New Year cheer leads Indian equities to a positive close on first trading day

The domestic benchmark equity indices managed to gather some impetus in final hours of the session to snap the first trading day of 2016 on an optimistic note, with moderate gains.  Earlier, Indian benchmarks started the day on subdued note due to lack of participation coupled with disappointing macro data that prompted some investors to book profits at lower levels. 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, bellwether indices pared their losses and entered into positive terrain in late afternoon session on the back of short-coverings and hopes that the Reserve Bank of India (RBI) will reduce key lending rates after Thursday's disappointing macro data points.

Eventually the NSE’s 50-share broadly followed index Nifty, settled with marginal gains of around two tens of a percent above the crucial 7950 support level while Bombay Stock Exchange’s Sensitive Index Sense added merely forty three points and closed above the psychological 26,150 mark. Moreover, broader markets showed some resilience by outclassing their larger peers by a big margin as investors carried forward their value hunting in beaten down shares from the midcap and small cap space.

On the BSE sectoral space, Realty counter remained the top gainer in the space with around two percent gains followed by the high beta-Capital Goods index which ended with gains of over a percent. On the flipside, the IT and Teck sectors languished at the bottom of the table with losses of 0.34% and 0.30% respectively, being the only laggards in the space.  Meanwhile, shares that attracted investors in a quiet market, were from aviation sector, such as Jet Airways, which rose 8.28 per cent, SpiceJet, gained 9.44 per cent, while InterGlobe Aviation jumped 8.73 per cent after oil marketing companies reduced aviation turbine fuel (ATF) prices by 10%. Good buying was also witnessed in Telecom stocks like Bharti Airtel, RCom and MTNL on the report that Mobile phone user base crossed 1 billion-mark in October this year to reach 1.03 billion connections, a rise of 0.7% from September. 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.

The market breadth remained in favour of advance, as there were 1990 shares on the gaining side against 834 shares on the losing side, while 127 shares remained unchanged.

Finally, the BSE Sensex gained 43.36 points or 0.17% to 26160.90, while the CNX Nifty ended up by 16.85 points or 0.21% to 7,963.20.

The BSE Sensex traded in a range of 26147.63 and 25941.91. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 0.92%, while Small cap index ended up by 0.88%.

The top gaining sectoral indices on the BSE were Realty up by 1.99%, Capital Goods up by 1.01%, Auto up by 0.93%, Power up by 0.89% and PSU up by 0.83%, while IT down by 0.34% and TECK down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.66%, Adani Ports &Special up by 2.65%, Coal India up by 1.58%, SBI up by 1.45% and BHEL up by 1.03%. On the flip side, GAIL India down by 1.49%, NTPC down by 1.03%, TCS down by 0.94%, Tata Steel down by 0.87% and Mahindra & Mahindra down by 0.64% 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 traded in a range of 7,972.55 and 7,909.80. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Bosch up by 3.02%, Tata Motors up by 2.68%, Adani Ports &Special up by 2.40%, Vedanta up by 2.40% and PNB up by 1.56%. On the flip side, GAIL India down by 1.69%, HCL Tech down by 1.11%, NTPC down by 0.99%, Zee Entertainment down by 0.96% and Tata Steel down by 0.96% were the top losers.