Benchmarks recover from day’s low; Nifty holds 7,550 mark

Indian equity benchmarks recovered remarkably after a knee-jerk reaction to Reserve Bank of India’s (RBI) stance of maintaining status quo. RBI’s Governor Raghuram Rajan on Tuesday chose to keep the policy repo rate unchanged on inflation concerns even as it emphasised that it continues to be accommodative. It has also left the cash reserve ratio of scheduled banks unchanged at 4.0 per cent. The reverse repo rate under the LAF will remain unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 7.75 per cent. Some support to the markets came with Raghuram Rajan saying he expects 7.6 per cent GDP growth next fiscal “notwithstanding significant headwinds” and based this on normal monsoons, the large positive terms of trade gains, improving real incomes of households and lower input costs of firms.

On the global front, Asian markets were trading mostly in red at this point of time, as crude oil prices slid on rekindled oversupply fears and after downbeat manufacturing data raised concerns about sluggish global economic growth. Closer home, Banking shares mainly public sector undertakings (PSU) were trading in green and erasing their losses after the Reserve Bank of India (RBI) kept its key policy rate unchanged in its sixth bi-monthly monetary policy review. The broader indices too were trading with traction, while the market breadth on the BSE was positive; there were 1,223 shares on the gaining side against 1,112 shares on the losing side while 106 shares remain unchanged.

The BSE Sensex is currently trading at 24885.60, up by 60.77 points or 0.24% after trading in a range of 24709.99 and 24928.75. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.27%, while Small cap index up by 0.31%.

The top gaining sectoral indices on the BSE were Telecom up by 1.25%, IT up by 0.74%, Capital Goods up by 0.74%, TECK up by 0.71% and Finance up by 0.68%, while Metal down by 1.92%, Oil & Gas down by 1.14%, Energy down by 1.06%, Materials down by 0.55% and Healthcare down by 0.32%, were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.75%, Dr. Reddys Lab up by 1.38%, SBI up by 1.27%, Bajaj Auto up by 1.20% and Larsen & Toubro up by 1.19%. On the flip side, Tata Steel down by 3.65%, ONGC down by 2.16%, Coal India down by 1.48%, NTPC down by 1.43% and Sun Pharma down by 1.31% were the top losers.

Meanwhile, pointing to a low growth in industrial activity, eight core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity, which comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), posted tepid growth of 0.9% in December 2015 from 3.2 per cent in the same month of previous year on the back of decline in production of crude oil, natural gas and steel sectors. The December production numbers are, however, better than those in November which witnessed the worst performance in seven months with the output of eight sectors contracting by 1.3 per cent.

According to that data released by the ministry of Commerce and Industry, the combined Index of Eight Core Industries stands at 175.7 in December, 2015, which was 0.9% higher compared to the index of December, 2014. Its cumulative growth during April to December, 2015-16 was 1.9%.

Crude Oil production having weight of 5.22%, decreased by 4.1% in December, 2015 over December, 2014, due to lower global prices that has squeezed out investments from oil exploration and production activities. Its cumulative index during April to December, 2015-16 decreased by 0.8% over the corresponding period of previous year. The Natural gas production with the overall weight of 1.71% contracted 6.1% in December, 2015. Its cumulative index during April to December, 2015-16 declined by 2.7% over the corresponding period of previous year. Steel production having weight of 6.68% declined 4.4% in December, 2015. Its cumulative index during April to December, 2015-16 declined by 1.9% over the corresponding period of previous year. With the trend in global prices weighing upon the viability of domestic production, the contraction in steel output may persist in the near term, and continue to act as a drag upon core sector growth.

Meanwhile, Coal production having 4.38% weight increased by 6.1% in December, 2015 over December, 2014. Its cumulative index during April to December, 2015-16 increased by 4.6% over corresponding period of previous year. Petroleum Refinery production having weight 5.94% increased 2.1% in December, 2015. Its cumulative index during April to December, 2015-16 increased by 2.4% over the corresponding period of previous year. Fertilizer production having 1.25% weight increased 13.1% in December, 2015. Its cumulative index during April to December, 2015-16 increased by 10.1% over the corresponding period of previous year.

Cement production having weight of 2.41% increased by 3.2% in December, 2015. Its cumulative index during April to December, 2015-16 increased by 2.2% over the corresponding period of previous year. Electricity generation having weight of 10.32% increased 2.7% in December, 2015. Its cumulative index during April to December, 2015-16 increased 4.0 % over the corresponding period of previous year.

The sluggish performance of the eight core infrastructure industries has continued in the month after hitting seven-month low levels of negative (-) 1.3 per cent in November. The poor growth indicates that industrial production would remain subdued and a stable recovery would take more time to materialise. The slow growth could also push down GDP growth projects for the 2015-16 financial year. The government is hoping for growth to stabilize in the balance period of the fiscal to achieve targeted growth levels.

The CNX Nifty is currently trading at 7563.00, up by 7.05 points or 0.09% after trading in a range of 7508.90 and 7576.30. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 3.31%, PNB up by 2.44%, Bharti Airtel up by 1.75%, Dr. Reddys Lab up by 1.47% and Power Grid up by 1.47%. On the flip side, Vedanta down by 3.91%, Tech Mahindra down by 3.66%, Tata Steel down by 3.49%, Cairn India down by 2.81% and ONGC down by 2.29% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 132.78 points or 0.68% to 19,462.72, Nikkei 225 declined 114.55 points or 0.64% to 17,750.68, Jakarta Composite dropped 31.15 points or 0.67% to 4,593.49, Taiwan Weighted fell 25.72 points or 0.32% to 8,131.24, KOSPI Index shed 18.22 points or 0.95% to 1,906.60 and FTSE Bursa Malaysia KLCI was down by 12.24 points or 0.73% to 1,655.56. On the flip side, Shanghai Composite was up by 47.21 points or 1.76% to 2,736.06.