Benchmarks erases early gains; Sensex below 27900 mark

After opening at fresh all-time highs, Indian equity benchmarks erased all their gains and were trading marginally lower as investors turned cautious and booked profits at higher levels. Sentiment on the street weakened as Core sector output in the month of September slowed down to 1.9% as compared to 5.8% in August, lowest in eight months, led by contraction in output of sectors including crude oil, refinery products, natural gas and fertilisers. Besides, India’s fiscal deficit widened to 82.6% to cross Rs. 4.38 lakh crore during April-September this fiscal as against Rs.5.31 trillion Budget Estimates for 2014-15, also weighed on the sentiment. However, losses remained capped with Finance Minister Arun Jaitley’s statement that economic growth in the current fiscal will be in the 5.5-5.9 per cent range and declining prices of crude oil and food will help lower inflation.  On the sectoral front, shares of most of the frontline automobiles companies were trading lower after reporting drop in vehicle sales during the month of October despite of the festive season. On the other hand, shares to aviation companies – Jet Airways (India) and SpiceJet have shined after state oil marketing companies have cut jet fuel (ATF) prices by a steep 7.3% from Saturday.

In scrip specific development, shares of Karnataka Bank rallied after reporting a threefold jump in its net profit at Rs 88.46 crore for the quarter ended September 30, 2014 as compared to Rs 28.95 crore for the same quarter in the previous year. On the flip side, shares of eClerx Services have declined after reporting 8.27% fall in its net profit at Rs 58.71 crore for the quarter under review as compared to Rs 64.00 crore for the same quarter in the previous year.

On the global front, Asian shares were mostly in the red as unexpected weakness in Chinese manufacturing tempered enthusiasm for Japan's surprise central bank stimulus. Back home, Indian rupee declined by 15 paise to 61.51 in early trade on fresh dollar demand from banks and importers amidst strengthening of the American currency overseas. The market breadth on BSE was negative, out of 2319 stocks traded, 1404 stocks advanced, while 832 stocks declined on the BSE.

The BSE Sensex is currently trading at 27844.91 down by 20.92 points or 0.08% after trading in a range of 27969.82 and 27789.40. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index was up by 0.82%.

The gaining sectoral indices on the BSE were Realty up by 1.00%, TECK up by 0.79%, IT up by 0.77%, Metal up by 0.51% and Infrastructure up by 0.24%, while Consumer Durables down by 0.92%, Auto down by 0.84%, Oil & Gas down by 0.25%, FMCG down by 0.16% and Bankex down by 0.02% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 1.86%, Dr. Reddys Lab up by 1.27%, SBI up by 1.20%, Hindalco up by 0.95% and Infosys up by 0.90%. On the flip side, GAIL India down by 3.90%, Mahindra & Mahindra down by 2.87%, Hero MotoCorp down by 1.77%, BHEL down by 1.37% and Maruti Suzuki down by 1.18% were the top losers.

Meanwhile, Core sector output in the month of September slowed down to 1.9% as compared to 5.8% in August, lowest in eight months, led by contraction in output of sectors including crude oil, refinery products, natural gas and fertilisers. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel - have a weight of 37.9% in the overall Index of Industrial Production (IIP). Its cumulative growth during April to September, 2014-15 was recorded at 4.0 %.

Among core sectors, Electricity generation having 10.32% weight in IIP index registered a growth of 3.8% in September, 2014 over the same month of corresponding period. During April to September 2014-15, it recorded a growth of 10% over the corresponding period of previous year. Coal production with weightage of 4.38% in index increased by 7.2% in September, 2014 over the same period of corresponding period. On cumulative basis, coal production growth during April-September, 2014-15 increased by 7.2% compared to April-September, 2013-14. Cement sector having weightage of 2.41% respectively in IIP index, registered a growth of 3.2% respectively, in the month under review over September 2013. In cumulative terms, Cement production was recorded at 9.7% during April-September 2014-15.

On the flip side, Crude oil and Petroleum Refinery Products, with weightage of 5.22% and 5.94% in index declined by 1.1% and 2.5% in September, 2014 over September, 2013. In cumulative terms, Crude oil and Petroleum Refinery Products declined by 1.2 % and 2.6% during April-June 2014-15. Natural Gas production having weightage 1.71% in IIP index declined by 6.2% in September 2014 as compared to the month in September, 2013. The cumulative index for Natural Gas production during April-September 2014-15 declined by 5.9% over corresponding period of previous year.

Fertilizer production with weightage of 1.25% in IIP index declined 11.6% in September, 2014 over September, 2013. However, the cumulative index of Fertilizer production during April-September 2014-15 registered no growth. Steel production (weight: 6.68%) increased by 4.0 % in September, 2014 over September, 2013. While, its cumulative index during April to September, 2014-15 increased by 2.3% over the corresponding period of previous year.

Core sector output during September was dampened by the base effect as eight core industries output grew by 9 percent during the same month last fiscal. Going forward the festival season will boost the manufacturing sector output.

The CNX Nifty is currently trading at 8,311.35 down by 10.85 points or 0.13% after trading in a range of 8,350.60 and 8,297.70. There were 24 stocks advancing against 26 declining on the index.

The top gainers on Nifty were Jindal Steel & Power up by 2.44%, Tech Mahindra up by 1.99%, Sesa Sterlite up by 1.76%, Zee Entertainment up by 1.74% and SBI up by 1.19%. On the flip side, GAIL India down by 3.91%, Mahindra & Mahindra down by 3.07%, Hero MotoCorp down by 1.84%, BHEL down by 1.83% and Kotak Mahindra Bank down by 1.64% were the top losers.

Asian markets were trading mostly in the red; Hang Seng down by 0.28%, KOSPI Index dropped 0.77%, Jakarta Composite contracted 0.24% and FTSE Bursa Malaysia KLCI was down by 0.11%. On the other hand, Straits Times rose 0.36%, Shanghai Composite increased by 0.61% and Taiwan Weighted was up by 0.25%. The Japanese market remained shut for the trade today for Culture Day holiday.