Benchmarks make cautious start on feeble global cues

Pressurized by feeble global cues, Indian equity benchmarks have made a cautious start and are trading in red terrain in early deals on Monday. Sentiments remained dampened after the US Federal Reserve post its meeting over the weekend indicated increase in interest rate hike during the current calendar year. Back home, losses remain capped with reports that in order to ensure that GST is rolled out by April 1, 2017, the government is trying hard to get the winter session of Parliament advanced by a fortnight to pass the bill. Winter Session of Parliament is normally convened in the third or fourth week of November. Some solace also came with the Economic Affairs Secretary Shaktikanta Das’s statement that India is expected to clock a GDP growth of nearly 8 percent this fiscal on the back of good monsoon rains. He said that Agriculture production is expected to be much better than previous two years and definitely agriculture will contribute significantly to the GDP.

On the sectoral front, stocks related to banking and financial counters were trading lower despite Union Minister Nirmala Sitharaman defending her demand for 2 per cent cut in interest rates by RBI, saying it is essential to boost SMEs and create jobs. In scrip specific developments, Tata Motors remained the top gainer on better-than-expected revenues. The auto major reported 9% growth in consolidated net income and JLR revenue for the June 2016 quarter. However, consolidated net profit for the quarter was down 57% at Rs 2,236 crore. On the flip side, Adani Ports declined around two and a half percent after the promoters pledged shares of the company.

The BSE Sensex is currently trading at 27730.54, down by 51.71 points or 0.19% after trading in a range of 27701.72 and 27827.26. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.37%, while Small cap index was down by 0.18%.

The top gaining sectoral indices on the BSE were Auto up by 0.65%, Industrials up by 0.46%, Energy up by 0.44%, Metal up by 0.36% and Oil & Gas up by 0.22%, while IT down by 1.34%, TECK down by 1.11%, Healthcare down by 0.90%, Realty down by 0.81% and Power down by 0.63% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.48%, Axis Bank up by 1.40%, Reliance Industries up by 0.92%, Tata Steel up by 0.89% and ICICI Bank up by 0.29%. On the flip side, Adani Ports & Special down by 2.41%, TCS down by 1.78%, Wipro down by 1.57%, Bajaj Auto down by 1.48% and Lupin down by 1.40% were the top losers.

Meanwhile, India’s apex body of business organisation, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest quarterly report on manufacturing outlook for the second quarter has stated that India's manufacturing sector may witness higher growth during the July-September quarter due to improvement in export prospects and domestic demand, even as the hiring outlook remains subdued and the interest rate paid by the manufacturers remained high and sticky.

In the report based on survey drawn on the manufacturing outlook from the 308 manufacturing units from large, small and medium enterprises segments with a combined annual turnover of over Rs 4 lakh crore the respondents expected higher growth during July-September quarter, rising to 55 percent as against 53 percent for April-June quarter 2016-17, although, it remained much below the 60 percent for January-March quarter of the previous fiscal. Further it stated that the slight improvement in the outlook for manufacturing production in second quarter of 2016-17 is attributable to various factors including somewhat better outlook for exports compared to previous quarters, and better outlook on domestic demand front too.

Export outlook for manufacturing in September quarter improved slightly as against the expectations for the first quarter. It anticipated export in the second quarter likely to rise by 5 percentage points to 41 percent as against 36 percent in 2016-17. However, hiring outlook remains subdued in manufacturing in coming months as three quarters of the participants in second quarter of 2016-17 are unlikely to hire additional workforce in next three months and it remained almost similar to that recorded for June quarter that is 76 percent. Moreover, average interest rate paid by the manufacturers still reportedly remains high and sticky. The rate is as high as 15 percent with average interest rate at around 11.5 percent per annum.

The report further said that uncertain economic environment, unfavourable market conditions, competition from imports, delayed clearances, inadequate infrastructure (especially availability of power) and cost escalation are some of the major constraints affecting the expansion plans of the industry.

The CNX Nifty is currently trading at 8553.20, down by 19.35 points or 0.23% after trading in a range of 8551.70 and 8583.75. There were 15 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 3.41%, Tata Motors - DVR up by 1.99%, Zee Entertainment up by 1.57%, Axis Bank up by 1.55% and Tata Steel up by 1.11%. On the flip side, HCL Tech down by 2.98%, Adani Ports & Special down by 2.52%, TCS down by 1.72%, Tech Mahindra down by 1.57% and Bajaj Auto down by 1.56% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 79.59 points or 0.35% to 22,829.95, Jakarta Composite declined 68.24 points or 1.25% to 5,370.59, Taiwan Weighted fell 43.97 points or 0.48% to 9,087.75, KOSPI Index slipped 3.54 points or 0.17% to 2,033.96 and FTSE Bursa Malaysia KLCI was down by 3.33 points or 0.2% to 1,679.76.

On the flip aide, Shanghai Composite rose 1.48 points or 0.05% to 3,071.79 and Nikkei 225 was up by 401.18 points or 2.45% to 16,761.89.