Indian equities trim gain; Nifty above 7,950 mark

After getting a gap-up start, Indian benchmark indices trimmed some of their early gains but continued to trade in green in the noon session on account of sustained buying by investors, as a rebound in oil prices propped up equities worldwide. Sentiments got some support after 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, market participants 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%. 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. Meanwhile, aviation stocks gained traction with report that domestic airlines carried 86.72 lakh passengers during October this year, registering a growth of 23.18% over the 70.39 lakh passengers flown during the same period in the previous year.

On the global front, Asian markets were trading in green on Tuesday, helped by solid overnight gains on Wall Street, though investors were wary of chasing prices higher until President-elect Donald Trump picks his economic team. Crude oil extended gains in Asian trading with US West Texas Intermediate (WTI) up 1 per cent in early deals as the dollar pulled back.  Further, Japanese shares turned slightly positive as damage from an earthquake appeared moderate. 

Back home, stocks from Metal, Oil & Gas and IT counters were supporting the markets’ uptrend, while those from Power, Capital Goods and Realty counters were adding to the underlying cautious undertone. In scrip specific development, Sobha declined after the company has reported marginal fall of 1.03% in its consolidated net profit at Rs 38.40 crore for the quarter ended September 30, 2016 as compared to Rs 38.80 crore for the same quarter in the previous year. On the flip side, HCL Infosystems gained after the company signed a MoU with Omantel to deliver Internet of Things (IOT), Machine to Machine (M2M) services, enhance automation, accelerate efforts to optimise network capabilities and roll-out large-scale ICT services and solutions across Oman.

The market breadth remained pessimistic as there were 1104 shares on the gaining side against 1084 shares on the losing side, while 153 shares remained unchanged.

The BSE Sensex is currently trading at 25809.95, up by 44.81 points or 0.17% after trading in a range of 25797.81 and 26039.70. There were 17 stocks advancing against 12 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.16%, while Small cap index down by 0.03%.

The top gaining sectoral indices on the BSE were Metal up by 1.74%, Oil & Gas up by 0.82%, IT up by 0.73%, TECK up by 0.68% and FMCG up by 0.49%, while Power down by 1.52%, Capital Goods down by 1.50%, Realty down by 0.98%, Bankex down by 0.25% and PSU down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.04%, Hindustan Unilever up by 1.99%, Cipla up by 1.48%, Adani Ports &Special up by 1.29% and Hero MotoCorp up by 1.28%. On the flip side, NTPC down by 2.29%, Larsen & Toubro down by 2.24%, Power Grid down by 1.92%, GAIL India down by 1.61% and SBI down by 1.20% were the top losers.

Meanwhile, in view of the cascading impact of demonetization on the economy activity, domestic rating agency ICRA in its latest report has estimated 40 bps dip in economic growth rate of the country to 7.2 per cent in the second quarter of FY2017, as compared to 7.6 per cent projected earlier and also slightly lower than the year-ago period. Accordingly, the rating agency has also revised its forecasts for growth of GDP and GVA in FY2016-17, downward by 40 bps each to 7.5 per cent and 7.3 per cent, respectively from earlier forecasts of 7.9 per cent and 7.7 cent, respectively. ICRA expects the boost to agriculture and allied activities from the near-normal monsoons to be neutralized by a decline in the growth of industry and services in the second quarter. Therefore, the pace of expansion of Gross Value Added (GVA) at basic prices is expected to ease slightly to 7.2 per cent in Q2 of FY2017 from 7.3 per cent each in Q2 FY2016 and Q1 FY2017.  It expects industrial growth to ease to 5.5 per cent in Q2 from 6.3 per cent a year ago, led by the manufacturing, mining and electricity sub-sectors. The report further said that due to the demonetization drive, consumption-oriented sectors, mainly those involving large cash transactions, such as real estate, construction, jewellery, retail, travel and tourism and trade are likely to experience a lull in the short-term. Also, Cash-based transactions in the unorganized sector too are likely to get disrupted, mainly in rural areas.

Rating agency also noted that the GVA growth for the manufacturing sector has been significantly higher than the volume growth revealed by the IIP for several quarters, partly led by the decline in input costs for corporates in some sectors, reflecting lower commodity prices. It also expected that industrial growth to ease to 5.5 per cent in July-September as compared to 6.3 per cent a year ago, led by manufacturing, mining and electricity sub-sectors. Service sector growth too is expected to cool down to 8.7 per cent in Q2 from 9 per cent a year ago.

The CNX Nifty is currently trading at 7955.05, up by 25.95 points or 0.33% after trading in a range of 7946.35 and 8018.45. There were 35 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.13%, Zee Entertainment up by 2.60%, Hindustan Unilever up by 2.26%, Maruti Suzuki up by 2.04% and Ultratech Cement up by 1.77%. On the flip side, BHEL down by 3.41%, NTPC down by 2.29%, Larsen & Toubro down by 2.18%, Power Grid down by 1.89% and GAIL India down by 1.59% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI gained 0.22%, Jakarta Composite rose 0.24%, KOSPI Index jumped 0.99%, Shanghai Composite advanced 0.76%, Nikkei 225 increased 0.28%, Taiwan Weighted surged 1.02% and Hang Seng was up by 1.28%.