Indian equities continue their lackadaisical trade in noon session

Indian equities continued lackadaisical trade hovering around the neutral line in the noon session as investors tuned jittery, after Italian Prime Minister Matteo Renzi resigned following a heavy defeat in a referendum over his plan to reform the constitution. Investors and Europe's politicians fear victory for the opposition 'No' camp could cause political instability and renewed turmoil for Italy's banking sector, which has been hit by fears over its huge exposure to bad loans built up during years of economic downturn. On the domestic front, sentiments were undermined after the Goods and Services Tax (GST) Council failed on Saturday, for the third time in a month, to break the deadlock between the Centre and the states on the control of assessees under the new indirect tax regime. Now, it seems impossible that the GST Bill, scheduled to be placed before Parliament during the ongoing winter session, will be passed. This also casts a shadow on the April 1, 2017 deadline for rolling out GST. The trading sentiments weakened further after Nikkei IHS Markit stated that the performance of India’s service sector weakened in November as a result of cash shortages. New business declined for the first time since June 2015, leading to a solid reduction in activity. Correspondingly, backlogs of work rose, while employment increased only marginally. Dropping from 54.5 to 46.7 in November, the seasonally adjusted headline Business Activity Index registered in contraction territory for the first time since June 2015 and pointed to the sharpest reduction in output for almost three years.

On the global front, Asian markets were trading mostly lower on Monday as investors feared the “no” vote in Italy’s referendum on Sunday could hurt the country’s banking system and spark global contagion. Banking stocks across Asia declined on worries of any spillover impact. Further, oil prices sagged after last week's surge in response to an agreement between key producers Opec and Russia to cut output from next month. The surprise deal on Wednesday sent crude flying around 15 per cent last week.

Back home, stocks from FMCG, Auto and Metal counters were supporting the markets’ uptrend, while those from IT, Consumer Durables and Oil & Gas counters were adding to the underlying cautious undertone. In scrip specific development, Procter and Gamble Hygiene and HealthCare (P&G) edged higher after the company reported a 50% year on year jump in net profit at Rs 103.72 crore for the quarter ended September 30, 2016, helped by higher volume growth. Moreover, Kolte-Patil Developers has surged after the company reported a strong 54% year on year (YoY) jump in net profit at Rs 19.3 crore for the quarter ended September 2016, on back of healthy volume growth.

The market breadth remained optimistic as there were 1262 shares on the gaining side against 975 shares on the losing side, while 118 shares remained unchanged.
The BSE Sensex is currently trading at 26192.32, down by 38.34 points or 0.15% after trading in a range of 26151.16 and 26273.29. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.27%, while Small cap index up by 0.14%.

The top gaining sectoral indices on the BSE were FMCG up by 0.80%, Auto up by 0.78%, Metal up by 0.37%, PSU up by 0.14% and Bankex up by 0.08%, while IT down by 0.79%, Consumer Durables down by 0.72%, TECK down by 0.49%, Oil & Gas down by 0.26% and Realty down by 0.23% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.80%, Bharti Airtel up by 2.13%, Hindustan Unilever up by 1.80%, Asian Paints up by 1.70% and Mahindra & Mahindra up by 1.32%. On the flip side, HDFC down by 2.58%, TCS down by 1.72%, Wipro down by 1.24%, Power Grid down by 1.03% and HDFC Bank down by 0.63% were the top losers.

Meanwhile, in a bid to support the domestic steel industry suffering from cheap imports, the government has decided to extend further the Minimum Import Price (MIP) regime on 19 colour-coated and galvanised steel products by another two months till February 4, 2017. The 19 products include semi-finished products of iron or non-alloyed steel, flat-rolled products of different widths, bars and rods. The MIP ranges between $643-752 per tonne.

The Directorate General of Foreign Trade, under the ministry of commerce and industry, notified that “As per the applicable laws and powers conferred to the department by the government of India, the period of MIP has been extended on 19 steel products by two months till 4 February.” 

Government in February had imposed MIP, ranging between $341 to $752 per tonne on 173 steel products for a period of six months, in order to guard domestic steel producers against cheap in-bound shipments. Later, in August it decided to extend the MIP on 66 steel products for a period of two months as against 173 items earlier.

Indian Steel Association had asked the government to extend MIP on certain products by saying its imposition has marginally improved the industry’s viability after a long period of subdued prices. Accelerating imports at predatory prices from steel surplus countries like China, Japan and Korea have been a major concern area for the domestic industry since September 2014. However, despite repeated pleas by the industry, the steel ministry was not in favour of the extension of the MIP for 30 semi-finished products such as slabs and billets, in October as imports of these items have been negligible. Also, there are fears of huge backlash in the international arena from WTO non-compatible measures like MIP.

The CNX Nifty is currently trading at 8076.65, down by 10.15 points or 0.13% after trading in a range of 8071.90 and 8103.30. There were 25 stocks advancing against 25 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Lupin up by 2.91%, Bharti Airtel up by 2.02%, Bosch up by 2.01%, Hindustan Unilever up by 1.92% and Asian Paints up by 1.64%. On the flip side, HDFC down by 2.43%, Grasim Industries down by 1.83%, TCS down by 1.68%, Zee Entertainment down by 1.57% and Wipro down by 1.35% were the top losers.

Most of the Asian markets were trading in red, Nikkei 225 declined by 0.87%, Hang Seng was down by 0.55%, Shanghai Composite was lower by 1.43%, KOSPI Index decreased by 0.27% and Taiwan Weighted was tad down by 0.31%. On the other hand, FTSE Bursa Malaysia KLCI rose 0.04% and Jakarta Composite was up by 0.37%.