Benchmarks add losses; Nifty slips below 8100 mark

Indian bourses adding losses, continued to trade in red in the late morning session, with the Sensex losing over 300 points and Nifty falling below the 8100 level, on account of sharp selling in frontline blue chip counters. Sentiments took a hit after a government data, released after trading hours on Friday showed industrial output contracted by 0.8 per cent in April, the first decline in three months, due to drastic fall in capital goods production and manufacturing activities. Disappointed over the latest Index of Industrial Production data, India Inc has said that industrial revival is going to be a major challenge going ahead but expressed hope that the growth will pick up on account of the recent measures taken by the government. Besides, a weak trend in other Asian markets in line with sell-off in the US and Europe on Friday, on renewed worries about the global economy and uncertainty over Britain’s future in the European Union, also weighed on domestic market sentiment. Caution also prevailed ahead of the key central bank meetings this week in the United States, the UK, Switzerland and Japan. All are expected to hold monetary policy steady against a backdrop of caution heightened by the global impact from a possible Brexit. 

Back home, all sectoral indices on the BSE were in the red with Banking index emerging as the top loser down by over one and half percent followed by Power and Realty indices among others. In scrip specific development, shares of Dr. Reddy’s Laboratories gained after the company entered into a definitive agreement with Teva Pharmaceutical Industries and an affiliate of Allergan plc to acquire a portfolio of eight Abbreviated New Drug Applications (ANDAs) in the US for $350 million in cash at closing. Moreover, A2Z Infra Engineering rose after the company has been awarded a contract worth $13.56 from Nepal Electricity Authority for expansion of distribution network in the western region of Nepal.

The market breadth on BSE was pessimistic, out of 2272 stocks traded, 719 stocks advanced, while 1438 stocks declined on the BSE. 

The BSE Sensex is currently trading at 26323.24, down by 312.51 points or 1.17% after trading in a range of 26323.24 and 26468.27. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.83%, while Small cap index lost 0.78%.

The top losing sectoral indices on the BSE were Bankex down by 1.69%, Power down by 1.57%, Realty down by 1.56%, Auto down by 1.45% and Capital Goods down by 1.44%, while there were no gaining sectoral indices on the BSE.

The gainers on the Sensex were Lupin up by 0.71%, Coal India up by 0.67%, Dr. Reddys Lab up by 0.59%, Hindustan Unilever up by 0.23% and GAIL India up by 0.22%. On the flip side, Tata Motors down by 3.95%, ICICI Bank down by 3.70%, Tata Steel down by 3.21%, BHEL down by 2.79% and Axis Bank down by 2.73% were the top losers.

Meanwhile, dragged down by poor manufacturing and capital sectors, India's latest Index of Industrial Production numbers, which monitor industrial production in the country, stated that the country's industrial output shrank 0.8% in April as against 3 per cent growth in the same month last year. This is the first time in three months that the factory output has contracted, prompting industry to demand policy interventions from the government. Disappointing data may add to the clamour for rate cut by the Reserve Bank of India.

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 April 2016 stood at 176.4, which is 0.8 percent lower as compared to the level in the month of April 2015. The cumulative growth for the period April-March 2015-16 over the corresponding period of the previous year stands at 2.4 percent.

On the sectoral basis, the growth of manufacturing index which occupies 75.52 percent weightage in the overall index contracted by 3.1 per cent in April this year compared to a growth of 3.9 per cent in same month last year. Mining sector, showed some improvement recording a growth of 1.4 per cent as against a contraction of 0.6 per cent a year ago. On the positive side, power generation recorded a growth of 14.6 per cent as against a marginally decline of 0.5 per cent a year ago.The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of April 2016 stand at 123.6, 182.6 and 203.0 respectively. The cumulative growth in these three sectors during April-March 2015-16 over the corresponding period of 2014-15 has been 2.2 percent, 2.0 percent and 5.7 percent respectively. In terms of industries, nine out of the twenty two industry groups in the manufacturing sector have shown negative growth during the month of April 2016 as compared to the corresponding month of the previous year.

As per Use-based classification, the growth rates in April 2016 over April 2015 are 4.8 percent in Basic goods, (-) 24.9 percent in Capital goods and 3.7 percent in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 11.8 percent and (-) 9.7 percent respectively, with the overall growth in Consumer goods being (-) 1.2 percent.

This is the first set of production data after the statistics office said the economy grew 7.6 percent in FY16. The Reserve Bank of India expects the country to clock 7.6 percent gross value added growth in the current fiscal, slightly higher than 7.3% in the last one.

The CNX Nifty is currently trading at 8083.45, down by 86.60 points or 1.06% after trading in a range of 8083.20 and 8111.60. There were 10 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Coal India up by 1.01%, BPCL up by 0.82%,  Lupin up by 0.75%, Bharti Infratel up by 0.69% and Dr. Reddys Lab up by 0.56%. On the flip side, Tata Motors - DVR down by 4.56%, Tata Motors down by 3.93%, ICICI Bank down by 3.68%, Idea Cellular down by 3.29% and Tata Steel down by 3.20% were the top losers.Asian markets were trading in red; Hang Seng tumbled 2.47%, Nikkei 225 declined 3.09%, Taiwan Weighted dropped 2.18%, KOSPI Index fell 1.83%, Shanghai Composite decreased 0.78%, Jakarta Composite shed 0.36% and FTSE Bursa Malaysia KLCI was down by 0.57%.