Benchmarks extend winning streak for second straight session

Extending their winning streak for second day in a row, Indian equity benchmarks ended the session with a gain of around two tens a percent on Monday. Sentiments got some support with United Nations world economy report, which indicates that India will be the world's fastest growing large economy at 7.3 percent in 2016, improving further to 7.5 percent in the following year. Some support also came with the report that India's index of industrial production (IIP) is likely to grow 4-5 per cent in December 2015. The government's efforts to de-bottleneck investment coupled with early signs of pick-up in urban demand would support production. However, gains remained capped by profit bookings and caution over the upcoming rate setting meeting of the FOMC (Federal Open Market Committee) scheduled for January 27-28. FOMC assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India. Investors also remained cautious with global rating agency Moody's statement that that India's economic exposure to external risks has gone up during the past seven months. Market participants are increasingly concerned about the potential spillover on India's growth story of external risks such as interest rate tightening in the US and China's ongoing slowdown. Meanwhile, volatility ahead of expiry of January derivative contracts has also kept investors on the sidelines.

On the global front, Asian stocks rallied again Monday as investors bet on central bank stimulus measures to support markets after the bloodbath at the start of the year. Apart from ECB President’s hint of stimulus, speculation that China could ease policy to soothe investors fueled a surge across risk-asset classes in the global markets. However, European markets traded with mild losses, as crude oil failed to maintain morning gains and slipped below the $32 a barrel mark, while weak business sentiment numbers from Germany highlighted growing concerns about the outlook for the global economy.

Back home, the benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. But the optimism soon started showing signs of easing in late hours of trade and profit booking in few sectors and drifting European markets weighed down the local bourses by the end of session. However, hefty short covering in the late hours helped the indices to end the session on positive note. Eventually the NSE’s 50-share broadly followed index Nifty, settled with the gains of around two tens of a percent below the crucial 7,450 support level while Bombay Stock Exchange’s Sensitive Index Sense added merely fifty points and closed above the psychological 24,450 mark. Moreover, the broader markets showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin.

On the BSE sectoral space, the Metal counter remained the top gainer in the space with over one and half percent gains followed by the beaten down Consumer Durables pocket which surged over a percent. On the flipside, Capital Goods counter languished at the bottom of the table with a cut of around a percent while the high beta Auto and Power sectors settled with moderate cuts of around half a percent. The market breadth remained in favour of advance, as there were 1730 shares on the gaining side against 924 shares on the losing side, while 166 shares remained unchanged.

Finally, the BSE Sensex gained 50.29 points or 0.21% to 24485.95, while the CNX Nifty ended up by 13.70 points or 0.18% to 7,436.15.

The BSE Sensex traded in a range of 24650.57 and 24433.67. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 0.24%, while Small cap index ended up by 0.94%.

The top gaining sectoral indices on the BSE were Metal up by 1.58%, Consumer Durables up by 1.34%, Realty up by 0.50%, IT up by 0.31% and Bankex up by 0.21%, while Capital Goods down by 0.90%, Auto down by 0.69%, Power down by 0.40% and Oil & Gas down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.73%, Sun Pharma up by 2.25%, ONGC up by 1.57%, Coal India up by 1.52% and ICICI Bank up by 1.46%. On the flip side, GAIL India down by 3.09%, Hero MotoCorp down by 2.52%, Larsen & Toubro down by 2.46%, Tata Motors down by 1.90% and Adani Ports &Special down by 1.49% were the top losers.

Meanwhile, Indian economy is expected to get better in next six months, however lack of investment appetite in the private sector in the backdrop of lower capacity utilisation, excess supply and continuous pressure on profitability are the key areas of concern for the next few quarters, according to the Assocham-Bizcon survey. Assocham asserted that the India Inc. hopes to see better sales volume and improved capacity utilization in the next two quarters but does not expect any uptick in investment and corporate earnings even as the overall macro situation would change for better.

As per the Assocham-Bizcon survey, nearly 63 percent of the survey respondents felt the state of economy would be better in the coming six months. In terms of the domestic investment, 58.3 percent respondents felt there has been no change in the investment plans at the level of individual companies. Further, 62.5 percent respondents in the survey have said that the January-March quarter of 2016 would not see much change in investment levels. As many as 41.7 percent of respondents felt there was a decline in sales volume during October-December 2015 and expected better volumes during January to March 2016, while 45.8 percent expect their sales volumes to increase in future. In terms of future of capacity utilisation, 66.7 percent said the industry will be engaged at higher levels. Besides, 54.2 per cent said there was no change in the cost of credit during October to December 2015.

Sharing concerns brought out by the respondents in terms of pressure on profitability and lack of investment, Assocham secretary general D.S. Rawat has said that global deflationary situation creeping into India in several sectors is hitting investor sentiment. He added that the consumer confidence can return only if there are more job opportunities through higher investment into productive areas of the economy like construction, infrastructure and manufacturing.

The CNX Nifty traded in a range of 7,487.15 and 7,421.20. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Cairn India up by 5.14%, Tata Steel up by 2.93%, Sun Pharma up by 2.37%, ICICI Bank up by 1.87% and Ambuja Cement up by 1.81%. On the flip side, Larsen & Toubro down by 2.67%, GAIL India down by 2.52%, Hero MotoCorp down by 1.99%, Tata Motors down by 1.74% and Adani Ports &Special down by 1.67% were the top losers.

European markets were trading mixed, Germany’s DAX increased by 6.1 points or 0.06% to 9,770.98, while UK’s FTSE 100 declined by 9.43 points or 0.16% to 5,890.58 and France’s CAC lost 2.41 points or 0.06% to 4,334.28.

Asian equity markets ended in green on Monday, as oil prices rose above $32 a barrel after the onset of a massive snowstorm on the US East Coast and Chinese shares began the week on a firm note amid indications that the Chinese government will hold the yuan steady for long. Investors also took heart from a rally on Wall Street Friday that helped US stocks notch their first week of gains in a month. Japan shares ended higher after a sharp rebound in crude oil prices helped global market sentiment, despite a firmer yen and the latest trade figures showing exports falling for a third straight month. The country's exports fell by 8% in December from a year earlier, steeper than estimates for a 7% decline and the biggest drop since 2012. Imports lost 18%, compared with expectations for a 16.4% decline as energy imports fell on cheaper oil prices. The markets in Malaysia are closed today in observance of Thaipusam Day.