Markets trade flat with negative bias in early deals

After a negative opening, Indian equity benchmarks altering between positive and negative territory, are now trading flat with negative bias, in early deals on Monday. The sentiments were under pressure with the finance ministry in its Mid-Year Economic Analysis lowering the projection for FY16 GDP growth to 7-7.5% from 8.1-8.5%. Further, foreign portfolio investors (FPIs) sold shares worth a net Rs 6.99 crore on December 18, 2015, as per provisional data released by the stock exchanges that too kept pressurizing the sentiments. However, the broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices gained around 0.40% each. Some support came in after the truce in Parliament, with the government hopeful about a substantial portion of pending legislative business being completed in the remaining three days of the Winter Session, where 18 bills are pending.  On the sectoral front traders were seen piling up position in Metal, Bankex, Power, PSU and Realty, while selling was witnessed in Consumer Durables, IT and TECK.

In the scrip specific development, Sun Pharmaceuticals Industries has dipped 7% on the National Stock Exchange (NSE) after the company has received a warning letter from US Food and Drugs Administration (FDA) for its manufacturing facility located in Halol in Gujarat. This follows the FDA inspection at the Halol plant last September.

On the global front, the US stocks ended lower on Friday as investors weighed low oil and economic data in the aftermath of the Federal Reserve's rate hike Wednesday. Asian markets were trading mostly in green, after a lackluster start, defying a dive on Wall Street, and the price of Brent crude threatened to plumb lows last seen in 2004 on renewed worries over a global oil glut.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,750 and 25,500 levels respectively.  The market breadth on BSE was positive in the ratio of 1188: 515 while 101scrips remained unchanged.

The BSE Sensex is currently trading at 25514.87, down by 4.35 points or 0.02% after trading in a range of 25413.54 and 25525.61. There were 22 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.47%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Metal up by 0.92%, Bankex up by 0.74%, Power up by 0.71%, PSU up by 0.67% and Realty up by 0.57%, while Consumer Durables down by 0.46%, IT down by 0.44% and TECK down by 0.34% were the losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 2.22%, Tata Steel up by 1.55%, Lupin up by 0.92%, GAIL India up by 0.76% and Axis Bank up by 0.74%. On the flip side, Sun Pharma down by 6.76%, Wipro down by 0.88%, Infosys down by 0.73%, Hindustan Unilever down by 0.53% and Asian Paints down by 0.50% were the top losers.

Meanwhile, the mid-year economic analysis has came up with a somewhat soothing picture of the economy, highlighting that the Indian economy this fiscal was being powered by private consumption and government investment and that the economy was doing 'remarkably well. Though the mid-year economic analysis of 2015-16, has lowered the forecast for GDP growth to 7-7.5 per cent for the fiscal, against 8.1-8.5 per cent growth projected in February this year. Nominal GDP growth is likely to be 8.2 percent for FY2015-16 as a whole. This estimate implies that nominal growth in the second half will be greater than that in the first half based on the likelihood that the fourth quarter will not witness severe expenditure cuts unlike in previous years. CPI inflation is likely to be within the RBI’s target of about 6 percent. The latest GDP estimates suggest that real GDP in the first half of 2015-16 grew at 7.2 percent as compared to 7.5 percent in the first half of FY 2015. In contrast, nominal GDP growth declined substantially from 13.5 percent in H1 FY 2015 to 7.4 percent in H1 FY 2016.

The mid-year analysis has said that decline in nominal GDP growth relative to the budget assumption will pose a challenge for meeting the fiscal deficit target of 3.9 per cent of GDP. Slower-than-anticipated nominal GDP growth (8.2 percent versus budget estimate of 11.5) will itself raise the deficit target by 0.2 percent of GDP. However, it said that tax collections have been buoyant. That plus the additional revenue measures (the Swachh Bharat cess and recent increases in excise) will ensure that central government's target will be met.

Inflation has continued to moderate steadily. Consumer price inflation (measured by the CPI-NS) has declined from 5.4 percent in February 2015 to 5 percent in October 2015. The WPI has been in negative territory for 12 months since November 2014 and is at (-) 3.8 percent in October 2015. It further said that the outlook for inflation would of course depend on international prices and the state of domestic demand.

The analysis further stated that current account deficit has declined and is at comfortable levels (about 1.2 percent of GDP); foreign exchange reserves have risen to $ 352.1 billion as on December 4, 2015 which seem ample, measured against conventional norms; net FDI inflows have grown from $ 15.8 billion in H1 (April-September) 2014-15 to over $ 17 billion in H1 2015-16 which is noteworthy against the background of uncertainty in other capital inflows; and finally, the nominal value of the rupee, measured against a basket of currencies has been steady or even strengthened. Sustained capital inflows, particularly in the form of foreign direct investment and non-resident deposits, adequately financed CAD and led to an accretion to foreign exchange reserves.

It said that revival in the overall growth of the economy is reflected in the growth of index of industrial production (IIP) as well. The overall index of industrial production (IIP) has grown marginally faster in the first six months this year than the last; there is considerable variation in performance across sectors.

The CNX Nifty is currently trading at 7758.40, down by 3.55 points or 0.05% after trading in a range of 7733.45 and 7770.70. There were 27 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 2.18%, Power Grid Corpn. up by 2.03%, Hindalco up by 1.56%,  Tata Steel up by 1.37% and GAIL India up by 1.10%. On the flip side, Sun Pharma down by 6.73%, Ultratech Cement down by 1.05%, Wipro down by 0.90%, Grasim Industries down by 0.85% and Infosys down by 0.48% were the top losers.

Asian markets were trading mostly in green, Taiwan Weighted increased 1.5 points or 0.02% to 8,258.82, KOSPI Index increased 3.54 points or 0.18% to 1,978.86, Shanghai Composite increased 48.64 points or 1.36% to 3,627.61 and Hang Seng increased 97.22 points or 0.45% to 21,852.78

On the flip side, Nikkei 225 decreased 322.48 points or 1.7% to 18,664.32, FTSE Bursa Malaysia KLCI decreased 13.93 points or 0.85% to 1,629.97 and Jakarta Composite decreased 4.63 points or 0.1% to 4,464.03.