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

Reversing gears, Indian equity markets have slipped into negative territory in absence of positive triggers which could take the markets higher and selling in frontline blue-chip stocks as investors turned cautious on expectation that consumer inflation probably edged up for the fifth straight month in December, driven by higher food prices. Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 1319.24 crore on January 11, 2016 that kept pressurizing the markets. However, market participants got some relief with finance minister Arun Jaitley’s statement that India can move to a high-growth trajectory of 10 per cent over the next two years with higher spending on infrastructure and by creating and strengthening banks. Some support also came with urban development and parliamentary affairs minister M Venkaiah Naidu’s statement that the Centre will continue with reforms to accelerate India's growth, opposition's efforts to stall key legislations such as the Goods and Services Tax notwithstanding.

On the global front, shares in Asia markets mostly recovered Tuesday, as the Chinese yuan stabilized for the third straight day, though trading remained choppy on the mainland stock market. Overnight, the Dow Jones Industrial Average eked out a gain, rising 0.3%, after stocks veered between gains and losses throughout the session. Meanwhile, Crude oil prices declined on Tuesday to trade near $30 a barrel, making the specter of bankruptcy ever more likely for a significant chunk of the U.S. oil industry. Back home, stocks from Capital Goods, Power and Consumer Durables counters were supporting the markets’ uptrend, while those from IT, Teck and Banking counters were adding to the underlying cautious undertone. Among other shares, aviation stocks witnessed buying interest as lower crude oil prices would boost earnings with aviation fuel comprising nearly 40 percent of the operating costs for the airlines. In scrip specific development, shares of NIIT Technologies have surged after the company has been selected as a strategic partner by Ofcom, the UK’s communications regulator. NIIT Technologies will help Ofcom manage its infrastructure and application systems and offer a customer focused service to improve the users’ experience of ICT services. Furthermore, CMI has rallied after GMO-controlled funds bought more than 10% stake in telecom cables manufacturer for Rs 45 crore through open market transaction.

The market breadth on BSE was positive, out of 2509 stocks traded, 1239 stocks advanced, while 1106 stocks declined on the BSE. 

The BSE Sensex is currently trading at 24706.91, down by 118.13 points or 0.48% after trading in a range of 24683.17 and 24882.30. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mix; the BSE Mid cap index was down by 0.08%, while Small cap index up by 0.17%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.03%, Power up by 0.63% and Consumer Durables up by 0.38%, while IT down by 1.35%, TECK down by 1.29%, Bankex down by 0.89%, Realty down by 0.48% and Metal down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 2.16%, NTPC up by 1.80%, Larsen & Toubro up by 1.59%, BHEL up by 1.14% and GAIL India up by 1.00%. On the flip side, ONGC down by 2.41%, Axis Bank down by 2.10%, Infosys down by 1.96%, TCS down by 1.48% and SBI down by 1.47% were the top losers.

Meanwhile, rating agency Moody’s had said that India’s market outlook for this year will depend on consumption demands, corporate earnings and inflation trends. While maintaining that it expects the country to be the world’s fastest growing major economy this year, it expects that the market trends will depend on whether inflation remains under control and corporate profits revive.

Moody’s further stated that “India enters 2016 on the cusp of a cyclical growth recovery, with inflation under control and the economy benefiting from lower commodity prices.” Notifying that these reasons  place the country at an advantage relative to many similarly rated emerging market peers, Moody’s said that it believes that these advantages will only yield sustainable growth acceleration once corporate and bank balance sheets are repaired, and if the private sector remains internationally competitive.

Additionally, Moody’s said that inflation and corporate profit trends will offer clues as to whether these efforts have created conditions for growth that are sustainable over the next three to four years. While quoting a projection of a boost in consumption following the pay revision for Central government employees and pensioners and a potential upturn in farm, which is expected to boost rural demand, it said that a broad based pick up in investment will only unfold with a lag.

The CNX Nifty is currently trading at 7519.25, down by 44.60 points or 0.59% after trading in a range of 7517.95 and 7588.30. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Adani Ports &Special up by 2.14%, NTPC up by 2.05%, Larsen & Toubro up by 1.74%, BHEL up by 1.20% and Reliance Industries up by 0.84%. On the flip side, ONGC down by 2.15%, Cairn India down by 2.15%, Axis Bank down by 2.12%, Ultratech Cement down by 2.06% and Infosys down by 1.96% were the top losers.

Asian markets were trading mostly in green; KOSPI Index was up by 0.03%, FTSE Bursa Malaysia KLCI up by 0.48%, Shanghai Composite up by 0.38%, Hang Seng up by 0.3% and Jakarta Composite up by 1.26%. On the flip side, Nikkei 225 was down by 2.53% and Taiwan Weighted was down by 0.62%.