Sensex registers small gains

After swinging between positive and negative zone near the flat line in intraday trade, key benchmark indices provisionally registered small to minuscule gains. The barometer index, the S&P BSE Sensex, rose 97.87 points or 0.4% at 24,704.86, as per the provisional closing data. The 50-unit Nifty 50 index ended near the flat line. It rose 9.75 points or 0.13% at 7,485.35, as per the provisional closing data.

The Sensex hit its highest level in more than four weeks when it rose 112.06 points or 0.45% at the day's high of 24,719.05 at the onset of the trading session. The barometer index lost 75.19 points or 0.3% at the day's low of 24,531.80 in early trade. The Nifty hit its highest level in more than three weeks when it rose 30.30 points or 0.4% at the day's high of 7,505.90 at the onset of the trading session. The index lost 31.50 points or 0.42% at the day's low of 7,444.10 in early trade.

In overseas stock markets, European stocks traded with small gains. Earlier during the global day, most markets in Asia edged higher after a batch of positive US economic data overnight. US stocks closed slightly higher yesterday, 3 March 2016, as oil prices stabilized. The latest data showed US factory orders rose in January after two straight monthly declines and the service sector index showed continued expansion.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,509 shares rose and 1,092 shares fell. A total of 147 shares were unchanged. The BSE Mid-Cap index was provisionally up 1.13%. The BSE Small-Cap index was provisionally up 0.75%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3239 crore, higher than turnover of Rs 2869.89 crore registered during the previous trading session.

Bharti Airtel and Idea Cellular edged lower on media reports that a foreign brokerage has reduced its earnings forecast for these two companies for three financial years starting from the current financial year in anticipation of increased spectrum costs and higher capex intensity. Idea Cellular lost 2.26% at Rs 105.80. Bharti Airtel shed 0.7% at Rs 331.10. The foreign brokerage reportedly said that Bharti Airtel and Idea Cellular are likely to face sustained cash flow challenges through FY 2016-18 amid pricing pressure, rising capex intensity on data network rollouts and mounting spectrum-linked costs.

Stocks of public sector banks (PSU banks) led upmove in banking sector stocks. Indian Bank (up 9.34%), IDBI Bank (up 4.2%), Punjab National Bank (up 5.25%), Bank of India (up 1.67%), State Bank of India (up 3.75%), Union Bank of India (up 4.17%) and Bank of Baroda (up 2.96%) rose. Central Bank of India (down 0.89%) edged lower.

The finance ministry has convened a two-day conference in Gurgaon staring today, 4 March 2016, to provide an informal academic environment to take forward the government's commitment to reforms in the banking and financial sector. Top management of PSU banks, state-run insurance companies and other state-run financial institutions (FIs), finance sector regulators and finance ministry officials will participate in the second such conference called Gyan Sangam.

Meanwhile, the Union Budget 2016-17 disappointed the public sector banks by maintaining the allocation of capital funds unchanged at Rs 25000 crore for FY 2017 considering higher non-performing assets (NPAs) and weak earnings. On the flip side, the Budget has announced to operationalize Banks Board Bureau (BBB) in 2016-17, which will spell out a roadmap for consolidation of public sector banks.

Among private sector banks, IndusInd Bank (up 2.39%), ICICI Bank (up 1.51%), HDFC Bank (up 1.1%) and Kotak Mahindra Bank (up 1.06%) edged higher. Axis Bank (down 0.02%) and Yes Bank (down 0.13%) edged lower.

The Reserve Bank of India (RBI) early this week announced relaxations on the treatment of certain balance sheet items for the purpose of determining banks' regulatory capital.

IT stocks edged lower as rupee edged higher against the dollar. HCL Technologies (down 2.44%), Tech Mahindra (down 2.43%), Wipro (down 1.29%), and Persistent Systems (down 0.44%) and TCS (down 0.39%) edged lower. Infosys (up 0.54%) and Oracle Financial Services Software (up 4.49%) rose. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

In the foreign exchange market, the partially convertible rupee was currently hovering at 67.235, compared with its close of 67.335 during the previous trading session.

Meanwhile, the Union Budget 2016-17 is mixed for the technology and services sector. Industry association Nasscom believes, in the backdrop of global economic volatility, there are unmet expectations on policy announcements in the budget that enable ease of doing business for the IT sector. The budget partially covers its wish list on policy bottlenecks, including ease of business, nurturing start-ups, products and e-commerce sector. The budget also left IT services sector disappointed as various demands such as clarity on transfer pricing, exemption from minimum alternate tax (MAT) for SEZ units, relief from service tax and VAT double taxation have not been addressed. Domestic IT services and software companies such as TCS, Infosys, and Persistent Systems can look forward to service the technological initiatives announced in the budget and convert them into opportunities for growing their domestic business as well as help the government to increasingly digitize the economy.

Dr Reddy's Laboratories (DRL) rose 1.6% at Rs 3,239.35, with the stock extending previous trading session's gains triggered by the company receiving approval from the United States Food and Drug Administration (FDA) for Palonosetron Hydrochloride injection or Aloxi generic. The stock surged 5.77% to settle at Rs 3,188.35 yesterday, 3 March 2016. Palonosetron Hydrochloride is used to treat chemotherapy induced nausea. In October 2015, DRL had entered into a settlement agreement with Helsinn Healthcare SA, a Switzerland-based pharma company for patent litigations related to Aloxi generic in the US. With this settlement, the company is permitted to market Aloxi generic on 30 September 2018 or earlier.

Meanwhile, India's stock market remains closed on Monday, 7 March 2016, on account of Mahashivratri.

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