Markets trade in fine fettle in early deals; Sensex regains 28,100 mark

Indian equity markets have made a gap-up opening and are trading in fine fettle in early deals, with key gauges recapturing their crucial 28,100 (Sensex) and 8,650 (Nifty) levels. Sentiments remained up-beat with Jharkhand becoming the third state to ratify the Goods and Services Tax Amendment Bill in a special session of the Legislative Assembly. The government has set a deadline of April 2017 for its rollout. Some support also came with report that foreign portfolio investors (FPIs) bought shares worth net Rs 0.05 crore yesterday as per provisional data released by the stock exchanges.

Firm trade in Asian markets at this point of time too were adding support to domestic markets after minutes of the US Federal Reserve's latest meeting showed policy makers were in no rush to raise interest rates. Back home, in scrip specific developments, Hindalco Industries rose after its wholly owned US subsidiary Novelis Inc has completed refinancing of its $1.15 billion senior notes due 2024. M&M was up by over a percent after the company incorporated a subsidiary company in Mexico viz. Mahindra Mexico S. de. R.L.  Incorporated to promote Mahindra Brand in Mexico and expand its reach into Mexico to promote higher HP tractors.

The BSE Sensex is currently trading at 28118.52, up by 113.15 points or 0.40% after trading in a range of 28077.00 and 28170.83. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.43%, while Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were Power up by 1.07%, Bankex up by 1.06%, Utilities up by 0.93%, Finance up by 0.81% and Auto up by 0.76%, while Metal down by 0.44%, Capital Goods down by 0.30% and FMCG down by 0.07% were the few losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.84%, Adani Ports & Special up by 2.76%, Mahindra & Mahindra up by 1.11%, ICICI Bank up by 1.09% and Axis Bank up by 1.09%. On the flip side, Coal India down by 1.73%, GAIL India down by 0.92%, Larsen & Toubro down by 0.92%, Tata Steel down by 0.84% and Wipro down by 0.52% were the top losers.

Meanwhile, international rating agency Moody’s Investor Service in its latest report titled ‘Steel-Asia: Lower Earnings Keep Outlook Negative’ has said that India’s reform and policy support for infrastructure and manufacturing, as well as increasing urbanisation, will drive steel consumption. The report said that steel demand in India will outpace the regional average as the country’s Gross domestic product (GDP) growth of around 7.5 per cent in 2016 and 2017 based on their forecast, remains among the highest in Asia, while profitability of domestic steel companies will outperform regional peers on account of increase in domestic demand.
Moody’s further said the profitability of Indian steel companies such as Tata Steel and JSW Steel will outperform that of regional peers owing to rising domestic demand and Indian government’s protectionist measures in the form of minimum import prices and anti-dumping duties. In addition, the expected ramp-up of Tata Steel’s greenfield Kalinganagar operations and JSW’s brownfield expansion will help raise the companies’ earnings in 2016.

Rating agency said that it anticipate the profitability of the rated steel producers to remain higher than the regional industry average because most of them are leaders in their respective countries, sell high-margin premium steel products and benefit from business integration and diversification. Asian steel demand will continue to decline by a low-single-digit percentage in the next 12 months owing mainly to slowing demand from China’s manufacturing and property sectors. Also the volume of steel exported from China will grow by a low-single-digit percentage in the next 12 months and flatten out towards the end of 2017, down from 20 per cent year-on-year growth in 2015.

Report stated that Indian and Southeast Asian demand will rise but would not offset the decline in China, which accounts for about 70 per cent of Asian steel consumption. According to China’s General Administration of Customs, countries are taking steps to limit the import of cheap steel, primarily from China, in an effort to protect their own steelmakers, as a result the growth in Chinese steel exports slowed to 9% per cent during the first half of 2016.

India, which accounts for 8 per cent of Asian production, will increase steel production to meet rising domestic consumption but this increase would not be enough to prevent the aggregate regional production decline. Production in other major countries excluding India will also decrease.  Japan, Korea and Taiwan, which export around 40-50 per cent of their steel output, have reduced their production due to flat domestic demand, the lower demand from China, overseas price competition and trade barriers.

The CNX Nifty is currently trading at 8658.65, up by 34.60 points or 0.40% after trading in a range of 8645.05 and 8670.50. There were 39 stocks advancing against 11 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Power Grid up by 2.78%, Adani Ports & Special up by 2.34%, Indusind Bank up by 2.28%, Ultratech Cement up by 1.26% and BHEL up by 1.20%. On the flip side, Coal India down by 1.74%, Larsen & Toubro down by 1.06%, Tata Steel down by 1.00%, Bharti Infratel down by 0.99% and Hindalco down by 0.93% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 9.33 points or 0.46% to 2,053.08, Shanghai Composite gained 12.61 points or 0.41% to 3,122.16, Jakarta Composite surged 67.79 points or 1.26% to 5,439.64 and Hang Seng was up by 364.91 points or 1.6% to 23,164.69. On the flip side, Nikkei 225 declined 169.74 points or 1.01% to 16,575.90, Taiwan Weighted slipped 3.03 points or 0.03% to 9,114.67 and FTSE Bursa Malaysia KLCI was down by 1.37 points or 0.08% to 1,692.95.