Benchmarks make choppy start on feeble global cues

Pressurized by weak global cues, Indian equity benchmarks have made a choppy start and were trading marginally in red in early deals. Sentiments also remain dampened on an account of mixed set of macro-economic data. India’s factory output again dipped to a negative growth of (-) 2.4 percent in July from an expansion of 1.95 per cent in the month before, dragged down by a negative growth of (-) 3.4 percent in the manufacturing sub-index, which enjoys the maximum weight in the main index, however India’s annual retail inflation eased by 100 basis points to 5.05 percent in August. Losses remained capped after India Ratings and Research has said that the sharp fall in retail inflation in August has increased the chances of monetary easing by the central bank. The rate sensitive sectors are likely to see some action on hopes of rate cut.

On the global front, most of the Asian equity indices were mostly trading in red at this point of time, as the Federal Reserve weighs the case for a US interest-rate increase at a time when central bankers in Europe and Japan are questioning the benefits of further stimulus. Back home, Indian oil and gas sector remained buzzing, as the global rating agency Fitch ratings has said that after growing at a robust 7.8 percent in first quarter, India's fuel consumption growth is likely to moderate at around 5-6 per cent in the current fiscal.

In scrip specific developments, HCC surged over five percent with the company bagging Rs 181.65 crore worth contract by the Department of Atomic Energy (DAE) to build premium high rise residential towers at Indira Gandhi Centre for Atomic Research (IGCAR), Kalpakkam in Tamil Nadu. Dr Reddy’s Laboratories gained in early deals after it has been listed as an index component of the Dow Jones Sustainability Indices (DJSI) 2016 in the pharmaceuticals, biotechnology and life sciences industry group.

The BSE Sensex is currently trading at 28331.86, down by 21.68 points or 0.08% after trading in a range of 28314.16 and 28416.41. There were 18 stocks advancing against 11 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index gained 0.30%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Telecom up by 0.56%, Healthcare up by 0.46%, Basic Materials up by 0.35%, Utilities up by 0.35% and Bankex up by 0.34%, while Metal down by 1.00%, Auto down by 0.16%, IT down by 0.06%, Capital Goods down by 0.05% and TECK down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.48%, NTPC up by 1.11%, ICICI Bank up by 1.02%, Cipla up by 0.89% and SBI up by 0.87%. On the flip side, Coal India down by 2.15%, Tata Steel down by 1.87%, TCS down by 1.17%, HDFC down by 1.04% and Tata Motors down by 0.75% were the top losers.

Meanwhile, global rating agency, Fitch Ratings in its latest report has said that after growing at a robust 7.8 percent in first quarter, India's fuel consumption growth is likely to moderate at around 5-6 per cent in the current fiscal, though the rating agency also expects the consumption growth for petroleum products to remain strong over the medium term.

It has stated that supported by robust passenger- vehicle sales amid low crude-oil prices there is expectation of strong gasoline (petrol) consumption growth of around 9-10 per cent over the medium term. It also expects that an improvement in India's GDP growth will likely boost demand for diesel. 

The report stated that higher refining capacity will boost refining volume and meet rising demand for refined products in the next 12-18 months and expects GRMs to remain stronger than the historical average, which together with higher volumes is likely to support strong operating cash flow in FY2016-17.

Fitch expected high capex for all state-owned oil marketing companies (OMCs) - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), over the medium term due to their plans to upgrade and expand refining capacity. It also said that there is unlikely to be any under-recoveries, as long as crude prices do not rally significantly from current levels. Regarding the downstream companies, Fitch expects their credit profiles to remain stable, despite large capex, supported by strong volume growth and relatively robust refining margins.

The CNX Nifty is currently trading at 8711.25, down by 4.35 points or 0.05% after trading in a range of 8703.45 and 8737.60. There were 30 stocks advancing against 21 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 2.50%, Yes Bank up by 1.65%, NTPC up by 1.44%, Asian Paints up by 1.39% and ICICI Bank up by 1.23%. On the flip side, Coal India down by 2.09%, Tata Steel down by 1.89%, HDFC down by 1.36%, Zee Entertainment down by 1.17% and TCS down by 1.13% were the top losers.

Asian markets were trading mostly in red; Jakarta Composite declined 80.86 points or 1.55% to 5,134.71, Nikkei 225 decreased 60.95 points or 0.36% to 16,668.09, Taiwan Weighted shed 27.1 points or 0.3% to 8,913.73, Shanghai Composite fell 17.71 points or 0.59% to 3,005.80 and FTSE Bursa Malaysia KLCI was down by 15.54 points or 0.93% to 1,661.64. On the flip side, KOSPI Index increased 7.88 points or 0.4% to 1,999.36 and Hang Seng was up by 18.62 points or 0.08% to 23,234.38.