Benchmarks slip into negative territory in absence of positive triggers

After making a flat but positive start, benchmark equity indices have now slipped into negative territory in absence of positive triggers which could take the markets higher and offloading of positions by participants in view of monthly expiry in the derivatives segment. Besides, continues selling by foreign investors, also weighed on the sentiment. FIIs have been net sellers of Indian equities for 11 consecutive sessions and have sold stocks worth Rs 7,049 crore. however, a firming trend at other Asian markets following overnight gains in US markets, capped losses on the domestic bourses. Some support also came in from reports that direct tax collections during April-November FY15 rose by 5.67 percent to Rs 3.29 lakh crore over the same period a year ago.

On global front, Asian share markets were mostly in the green tracking cues from Wall Street where the mood was quite positive overnight on the back of an upbeat report on U.S. third-quarter GDP. However, buying interest is somewhat subdued in most of the markets in the region ahead of Christmas holidays.  Back home, Indian rupee depreciated by 20 paise to 63.48 against the US currency in early trade due to the dollar’s gains against its rivals overseas, also weighed on the sentiment.

On the sectoral front, stocks from Realty, Auto and FMCG counters were supporting the markets’ uptrend, while those from Infrastructure, Power and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, shares of Manappuram Finance surged after the company’s board has approved the acquisition of 70% stake in Asirvad Micro Finance. Furthermore, UltraTech Cement rose after the company’s board has approved a proposal for the acquisition of cement units of Jaiprakash Associates (JAL) located in Madhya Pradesh.

The market breadth on BSE was positive, out of 2145 stocks traded, 1075 stocks advanced, while 1004 stocks declined on the BSE.

The BSE Sensex is currently trading at 27480.47 down by 25.99 points or 0.09% after trading in a range of 27571.25 and 27460.44. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.25%, while Small cap index up by 0.13%.

The gaining sectoral indices on the BSE were Realty up by 0.87%, Auto up by 0.32%, FMCG up by 0.27% and Capital Goods up by 0.26% while, Infrastructure down by 0.62%, Power down by 0.57%, Oil & Gas down by 0.49%, PSU down by 0.46% and Metal down by 0.35% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 0.87%, ITC up by 0.84%, Mahindra & Mahindra up by 0.82%, Infosys up by 0.48% and ICICI Bank up by 0.27%. On the flip side, Hindalco down by 2.15%, NTPC down by 2.10%, Dr. Reddys Lab down by 1.10%, ONGC down by 1.07% and Sesa Sterlite down by 0.69% were the top losers.

Meanwhile, amid rising concerns over the prevailing high interest rates and sluggish economic growth, Chief Economic Adviser Arvind Subramanian has asserted that there is a need to boost investments to achieve the potential economic growth rate of 7-8 percent in the next few years. Pitching for a rate cut by the Reserve Bank,  Arvind Subramanian stressed that with the inflation witnessing a declining trend, there is room for Apex Bank to cut interest rate even before the next policy which is due on February 3. Referring to investment, Arvind Subramanian stated that the private sector is facing high debt problems and hence it has become imperative to boost public investment to improve the business climate.

In order to contain the inflation, the RBI has kept the interest rates high at 8 percent since January. However, the WPI inflation declined to five and half year low at 0%. On the other hand, Indian GDP growth slowed down to 5.3% y-o-y to 14.39 lakh crore in Q2FY15 as against 5.7% in the previous quarter mainly due to sluggish investment and low demand.

Further, Arvind Subramanian also expressed the concern over the widening fiscal deficit and said that it would be a challenge to restrict the fiscal deficit to 4.1 percent in current fiscal. He also hinted measures like Rs 60,000-80,000 crore expenditure cut to generate additional revenues if it appears difficult to meet fiscal deficit targets this fiscal.

On economic growth, Chief Economic Adviser said that economic indicators have improved enormously as inflation is coming down and current account deficit is under control. Subramanian exuded the confidence that the current fiscal will end with a growth rate of 5.5 percent up from 4.7 percent in the previous year.

The CNX Nifty is currently trading at 8260.60 down by 6.40 points or 0.08% after trading in a range of 8286.40 and 8252.75. There were 19 stocks advancing against 31 declining on the index.

The top gainers on Nifty were Ultratech Cement up by 3.56%, ACC up by 1.54%, Ambuja Cement up by 1.21%, ITC up by 0.92% and Grasim Industries up by 0.89%. On the flip side, NTPC down by 2.20%, Hindalco down by 2.09%, Jindal Steel & Power down by 1.47%, Power Grid Corpn. down by 1.47% and Dr. Reddys Lab down by 1.20% were the top losers.

The Asian markets were trading mostly in the green; KOSPI Index rose 0.28%, Straits Times gained 0.40%, Hang Seng increased 0.07%, Jakarta Composite added 0.52%, Taiwan Weighted surged 0.81% and Nikkei 225 was up by 1.12%. On the flip side, Shanghai Composite decreased 1.88% and FTSE Bursa Malaysia KLCI was down by 0.12%.