Benchmarks trade lower in early deals

Extending their southward journey, Indian equity benchmarks have made a negative start as investors reacted negatively to the weak industrial output data announced late Friday that fell by 4.2 per cent in October compared to 2.5% growth in September, led by a 7.6 per cent fall in manufacturing output. However, Retail inflation dropped to 4.4 per cent in November- largely led by falling vegetable prices, and that may soothe some nerve. Sentiments also remained dampened on reports that foreign institutional investors were net sellers in Indian equities worth Rs 864.96 crore on Friday, as per provisional stock exchange data.

Global cues too remained somber as the US markets slumped in last session on global growth concern and plunge in crude prices, overlooking the upbeat report of consumer sentiments. The Asian markets were trading in red at this point of time and the Hang Seng and Japanese market were leading the losers pack. Confidence of Japan’s large manufacturers declined in the fourth quarter, the Tankan’s big manufacturer index slipped to 12 in December from 13 in September.

Back home, marketmen would closely analyze the data on corporate advance tax payment as it would provide clues on Q3 December 2014 corporate earnings. On the sectoral front, public sector undertaking, banking and power witnessed the maximum gain in trade, while software, technology and consumer durables remained the top losers on the BSE sectoral space. The broader indices too were reeling with traction, while the market breadth on the BSE was negative; there were 785 shares on the gaining side against 1088 shares on the losing side while 77 shares remain unchanged.

The BSE Sensex is currently trading at 27312.03, down by 38.65 points or 0.14% after trading in a range of 27105.04 and 27320.31. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.11%, while Small cap index down by 0.29%.

The few gaining sectoral indices on the BSE were PSU up by 0.52%, Bankex up by 0.50%, Power up by 0.31% and Metal up by 0.06% while, IT down by 1.97%, TECK down by 1.59%, Consumer Durables down by 1.41%, Capital Goods down by 0.25% and Healthcare down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.03%, ONGC up by 1.50%, Tata Power up by 1.13%, BHEL up by 0.97% and SBI up by 0.96%. On the flip side, TCS down by 3.30%, Wipro down by 2.04%, Cipla down by 1.39%, Dr. Reddys Lab down by 1.15% and Sesa Sterlite down by 1.04% were the top losers.

Meanwhile, in a shocking development, the index for industrial output (IIP) for the month of October slipped to a three-year low at 162.4, which is -4.2% against street’s expectation of 2.1%, led by a de-growth in manufacturing sector, which stood at -7.6% as against 2.5% (M-o-M). The September IIP had come in at 2.5%. The cumulative growth for the period April-October 2014-15 over the corresponding period of the previous year stands at 1.9%. Industrial production in September was upwardly revised to 2.8% year-on-year from 2.50% earlier.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2014 stood at 125.0, 166.4 and 184.2 respectively, with the corresponding growth rates of 5.2%, -7.6% and 13.3% as compared to October 2013. The cumulative growth in the three sectors during April-October 2014-15 over the corresponding period of 2013-14 has been 2.4%, 0.7% and 10.7% respectively.

On Use-based classification, capital goods production, a barometer for investments in the economy grew by -2.3% for the month under review as against 11.6% for the previous month. The output of basic goods sector grew by 5.8% as against 5.1% in October, while consumer non-durables output stood at -4.3% in October as compared to 1.5% in the previous month.

The output of consumer durables sector continued its contraction, stood at -35.2% in month under review as compared to contraction of 11.3% in September, indicating that consumers are reeling under high inflation which is impacting their spending.

The latest data, which is rude shock to Narendra Modi led government, mounts pressure on RBI to slash rates in its sixth bi-monthly monetary policy statement is scheduled on Tuesday, February 3, 2015, in order to promote industrial growth. The RBI in its policy statement has stressed that once the monetary policy stance changes it would be decisive and enduring. Since there were many uncertainties, RBI in its December 2, 2014 policy review left policy interest rates unchanged. 

The CNX Nifty is currently trading at 8210.00, down by 14.10 points or 0.17% after trading in a range of 8152.50 and 8218.85. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 2.26% and HDFC up by 1.97% and Zee Entertainment up by 1.40% and Bank of Baroda up by 1.34% and ONGC up by 1.26%. On the flip side, TCS down by 3.19%, Tech Mahindra down by 3.16%, HCL Tech. down by 2.25%, Wipro down by 2.24% and Cairn India down by 1.78% were the top losers.

The Asian markets were trading in red, Hang Seng decreased 246.18 points or 1.06% to 23,003.02, Nikkei 225 declined 192.42 points or 1.11% to 17,179.16, Taiwan Weighted dropped 52.45 points or 0.58% to 8,974.88, Jakarta Composite shed 46.79 points or 0.91% to 5,113.64, Straits Times tumbled 30.15 points or 0.91% to 3,293.98, FTSE Bursa Malaysia KLCI slumped 29.25 points or 1.69% to 1,703.74, Shanghai Composite dipped 22.81 points or 0.78% to 2,915.36 and KOSPI Index was down by 5.72 points or 0.3% to 1,915.99.