Benchmarks off day’s high; Nifty slips below 8,000 mark

Indian equity benchmarks have made a gap-up opening as traders opted to buy beaten down but fundamentally strong stocks after yesterday’s drubbing. Though, markets came off day’s high and frontline gauges slipped below their crucial 8,000 (Nifty) and 25,900 (Sensex) levels, as traders remained cautious over concern of India’s demonetisation move estimated to pull down gross domestic product growth this financial year from last year’s 7.6 per cent. The domestic rating agency, ICRA has forecasted a 40 bps dip in growth rate to 7.2 per cent in the second quarter of the current fiscal, citing debilitating impact of the demonetisation drive on the economy.

On the global front, Asian markets were rallying at this point of time tailing the gains in the US markets, Japanese markets too has rebounded as markets digested a tsunami warning in the Fukushima region. Back home, aviation stocks like Spicejet and Indigo edged higher with report that domestic airlines carried 86.72 lakh passengers during October this year, registering a growth of 23.18 per cent over the 70.39 lakh passengers flown during the same period in the previous year.

The broader indices too were trading slightly in green, while the market breadth on the BSE was positive; there were 1,040 shares on the gaining side against 835 shares on the losing side while 91 shares remain unchanged.

The BSE Sensex is currently trading at 25853.74, up by 88.60 points or 0.34% after trading in a range of 25816.53 and 26039.70. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading slightly in green; the BSE Mid cap index gained 0.11%, while Small cap index was up by 0.02%.

The top gaining sectoral indices on the BSE were Metal up by 1.20%, IT up by 1.06%, TECK up by 0.90%, Basic Materials up by 0.87% and Energy up by 0.84%, while Realty down by 1.25%, Utilities down by 0.70%, Power down by 0.63%, Capital Goods down by 0.31% and PSU down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & Special up by 2.00%, Maruti Suzuki up by 1.80%, TCS up by 1.58%, Infosys up by 1.30% and Hindustan Unilever up by 1.17%. On the flip side, NTPC down by 1.68%, Dr. Reddys Lab down by 1.61%, GAIL India down by 1.30%, SBI down by 0.97% and Bharti Airtel down by 0.78% were the top losers.

Meanwhile, Global rating agency, Moody's Investors Service in its latest report, on non-financial corporate, has stated that Indian corporate sector is expected to log healthy profit growth in 2017 on the back of sustained economic growth, capacity additions and higher commodity prices. However, it also cautioned that downside risks to this projection stem from GDP growth falling below 6% and/or weakening of commodity prices resulting in lower EBITDA growth. The report said that this projection for corporates is based on expectation of India clocking a GDP growth of 7.5%. Also, the commissioning of new production capacities and stabilising commodity prices will support EBITDA growth of 6-12% over the next 12 to 18 months.

Moody’s said that refinancing needs in 2017 will be manageable for most corporates, given their better access to capital markets and large cash balances. According to Moody's, the upside for Indian corporate sector was the implementation of the Goods and Services Tax (GST), structural reforms and improvement in commodity prices. An improvement in valuation of assets would provide de-leveraging opportunity to corporates. On other hand, it said that downside risk, with regard to telecom companies stems from intensifying competition as it could lead to lower earnings growth or increase in capex for some sectors. Besides, large debt-funded acquisitions or capacity additions that will result in weaker credit metrics could lead to downside. Also, higher interest rates brought on by rising inflation and/or exchange-rate volatility, resulting in a tight funding environment could act as downside risk.

Recently, Moody’s had affirmed India’s sovereign rating at ‘Baa3’ with a positive outlook, saying it expected policymakers to continue reforms to achieve balanced growth and reduce the government’s debt load. It had said that the positive outlook denotes Moody’s expectation that, over time, India’s credit metrics will likely shift to levels consistent with a ‘Baa2’ rating.

The CNX Nifty is currently trading at 7954.50, up by 25.40 points or 0.32% after trading in a range of 7946.35 and 8018.45. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.73%, Zee Entertainment up by 2.04%, Adani Ports & Special up by 1.86%, Maruti Suzuki up by 1.79% and TCS up by 1.66%. On the flip side, BHEL down by 2.29%, Bosch down by 1.91%, NTPC down by 1.55%, Dr. Reddys Lab down by 1.41% and SBI down by 1.32% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI gained 4.43 points or 0.27% to 1,631.71, Jakarta Composite rose 14.23 points or 0.28% to 5,162.55, KOSPI Index jumped 16.81 points or 0.86% to 1,982.86, Shanghai Composite advanced 23.42 points or 0.73% to 3,241.57, Nikkei 225 increased 42.02 points or 0.23% to 18,148.04, Taiwan Weighted surged 113.21 points or 1.25% to 9,154.32 and Hang Seng was up by 288.6 points or 1.29% to 22,646.38.