Benchmarks reverse gears; slip into negative territory in absence of positive triggers

Reversing gears, Indian equity markets have now slipped into negative territory in absence of positive triggers which could take the markets higher and profit booking in frontline line blue-chip stocks. Sentiments remained down-beat on the report that India's manufacturing growth slumped to a 25-month low in November due to a combination of lower demand, higher input costs and softening output. The Nikkei Manufacturing Purchasing Managers' Index declined to 50.3 in November from 50.7 in October, data released on Tuesday showed. However, losses remained capped on the hopes of a breakthrough in GST bill and expectations of fresh stimulus from the European Central Bank have supported Indian markets in the past few sessions. Further, although RBI Governor Raghuram Rajan kept the key policy rates unchanged, but affirmed the central bank’s commitment to ease the rates as and when room is available, saying inflation which guides its stance is likely to perform better than expected. Besides, overnight rally of the US markets and a mixed trend at other Asian markets in the opening trade also supported the pace.

On the global front, Asian markets were trading mixed, as investors turned cautious ahead of the European Central Bank's policy meeting and a monthly U.S. job report later in the week that could cement a Fed interest rate hike this month. Further, US markets coming out of the consolidation mood rallied on Tuesday, despite the Institute for Supply Management showing an unexpected contraction in US manufacturing activity. Back on street, stocks from Metal, Consumer Durables and Oil & Gas counters were supporting the markets’ uptrend, while those from Banking, IT and TECK counters were adding to the underlying cautious undertone. In scrip specific development, shares of Ceat have surged after the company and Italian tyre maker, Pirelli has entered an exclusive partnership for distribution of Pirelli’s global range of motorcycle tyres in the Indian market. Furthermore, TV Today Networks has rallied after RBI notified that FIIs/Registered Foreign Portfolios Investors (RFPIs) can now invest up to 26% of the paid up capital of TV Today Networks under the Portfolio Investment Scheme (PIS).

The market breadth on BSE was negative, out of 2405 stocks traded, 1092 stocks advanced, while 1224 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26067.81, down by 101.60 points or 0.39% after trading in a range of 26062.89 and 26256.42. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.19%, while Small cap index down by 0.21%.

The top gaining sectoral indices on the BSE were Metal up by 0.18%, Consumer Durables up by 0.17% and Oil & Gas up by 0.10%, while Bankex down by 0.91%, IT down by 0.70%, TECK down by 0.67%, Capital Goods down by 0.61% and PSU down by 0.59% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 1.13%, Vedanta up by 1.01%, Hindalco up by 0.82%, Tata Steel up by 0.78% and Maruti Suzuki up by 0.68%. On the flip side, SBI down by 1.78%, ICICI Bank down by 1.54%, Bharti Airtel down by 1.30%, BHEL down by 1.28% and Infosys down by 1.04% were the top losers.

Meanwhile, Global ratings agency Moody's Investors Service has said that investment levels in India (Baa3 positive) are showing nascent signs of recovery, driven by an upturn in the capital replacement cycle, and increased public sector expenditure.

The agency in its latest edition of Inside India, a quarterly publication, has however said that a revival in private sector capital expenditure will be required to sustain the recovery in investment activity, because India's weak fiscal position will limit the ability of the government to further expand public sector-led investment.

Moody's further said that lower commodity prices have benefited many Indian corporates, given the country's status as a net importer of raw materials, and its recent history of high inflation. The resultant moderating pace of inflation should result in lower borrowing costs for corporates and lower yields on corporate bonds.

It said that the government's focused investment in power and transport sectors has also helped. The extent to which this spending is effectively implemented could also spur private investment, leading to a marked acceleration in planned capital expenditure. But despite these overall supportive domestic conditions for the country's corporates, potential headwinds loom from a loss of reform momentum. Moody's also pointed out that the Modi administration has not enacted legislation on key reforms so far this year, including a unified goods and services tax, and the Land Acquisition Bill.

The CNX Nifty is currently trading at 7923.60, down by 31.30 points or 0.39% after trading in a range of 7910.90 and 7979.30. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 1.66%, Dr. Reddys Lab up by 1.06%, Tata Steel up by 0.80%, Vedanta up by 0.74% and Hindalco up by 0.63%. On the flip side, SBI down by 2.06%, PNB down by 2.05%, Bank of Baroda down by 1.91%, Idea Cellular down by 1.80% and HCL Tech. down by 1.71% were the top losers.

Asian markets were trading mixed; Nikkei 225 was down by 0.2%, Jakarta Composite down by 0.03%, KOSPI Index down by 0.37% and FTSE Bursa Malaysia KLCI down by 0.06%. On the other hand, Shanghai Composite was up by 0.35%, Taiwan Weighted up by 0.03% and Hang Seng was up by 0.27%.