Fatigued markets settle with paltry gain

Indian stock markets prolonging the lull for second straight day finished the session on a dull note, marginally above the neutral line as investors at large remained reluctant to build on long positions ahead of the expiry of January derivative contracts tomorrow and the US Federal Reserve meet outcome later today. Sentiments got some support  with Standard & Poor's Rating Services’ statement that Indian economy is less vulnerable to external shocks as it is mainly driven by household consumption and government spending, and not dependent on hot money which can move out quickly. Some support also came with the report that business sentiment among Indian companies rose for the first time in three months in January, largely supported by the first increase in new orders since last June. MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, rose from 60.7 in December to 61.8 in January -- the highest since October 2015, as domestic orders strengthened. However, gains remained capped with the report that manufacturing activity in the country dipped to a one-year low in January, suggesting moderation in growth.  The yearly SBI Composite Index fell below the 50 mark to 47.3 in January -- its lowest level in the past one year. Market participants also remained cautious with the buzz that the government has to make some big bang announcements in the forthcoming Budget to resurrect investment in the public projects, or else the Indian economy can soon catch up the Chinese flu with serious consequences.

On the global front, Asian markets barring China, closed higher mirroring a firm finish on the Wall Street after crude oil prices bounced back on prospects that OPEC and non-OPEC producers may reach a consensus to slash the output citing concerns regarding one of the largest oversupply gluts in decades. However, European equity markets suffered losses as weak corporate earnings triggered concerns regarding the economic slowdown in Eurozone and across globe.

Back home, after getting good start, Indian benchmarks slipped into negative territory on account of selling in frontline stocks and absence of positive triggers ahead of the expiry of January derivatives contracts on Thursday. Thereafter, the frontline indices traded near neutral line, altering between positive and negative territory, though some buying was witnessed in noon trade, but by the end of session the gains vaporized, leaving the NSE’s 50-share broadly followed index Nifty, with a miniscule gain of around two points only to settle above the crucial 7,400 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex- gained around seven points and closed below the psychological 24,500 mark. However, 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, Power counter remained the top gainer in the space with around one and half a percent gains followed by the high beta-Realty index which ended with a gain of over a percent. Among other shares, Pharma stocks witnessed buying interest on the report that the government scrapped the requirement of obtaining a 'No Objection Certificate' from the health ministry for drugs exported to developed countries including the US, Canada, Japan and Australia and the European Union. On the other hand, the Capital Goods index slipped by over half a percent followed by the rate sensitive Banking and Oil & Gas counters which too settled with modest losses. The market breadth remained positive as there were 1361 shares on the gaining side against 1197 shares on the losing side, while 188 shares remained unchanged.

Finally, the BSE Sensex gained 6.44 points or 0.03% to 24492.39, while the CNX Nifty ended up by 1.60 points or 0.02% to 7,437.75.

The BSE Sensex traded in a range of 24645.70 and 24458.13. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices made a positive closing; the BSE Mid cap index ended up by 0.30%, while Small cap index ended up by 0.57%.

The top gaining sectoral indices on the BSE were Power up by 1.61%, Realty up by 1.08%, PSU up by 0.68%, Metal up by 0.34% and TECK up by 0.29%, while Capital Goods down by 0.69%, Oil & Gas down by 0.19%, Consumer Durables down by 0.19% and Banking down by 0.12% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 4.10%, Dr. Reddys Lab up by 2.38%, Sun Pharma Inds. up by 1.67%, Tata Steel up by 1.46% and Tata Motors up by 1.28%. On the flip side, BHEL down by 4.12%, Asian Paints down by 1.98%, Hindustan Unilever down by 1.78%, Hero MotoCorp down by 1.54% and Adani Ports &Special down by 1.37% 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 7,477.90 and 7,419.70. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were NTPC up by 4.39%, Power Grid up by 4.14%, Dr. Reddys Lab up by 2.17%, Idea Cellular up by 2.06% and PNB up by 1.96%. On the flip side, BHEL down by 4.06%, Ambuja Cement down by 2.72%, Asian Paints down by 2.23%, Hindustan Unilever down by 1.95% and Hero MotoCorp down by 1.91% were the top losers.

European markets were trading in red; Germany’s DAX decreased 34.8 points or 0.35% to 9,787.95, UK’s FTSE 100 declined 21.38 points or 0.36% to 5,890.08 and France’s CAC was down by 17.2 points or 0.39% to 4,339.61.

Asian equity markets ended mostly higher on Wednesday, with Japanese shares climbing to a near two-week high in the run-up to a BOJ meeting, after Wall Street stocks rose sharply overnight amid a rebound in oil prices, upbeat consumer confidence and home price data as well as better-than-forecast earnings from companies such as Procter & Gamble, Johnson & Johnson, 3M Co. and Coach Inc. Hong Kong shares rebounded, probably helped by modest improvement in other regional markets though investors remained nervous as oil pulled back again and as they waited on a policy decision from the Federal Reserve later in the day. Chinese shares trimmed early losses to end slightly lower, adding to the previous session's steep losses. Worries about economic growth resurfaced after official data showed profits earned by Chinese industrial enterprises declined at a faster pace in December, weighed down by sluggish domestic demand and severe overcapacity across many manufacturing industries. Industrial profits fell an annual 4.7 percent, marking the seventh straight month of declines.