the airline can apply for international flights with more than 6 hours flying time.

Markets trade with slight losses
09:30 am

Asian stock markets are trading with moderate gains shunning the losses made by the Wall Street on Friday, last week. Although, Asian stocks started today's trading session on a back foot but gained investor optimism later on. This week is an important one as the Federal Reserve will be meeting for two days. Investors expect a decision over raising the interest rates as a part of an outcome of this two-day meeting. Japanese, Chinese, Hong Kong and Korean markets are trading the green with 0.2%, 1.4%, 0.4% and 0.2% respective gains while Taiwanese market is trading with moderate losses of 0.3%.

Indian markets have opened on a flattish note, however, the markets slipped in the red as selling pressure remained persistent. BSE Sensex declined 22 points while NSE-Nifty marginally down by 7 points. BSE Mid Cap and BSE Small Cap are trading flat as midcap indices have gained about 10 points and smallcap stocks have gained about 24 points. Banks and healthcare sector are trading with healthy gains.

Commodities remained volatile. Gold price per 10 grams increased nearly 1% and gold traded at Rs 25,900 levels while silver prices per kilogram increased 0.6% to Rs 35, 500 levels, up Rs 200. Crude oil prices tanked over 4% owing to international factors and investors' concern over raising interest rates. Moreover, international crude prices touched a 6 year low as US Dollar gained strength. The value of Indian currency declined 0.02% or 0.02 and is trading at Rs 62.95 levels.

Banking stocks are leading the market with modest gains. The previous month, government had announced its intent of infusing capital to the tune of Rs 112 billion. In an attempt to infuse capital SBI had planned to issue preferential shares whose value would be nearly Rs 29 billion. For this purpose, the value of each preferential share has been fixed at Rs 295.95. This value includes a premium of 15%. Shares of SBI have been trading with moderate gains of 0.4%.

Telecom companies have rallied despite the sell-off which hit markets last week. The spectrum bid crossed Rs 1 trillion mark. According to the department of telecom, nearly 87% of the total allocated spectrum has been auctioned for Rs 1.02 trillion. Robust bidding is being seen for 1800 Mhz, 900 Mhz and 800 Mhz bands. However, there was no bidding for 2100 MHZ for Mumbai, Delhi and Andhra Pradesh. According to a leading financial source, Haryana witnessed bidding for 1800 Mhz and 900 Mhz for West Bengal. After rallying, shares of Bharti Airtel faced some profit booking and fell over 1%.

How high will the Nikkei go this time?

We have repeatedly highlighted the fact that the developed world is struggling to register economic growth. After the global financial crisis of 2008-09, developed economies have not shown a quick recovery. However, the massive money printing by the central banks of these nations has certainly inflated a huge bubble in stock markets. Nowhere is this more evident than the US and Japan.

In the case of the US, there is at least some economic growth to back up corporate profits (however dubious it may be). But what about Japan? Here is an economy on the brink of deflation. The GDP grew by exactly 0% in 2014. The Prime Minister's stimulus measures have failed miserably to revive the economy. There have been no structural reforms. Yet the Nikkei has more than tripled over the last three years. In 2015, the index is up 8.4%. So what explains this stupendous rise in the Japanese stock market?

There are multiple answers. The depreciation of the Yen has allowed exporters to achieve record profits without much of an increase in productivity. Many marginal businesses too have benefitted. Thanks to the central bank's efforts, there is plenty of money chasing stocks in Japan. Also, the Japanese markets are still not as expensive as the US. However, the real fuel that has driven the rally recently was a change in the rules governing pension funds. Last year, these funds were allowed to double their stock holdings.

Now what has all this got to do with the real economy? Not much we believe. Japan continues down a path that is doomed to fail. Its poor demographics put it in a difficult spot. It can be countered with reforms but none are forthcoming. With money printing the only tool being employed, the Japanese economy will continue to struggle but the stock markets could continue on its northward journey. However, like all bubbles, this too will burst. And when it does, to quote Warren Buffett 'A new set of investors will learn some very old lessons'!