Benchmarks recover some early losses; still continue to trade in red

Recovering from day’s low, benchmark equity indices have gained momentum; however were still trading below the neutral line on continued selling by funds and retail investors after October industrial production contracted sharply. The index of industrial production (IIP) shrank 4.2% in October, dragged down by manufacturing, which contracted by 7.6%. Besides, weak trend in Asian stocks coupled with depreciation in rupee value also weighed on the sentiment. Some weakness also came with the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 864.96 crore on December 12, 2014. However, data showing retail inflation eased to a fresh low of 4.38% in November --the fifth straight month of decline -- restricting the fall to some extent. Retail inflation measured by the consumer price index (CPI) eased to 4.38% in November, compared with 5.52% a month ago, as vegetable prices fell 6.97%. While fuel and light inflation stood at 3.27%, clothing, bedding and footwear inflation was at 6.97%.

Meanwhile, some traders remained on the sidelines and refrained from any buying activity ahead of WPI data expected to be announced later in the day. Along with the WPI data, traders will keep a watch on Parliament proceedings for cues.

On global front, Asian shares slipped to nine-month lows as oil prices sank to fresh 5-1/2 year lows on concerns about a supply glut and slower global growth, hitting the stocks of energy and commodity producers and exporters. Investors sentiments weakened after US shares posted their biggest weekly fall in 2-1/2-years last week led by energy sector, and as they expect the US Federal Reserve to hint this week that it is getting closer to raising interest rates. Back home, Indian Rupee depreciated by 22 paise to trade at over 10-month low of 62.51 against the greenback in early trade due to increased demand for the US currency from importers, also weigh on domestic sentiment.

On the sectoral front, stocks from Banking, PSU and Power counters were supporting the markets’ uptrend, while those from IT, Consumer Durables and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, shares of ONGC have gained after the company announced three new oil and gas discoveries in Krishan Godavari Basin and Mumbai offshore and said it will pay its shareholders an interim dividend of 100%. Furthermore, shares of Mastek have rallied after Majesco, the insurance arm and a wholly owned subsidiary of the company announced its plans to merge Cover- All Technologies with itself in a 100% stock for stock transaction.

The market breadth on BSE was negative, out of 2241 stocks traded, 1004 stocks advanced, while 1158 stocks declined on the BSE.

The BSE Sensex is currently trading at 27323.93 down by 26.75 points or 0.10% after trading in a range of 27359.54 and 27105.04. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.06%, while Small cap index was lower by 0.03%.

The gaining sectoral indices on the BSE were Bankex up by 0.72%, PSU up by 0.64%, Power up by 0.41%, Metal up by 0.32% and Infrastructure up by 0.08%, while IT down by 1.89%, TECK down by 1.45%, Consumer Durables down by 0.86%, Oil & Gas down by 0.47% and FMCG down by 0.29% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 2.69%, Coal India up by 2.01%, BHEL up by 1.98%, SBI up by 1.08% and NTPC up by 0.79%. On the flip side, TCS down by 3.25%, Cipla down by 2.16%, GAIL India down by 1.88%, Wipro down by 1.51% and Infosys down by 0.97% were the top losers.

Meanwhile, to improve connectivity between ports, the Centre plans to set up a Railway Corporation exclusively to build rail connectivity to 12 major ports. According to the proposal floated by the cabinet, every port is required to have some equity in the company.

Road Transport, Highways and Shipping Minister, Nitin Gadkari emphasized that the government at this juncture wants to allocate highest priority to shipping sector and has already taken the decision to increase the capacity of its ports.  India has 12 major ports- Kandla, Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Ennore, V O Chidambarnar, Visakhapatnam, Paradip and Kolkata (including Haldia) which handle approximately 61 percent of the country's total cargo traffic.

The Railway Corporation, once set up, will implement all planned rail links to these 12 ports. Its connectivity with ports, would ensure goods traffic by railway.

The minister further highlighted the importance of shipping sector and inland waterways and unveiled that new bill, which would give power to Shipping Ministry to convert any river into waterway was ready. He pointed that waterways would be a much cheaper mode of transport, barely costing 50 paise for a km as against Re 1 cost by railway and Rs 1.5 through highways.

The CNX Nifty is currently trading at 8222.45 down by 1.65 points or 0.02% after trading in a range of 8232.60 and 8152.50. There were 23 stocks advancing against 27 declining on the index.

The top gainers on Nifty were HDFC up by 2.68%, Kotak Mahindra Bank up by 2.60%, Indusind Bank up by 2.59%, Coal India up by 2.17% and BHEL up by 1.84%. On the flip side, TCS down by 3.19%, Tech Mahindra down by 2.81%, Cipla down by 2.36%, BPCL down by 1.86% and GAIL India down by 1.86% were the top losers.The Asian markets were trading in red, Hang Seng decreased 1.06%, Nikkei 225 declined 1.27%, Taiwan Weighted dropped 0.53%, Jakarta Composite shed 0.89%, Straits Times tumbled 0.96%, FTSE Bursa Malaysia KLCI slumped 1.69%, Shanghai Composite dipped 0.78% and KOSPI Index was down by 0.27%.