Benchmarks trade cautiously ahead of CPI, IIP data

Indian equity benchmarks are trading slightly in the red in early deals on Monday as investors remained on sidelines ahead of major macro data of inflation and industrial production to be announced later in the day that will likely to set the tone for the Reserve Bank of India’s (RBI’s) move on interest rates in its next policy review in February. IIP data is likely to expand by 2.2 per cent in November, while the CPI inflation should accelerate to 5.4 per cent in the month of December as compared to 4.4 per cent reported in the month of November.

Global cues remained subdued with US markets ending lower on Friday following a two-day rally as December’s jobs report gave a mixed view of the economy, with financial shares leading the way lower. The Asian markets were trading mostly in the red at this point of time following a soft finish on Wall Street though sentiment was supported by speculation the Federal Reserve would be patient in tightening policy given the weakness of wages apparent in the jobs numbers.

Back home, on the sectoral front, fast moving consumer goods, capital goods and banking witnessed the maximum gain in trade, while oil and gas, metal and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1210 shares on the gaining side against 709 shares on the losing side while 77 shares remain unchanged.

The BSE Sensex is currently trading at 27433.07, down by 25.31 points or 0.09% after trading in a range of 27333.08 and 27539.55. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.46%, while Small cap index up by 0.70%.

The gaining sectoral indices on the BSE were FMCG up by 1.03%, Capital Goods up by 0.80%, Bankex up by 0.58%, Realty up by 0.50% and Power up by 0.46% while, Oil & Gas down by 1.14%, Metal down by 1.05%, PSU down by 0.31%, Auto down by 0.22% and TECK down by 0.11% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.06%, SBI up by 1.20%, Axis Bank up by 0.93%, Larsen & Toubro up by 0.90% and BHEL up by 0.81%. On the flip side, Coal India down by 3.74%, Bharti Airtel down by 1.75%, GAIL India down by 1.39%, Reliance Industries down by 1.27% and Cipla down by 0.93% were the top losers.

Meanwhile, industry body PHDCCI, in its latest report, has highlighted that Indian Government will have to undertake a massive provisioning of Rs 26 lakh crore for the next five years beginning 2015 to finance infrastructure projects to provide a fillip to 'Make in India' campaign and help the economy attain 7-8 percent growth. Investment norms for pension funds and for insurance companies will have to be liberalised further to utilise their corpus to part finance infrastructure projects.

The report further added that out of the estimated Rs 26 lakh crore almost 80 percent of the amount will be needed for infrastructure projects such as power, roads and urban infrastructure. In roads, investments would be driven towards building national highways and state roads, whereas in power, generation will continue to account for the largest share of investments. Referring to urban infrastructure, municipal bodies are likely to require significant investments for constructing urban roads, expanding its transport and revamping water supply and sewerage infrastructure.

On the source of funding, PHDCCI stressed that 70 percent of the projected Rs 26 lakh crore investment financing will have to be funded through debt, with banks remaining the largest source of finance. External commercial borrowings (ECBs) may provide funds to the extent of 14 percent and the remaining amount is expected to come through bonds issuance. However, the report also raised concern over the asset-liability mismatch for banks, underscoring that it would be difficult for banks alone to finance infrastructure projects as infrastructure project loans have long tenures of 10 to 15 years while bank deposits, the main source of funds, typically have a maturity of less than three years.

The CNX Nifty is currently trading at 8281.85, down by 2.65 points or 0.03% after trading in a range of 8245.60 and 8292.85. There were 21 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.36%, PNB up by 1.86%, Bank of Baroda up by 1.61%, IDFC up by 1.49% and Tech Mahindra up by 1.44%. On the flip side, Coal India down by 3.87%, Cairn India down by 2.61%, Bharti Airtel down by 1.70%, GAIL India down by 1.61% and Reliance Industries down by 1.24% were the top losers.

Asian markets were trading mostly in the red; Shanghai Composite tumbled 69.64 points or 2.12% to 3,215.77, Jakarta Composite decreased by 24.81 points or 0.48% to 5,191.86, Taiwan Weighted slipped by 17.99 points or 0.2% to 9,197.59, FTSE Bursa Malaysia KLCI dipped 5.49 points or 0.32% to 1,726.95, KOSPI Index shed 4.97 points or 0.26% to 1,919.73 and Straits Times was down by 1.74 points or 0.05% to 3,336.70. On the flip side, Hang Seng was down by 13.28 points or 0.06% to 23,933.23.