Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session as investors widened their bets amid a firming trend in other Asian markets. Sentiment got a boost with Finance Minister Arun Jaitley’s statement that the Government was hopeful of passing the Goods & Services Tax (GST) bill in the second half of the budget session, which will resume on April 20.  The GST bill, which has received the approval of the Lok Sabha, is stuck in the Rajya Sabha. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 378.36 crore on March 11, 2016. However, gains remained capped with the report that industrial production declined for a third month in a row, contracting by 1.5 per cent in January due to poor performance of manufacturing sector and lower offtake of capital goods. Meanwhile, banking pack has gained the most after RBI governor Raghuram Rajan commented that the headline fiscal deficit target for the next financial year (at 3.5 per cent) year is a comfort for the central bank has already hiked hopes of a rate cut, while shares of oil & gas producers such as ONGC, Reliance Industries and GAIL India also rose on the back of stability in the crude oil prices.

On the global front, Asian shares started the week higher on Monday, buoyed by gains on Wall Street, firmer crude prices and glimmers of strength in weekend data from China. However, the global investors are expected to remain cautious ahead of policy decisions by the Bank of Japan on Tuesday, the U.S. Federal Reserve on Wednesday and the Bank of England on Thursday.

Back home, stocks from Banking, Auto and FMCG counters were supporting the markets’ uptrend, while those from Metal and PSU counters were adding to the underlying cautious undertone. In scrip specific development, sasken Communication Technologies have rallied 20 after the company has reached a settlement with Spreadtrum Communications and Beijing UniSpreadtrum Technologies in connection with the unauthorized use of Sasken’s Protocol Stack IP, by the said companies. On the other hand, shares of Pfizer have dipped after the company has discontinued the manufacturing and sale of its popular drug “Corex”.

The market breadth on BSE was positive, out of 2169 stocks traded, 1403 stocks advanced, while 630 stocks declined on the BSE.

The BSE Sensex is currently trading at 24884.04, up by 166.05 points or 0.67% after trading in a range of 24801.70 and 24960.51. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.76%, while Small cap index up by 0.80%.

The top gaining sectoral indices on the BSE were Bankex up by 1.30%, Auto up by 1.13%, FMCG up by 0.98%, Oil & Gas up by 0.75%, Capital Goods up by 0.64%, while Metal down by 1.61% and PSU down by 0.30% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.47%, ICICI Bank up by 3.39%, GAIL India up by 2.05%, Adani Ports &Special up by 1.87% and Axis Bank up by 1.49%. On the flip side, Coal India down by 6.66%, Bharti Airtel down by 1.17%, Bajaj Auto down by 0.42%, Dr. Reddys Lab down by 0.32% and Asian Paints down by 0.26% were the top losers.

Meanwhile, contracting for the third month in a row, India’s annual industrial output growth, measured by index of industrial production (IIP), stood at (-)1.5 percent in the month of January 2016 against a revised (-)1.2 percent the previous month, driven by a sharp decline in capital goods production and consumables, signaling that growth momentum in the economy remains vulnerable.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2004-05 for the month of January 2016 stood at 186.3, which is 1.5 percent lower as compared to the level in the month of January 2015. The cumulative growth for the period April-January 2015-16 over the corresponding period of the previous year stands at 2.7 percent.

On the sectoral basis, the growth of manufacturing index which occupies 75.52% weightage in the overall index slipped to -2.8 percent in the month of January as against -2.4 percent in December 2015. Growth in mining slowed down to 1.3 per cent in January from 2.9 per cent in December. However, electricity sector output was the only savior, coming in at 6.6 percent in January versus 3.2 percent in December 2015.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2016 stood at 138.4, 195.0 and 188.3 respectively, with the corresponding growth rates of 1.2 percent, (-) 2.8 percent and 6.6 percent as compared to January 2015. The cumulative growth in three sectors during April-January 2015-16 over the corresponding period of 2014-15 has been 2.1 percent, 2.5 percent and 4.7 percent respectively. In terms of industries, ten out of the twenty two industry groups in the manufacturing sector have shown negative growth during the month of January 2016 as compared to the corresponding month of the previous year.

As per Use-based classification, the growth rates in January 2016 over January 2015 are 1.8 percent in Basic goods, (-) 20.4 percent in Capital goods and 2.7 percent in Intermediate goods.  The Consumer durables and Consumer non-durables have recorded growth of 5.8 percent and (-) 3.1 percent respectively, with the overall growth in Consumer goods being 0.0 percent.

Commenting on the numbers, Reserve Bank of India (RBI) Governor Raghuram Rajan has said the latest industrial growth numbers were disappointing and, though the economy was recovering, the process is volatile, raising hopes that the central bank may cut rates in its review early next month.

The CNX Nifty is currently trading at 7558.15, up by 47.95 points or 0.64% after trading in a range of 7540.55 and 7583.70. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 3.48%, Tata Motors up by 3.36%, GAIL India up by 2.21%, Zee Entertainment up by 2.11% and Adani Ports &Special up by 1.54%. On the flip side, Coal India down by 6.52%, Bharti Airtel down by 1.02%, Asian Paints down by 0.47%, Bajaj Auto down by 0.44% and Dr. Reddys Lab down by 0.27% were the top losers.

Asian markets were trading in green, KOSPI Index was up by 0.06%, FTSE Bursa Malaysia KLCI up by 0.24%, Jakarta Composite up by 0.99%, Taiwan Weighted up by 0.51%, Shanghai Composite up by 2.58%, Hang Seng up by 1.29% and Nikkei 225 was up by 1.69%.