Barometer indices fail to capitalize the early lead; end on a flat note

It turned out to be a lackadaisical performance from the benchmark indices on Wednesday as they failed to snap the session in the positive territory and ended on flat note. Rupee depreciation against dollar, foreign fund outflows and slow replenishment in new bills in winter session, weighed on investors’ morale. The winter session is likely to see a united opposition confronting the Narendra Modi government over the problems faced by people post the demonetisation move. The Congress has also sought discussion on issues relating to one rank, one pension (OROP), the situation in Jammu and Kashmir and proposed merger of Railway and Union budgets. However, investors got some comfort with the report that India's headline inflation rate based on the Consumer Price Index (combined) eased to 14 month low of 4.2% in October compared with 4.39% in September and 5% a year ago, raising hopes that the RBI (Reserve Bank of India) may cut monetary rate in its forthcoming monetary policy review next month. The country's wholesale inflation too softened to 3.39% in October from 3.57% in September. Meanwhile, shares of consumer durables companies continued to witness selling pressure with jewellery shares emerging as the top losers for the third straight trading sessions on fears of falling demand in wake of the demonetization. Textile and leather, which are labour-intensive industries, are also facing the heat of centre’s decision to demonetise the higher currencies. Companies are not able to pay wages to workers and not able to procure raw materials. Also, Cigarette companies like ITC, Godfrey Phillips India and NTC Industries ended in red on reports that government may impose complete ban on FDI in tobacco sector. Meanwhile, after trading on firm note for most part of the session, many IT stocks witnessed profit booking in final hour of the trade after Information technology industry body Nasscom cut growth guidance for the industry to 8-10 percent in constant currency terms from 10-12 percent.

On the global front, Asian markets ended mostly higher on Wednesday, tracking overnight gains on Wall Street, as investors awaited more policy details from US president-elect Donald Trump. Japanese shares ended higher as a weaker yen lifted exporters' shares and surging Japanese yields prompted investors to buy bank stocks, while Chinese shares ended largely flat, with heavyweight resource stocks pegged back by fears that sharp falls in Chinese commodities futures markets could prompt regulators to tighten curbs to dampen volatility. The European counterparts on the other hand were trading with a negative bias as investors eased away from the global stock rally in the week following Donald Trump's surprise U.S. election win.

Back home, the local benchmark got off to a positive start in the morning as investors were largely influenced by the supportive leads from Asian markets. The key indices capitalized on the momentum and touched intraday highs in noon session but the indices failed to hold onto the highs and receded to lows in afternoon trades post weak European market opening. Finally, the NSE’s 50-share broadly followed index - Nifty settled with trivial gains of three points above the psychological 8,100 levels, while Bombay Stock Exchange’s Sensitive Index - Sensex shed six points and closed below the psychological 26,300 mark. The market breadth remained pessimistic as there were 1048 shares on the gaining side against 1553 shares on the losing side while 154 shares remained unchanged.

Finally, the BSE Sensex declined 5.94 points or 0.02% to 26298.69, while the CNX Nifty ended up by 3.15 points or 0.04% to 8,111.60. 

The BSE Sensex touched a high and a low of 26621.40 and 26239.21, respectively and there were 12 stocks on gainers side against 18 stocks on the losers side on the index.

The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.56%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were TECK up by 1.78%, IT up by 1.76%, Auto up by 0.98% and Power up by 0.29%, while Consumer Durables down by 1.97%, Metal down by 1.07%, Bankex down by 0.96%, FMCG down by 0.93%, Oil & Gas down by 0.72% were the losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 4.72%, TCS up by 3.21%, Maruti Suzuki up by 2.91%, HDFC up by 2.32% and Bharti Airtel up by 2.20%. On the flip side, ITC down by 2.94%, Dr. Reddys Lab down by 2.89%, Cipla down by 2.55%, Lupin down by 2.27% and Sun Pharma Inds. down by 2.13% were the top losers.

Meanwhile, rising for the second month in a row, India’s merchandise exports stood at $ 23512.70 million, up by 9.59 percent in month of October 2016, as compared to $ 21456.11 million in October 2015, primarily due to healthy growth in shipments of jewellery and engineering products. In rupee term the exports during the month stood at Rs.156941.86 crore, which was 12.43% higher compared to Rs.139589.17 crore during October, 2015. Cumulative value of exports for the period April-October 2016-17 was $ 154913.20 million as against $ 155179.35 million in October 2015-16, registering a negative growth of 0.17 per cent in Dollar terms, while in rupee terms it stood at Rs.1036417.49 crore compared to Rs.998211.69 crore over the same period last year, showing a positive growth of 3.83 per cent.

The country's imports too increased during the month and stood at $ 33673.53 million, up by 8.11 per cent as compared to at $ 31148.33 million in October, 2015. Cumulative value of imports for the period April-October 2016-17 was $ 208083.15 million as against $ 233417.95 million registering a negative growth of 10.85 per cent in Dollar terms, while in rupee terms it stood at Rs.1392221.35 crore against Rs.1501290.90 crore over the same period last year down by 7.27 per cent.

The trade deficit for October 2016 declined by 32.04 per cent to $ 53169.95 million as compared to $78238.60 million in October 2015. The main export sectors which recorded positive growth in the month included engineering products which rose by 13.86 percent, gems and jewellery by 21.84 percent, petroleum by 7.24 percent and chemicals by 6.65 percent compared to the same month last year.

Oil imports during October, 2016 were valued at $ 7141.48 million, up 3.98 percent from oil imports of $ 6868.28 million in the corresponding period last year. Oil imports during April- October, 2016-17 were valued at $ 46438.65 million, 15.78 per cent lower than the oil imports of $ 55139.39 million in the corresponding period last year. Non-oil imports during October, 2016 were estimated at $ 26532.05 million, 9.28 per cent higher than non-oil imports of $ 24280.05 million in October, 2015. Non-oil imports during April-October 2016-17 were valued at $ 161644.50 million, 9.33 per cent lower than $ 178278.56 million in April- October, 2015-16. 

In September, exports grew by 4.62 percent to $ 22.9 billion on the back of expansion in shipments of engineering products and gems and jewellery, arresting the two-month fall. Exports were in negative zone between December 2014 and May 2016 due to weak global demand and slide in oil prices. Shipments witnessed growth only in June this year thereafter again entered into negative zone in July.

The CNX Nifty traded in a range of 8,210.05 and 8,089.40. There were 19 stocks in green against 32 stocks in red on the index.

The top gainers on Nifty were Asian Paints up by 5.52%, Zee Entertainment up by 4.37%, Eicher Motors up by 3.72%, Tech Mahindra up by 3.24% and TCS up by 3.13%. On the flip side, Hindalco Industries down by 3.82%, ITC down by 3.58%, Aurobindo Pharma down by 3.12%, Sun Pharma down by 3.09% and Cipla down by 2.97% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 17.56 points or 0.26% to 6,775.18, Germany’s DAX decreased 35.17 points or 0.33% to 10,699.97 and France’s CAC decreased 13.41 points or 0.3% to 4,523.12.

Asian equity markets ended on a mixed note on Wednesday, as oil prices climbed on hopes for a last-minute OPEC deal and investors speculated that higher US interest rates can boost bank profits. Japanese shares ended higher as a weaker yen lifted exporters' shares and surging Japanese yields prompted investors to buy bank stocks. Market expectations that US President-elect Donald Trump's administration will increase spending and accelerate inflation, leading to higher interest rates, helped the dollar climb to a five-month peak against the yen overnight. Meanwhile, Chinese shares ended largely flat, with heavyweight resource stocks pegged back by fears that sharp falls in Chinese commodities futures markets could prompt regulators to tighten curbs to dampen volatility.