Benchmarks fail to extend their northward journey; Nifty protects 8500 level

Indian benchmarks staged a lackadaisical performance on Wednesday’s trading session after remaining in a narrow band to finally settle flat. The frontline gauges took a breather, after showcasing a scintillating performance in last two sessions, as investors turned jittery after the mixed macro data was announced yesterday. Through, Industrial production growth recovered into the positive zone in May after shrinking in the previous month, the muted growth showed just a tepid recovery. The Index of Industrial Production (IIP) rose 1.2 per cent in May from a year earlier. Furthermore, Retail inflation scaled a 22-month high in June because of a sharp increase in vegetable prices, dampening hopes of a rate cut in August even as the small increase indicated that inflation may start cooling soon. Consumer Price Index (CPI) rose 5.77 percent in June 2016 compared with 5.76 percent rise in May 2016. However, investors got some comfort with report that monsoon rains have covered the entire country, two days ahead of schedule despite the week-long delay in its onset. Also, sowing of kharif crops has gathered pace across the country, raising hopes of higher growth in businesses dependent on the farm sector and lower dependence on imports for commodities such as cotton, maize and soyabean. 

On the global front, Asian markets ended mostly in green on Wednesday as accommodative economic policy in major countries whet investors risk appetite damaged by uncertainty from Brexit.  Further, Japanese stocks got a boost from a weaker yen amid expectations that a double-bazooka of fiscal and monetary easing was on the cards after Prime Minister Shinzo Abe's coalition won a landslide victory in upper house elections last week. Chinese stocks edged up, with investors shrugging off the impact of an international tribunal's ruling that denied China's claims in the South China Sea. Meanwhile, European stocks gained ground on Wednesday to take a benchmark regional index near its highest level in more than two weeks, with shares in Spanish banks and AccorHotels outperforming.

Back home, the local indices started the session on positive note as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices sea-sawed around the neutral line though rest of the session. Finally the NSE’s 50-share broadly followed index Nifty, registered single digit losses but managed to settle above the crucial 8,500 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex gained seven points and closed above the psychological 27,800 mark. The broader markets had to bear a brutal assault today as they went on to underperform their larger peers by quite a margin with BSE’s midcap shaving off 0.55% and BSE’s smallcap shelving  0.82%. On the BSE sectoral space, the high beta Realty index remained the top laggard in the space and settled with over two percent laceration followed by the Power and Consumer Durable pockets, which went home with around a percent cut. On the flipside, Metal and information technology (IT) stocks hogged the limelight as they settled with good gains, while the Oil & Gas counter too witnessed hefty buying interests on the report that the oil companies have received the green signal to increase kerosene price by 25 paise every month till April 2017.  Furthermore, footwear stocks gained after the report that the government is working on a package of both fiscal and non-fiscal measures for leather and non-leather footwear sector.

The market breadth remained pessimistic as there were 1018 shares on the gaining side against 1727 shares on the losing side while 164 shares remained unchanged.

Finally, the BSE Sensex ended higher by 7.04 points or 0.03% to 27815.18, while the CNX Nifty dropped 1.55 points or 0.02% to 8,519.50. 

The BSE Sensex touched a high and a low 27928.76 and 27752.14, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.55%, while Small cap index was down by 0.82%.

The top gaining sectoral indices on the BSE were Metal up by 1.83%, IT up by 0.96%, TECK up by 0.75%, Oil & Gas up by 0.36% and PSU up by 0.28%, while Realty down by 2.08%, Power down by 0.88%, Consumer Durables down by 0.81%, Auto down by 0.67% and Capital Goods down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.47%, GAIL India up by 3.09%, ONGC up by 3.01%, Coal India up by 2.00% and Infosys up by 1.46%. On the flip side, Power Grid down by 2.85%, Lupin down by 1.38%, Larsen & Toubro down by 1.20%, Maruti Suzuki down by 1.14% and Asian Paints down by 0.90% were the top losers.

Meanwhile, aided by government reforms, India is expected to increase the share of manufacturing in the overall economy to 25 per cent by 2025 from the current 16 per cent on account of various measures taken by the government, as per a report of Dun & Bradstreet (D&B).

The report said that the various steps taken by the government in terms of measures for ease of doing business, creation of conducive environment for the manufacturing activities, focus on improving industrial policies and FDI enhancement would aid in reviving the manufacturing sector and achieving global competitiveness.

It further noted that for enhancing the share of manufacturing to 25 percent of overall economy would, however, require conducive business environment, investment to support innovation, capital and labour efficiency, shift from low value added sectors towards high value added sectors, efficient business processes, presence of supporting industries along with continued policy thrust amongst other measures. 

As per the report Indian manufacturing companies will have to adapt and increase their focus on developing advanced manufacturing capabilities if they wish to stay competitive at the higher ends of the value chain. It also added that consumption as well as investment demand is likely to remain healthy, support overall growth momentum and push India's nominal GDP to reach $ 6.4 trillion by FY 2025 with real Gross Value Added expected to grow at an average rate of 7.9 per cent till FY 2025.

The CNX Nifty traded in a range of 8,550.25 and 8,493.55. There were 17 stocks advancing against 34 decliners on the index.

The top gainers on Nifty were Tata Steel up by 4.02%, GAIL India up by 3.78%, ONGC up by 2.63%, Coal India up by 2.27% and Idea Cellular up by 2.06%. On the flip side, Power Grid down by 3.09%, BPCL down by 2.64%, Indusind Bank down by 1.98%, Ultratech Cement down by 1.76% and Lupin down by 1.72% were the top losers.

European markets were trading in green, Germany’s DAX was up by 3.51 points or 0.04% to 9,967.58, France’s CAC was higher by 16.48 points or 0.38% to 4,347.86 and UK’s FTSE 100 gained 17.04 points or 0.26% to 6,697.73.

Asian markets ended higher on Wednesday, even as gains remained capped somewhat ahead of Chinese trade data released later in the day after regular hours on the major exchanges. Data from China's Customs Bureau offered few surprises as both exports and imports fell more than expected in June against a gloomy global economic outlook. Investors also await Chinese industrial output and GDP figures this week for further clues about the underlying direction of the world's second-largest economy. Japanese stocks got a boost from a weaker yen amid expectations that a double-bazooka of fiscal and monetary easing was on the cards after Prime Minister Shinzo Abe's coalition won a landslide victory in upper house elections over the weekend. Chinese stocks ended a tad higher as investors bet on further fiscal and monetary stimulus in the second half of 2016, following GDP data on Friday. The international court's stinging rejection of China's territorial claims in the South China Sea too had little impact on market sentiment. Hong Kong's shares ended higher after China's Premier Li Keqiang said its economy is ‘basically stable’ and on course to achieve the annual target of at least 6.5 percent.