Benchmarks continue weak trade in late morning session

After ending the 2015 on a cheerful note, Indian benchmarks started the New Year on subdued note and continued their sluggish trend in late morning session on account of selling in front line counters in absence of any upside triggers. Sentiments remained bearish on the report that India's core sector contracted 1.3% in November after expanding for six consecutive months, dragged down by a sharp decline in steel production due to weak demand and imports.  The fall in core sector output may curb industrial growth, which reached a five-year high of 9.8% in October.  Furthermore, India's fiscal deficit at the end of November was 87% of the target for the entire financial year, suggesting some struggle over the next four months but the government is still expected to stay within the budgeted figure without resorting to material spending cuts. The fiscal deficit for 2015-16 is budgeted at Rs 5.5 lakh core, or 3.9% of GDP. However, shares of aviation companies like Jet Airways (India), InterGlobe Aviation and SpiceJet - continued their uptrend with all three stocks currently trading at fresh 52-week highs on reports that oil marketing companies reduced aviation turbine fuel (ATF) by 10%. On the other hand, metal stocks witnessed  some beating as an official survey showed activity in China's manufacturing sector contracted for a fifth straight month in December.

Off day’s low, both Sensex and Nifty were trading above the psychological 26,000 and 7,900 levels respectively, with loss of over 1 /10 of a percent. However, the broader markets continue to outperform significantly- BSE Midcap and Smallcap indices are up over half a percent each. Traders were seen piling position in Realty, Capital Goods and Power stocks, while selling was witnessed in Banking, Teck and IT sector stocks. In scrip specific development, shares of KEC International have surged after the company secured new orders worth Rs 1,001 crore in its Transmission & Distribution, Cables and Solar businesses. Furthermore, Bharti Airtel gained after the company acquired the remaining balance paid up share capital i.e. 26 percent of Augere.

The market breadth on BSE was positive, out of 2404 stocks traded, 1727 stocks advanced, while 566 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26086.33, down by 31.21 points or 0.12% after trading in a range of 26008.20 and 26111.51. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59%, while Small cap index up by 0.54%.

The top gaining sectoral indices on the BSE were Realty up by 0.97%, Capital Goods up by 0.76%, Power up by 0.50%, PSU up by 0.38% and Auto up by 0.35%, while Bankex down by 0.34%, TECK down by 0.10% and IT down by 0.09% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.57%, Coal India up by 1.03%, BHEL up by 0.97%, Adani Ports &Special up by 0.88% and Lupin up by 0.69%. On the flip side, Tata Steel down by 1.33%, Sun Pharma down by 1.12%, ICICI Bank down by 0.94%, Bajaj Auto down by 0.84% and GAIL India down by 0.65% were the top losers.

Meanwhile, India’s core sector, after expanding for six consecutive months contracted 1.3% in November, dragged down by a sharp decline in steel production due to weak demand and imports. Registering the steepest fall in over a decade, the output in the eight key infrastructure industries, comprising nearly 38 % of the weight of items included in the Index of Industrial Production (IIP) plunged in November 2015 by 1.3 per cent compared to the same month a year ago, indicating a possible hiccup in the nascent economic recovery and a downturn in industrial production. Last time, the sectors were in negative zone was in April, when they shrank by 0.4%, while the rate of growth rate in October was 3.2%.

According to that data released by the ministry of Commerce and Industry showed the combined Index of eight core industries coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity stands at 166.8 in November, 2015, which was 1.3% lower compared to the index of November, 2014. Its cumulative growth during April to November, 2015-16 was 2.0%.

The decline in the core sector growth for the month of November was mainly on account of contraction in the output of steel, cement and crude oil production. Crude Oil production having weight of 5.22% declined by 3.3% in November, 2015 over -0.1% in November, 2014. Its cumulative index during April to November, 2015-16 decreased by 0.4% over the corresponding period of previous year. Natural gas production with the overall weight of 1.71% contracted by 3.9% in November, 2015, over -2.3% in November last year. Its cumulative index during April to November, 2015-16 declined by 2.3% over the corresponding period of previous year. Steel production having weight of 6.68% declined by 8.4% in November, 2015 over 9.9% in the same period last year. Its cumulative index during April to November, 2015-16 declined by 1.5% over the corresponding period of previous year. Cement production having weight of 2.41% decreased by 1.8 % in November, 2015 over 10.5% in November 2014. Its cumulative index during April to November, 2015-16 increased by 2.1% over the corresponding period of previous year.

On the flip side, Coal production having weight of 4.38% increased by 3.5% in November, 2015 over November, 2014. Its cumulative index during April to November, 2015-16 increased by 4.3% over corresponding period of previous year. Petroleum Refinery production having weight of 5.94%,increased by 2.5 % in November, 2015. Its cumulative index during April to November, 2015-16 increased by 2.5% over the corresponding period of previous year. Fertilizer production having weight of 1.25%, increased by 13.5 % in November, 2015 over - 2.8% in the same month last year. Its cumulative index during April to November, 2015-16 increased by 9.7 % over the corresponding period of previous year.

Meanwhile, Electricity generation having weight of 10.32% recorded no change in November, 2015 over November, 2014. Its cumulative index during April to November, 2015-16 increased by 4.2% over the corresponding period of previous year.

The fall in core sector output may curb industrial growth, which reached a five-year high of 9.8% in October. Part of the contraction in core sector output can be attributed to the fewer number of working days as compared with November 2014 and the shift in the festival was in October last year.

The CNX Nifty is currently trading at 7933.10, down by 13.25 points or 0.17% after trading in a range of 7909.80 and 7940.35. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 1.51%, BHEL up by 0.98%, Adani Ports &Special up by 0.79%, Larsen & Toubro up by 0.69% and Coal India up by 0.67%. On the flip side, Tata Steel down by 1.52%, Sun Pharma down by 1.21%, ICICI Bank down by 0.94%, NTPC down by 0.85% and Kotak Mahindra Bank down by 0.76% were the top losers.

Asian markets were trading in red; Jakarta Composite was up by 0.52%, Hang Seng up by 0.15% and Taiwan Weighted up by 0.7%. On the flip side, Shanghai Composite was down by 0.94%.