Benchmarks end a lackluster session with modest gains; Nifty ends above 8250 mark

It turned out to be a lackadaisical performance from the benchmark indices on Friday as they traded in tight range and finished the session only with modest gains after showing huge rally in last session. Investors got some comfort with CBEC Chairman Najib Shah’s statement that the GST Council may in future decide to reduce the tax slabs under the Goods and Services Tax (GST) regime after analyzing the revenue garnered and the compensation payouts to states. He said that any change in tax slab is possible after assessing the revenues and the effect of exemptions and deductions given in the new tax regime and analyzing it with the expenditure. Some support also came with the reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 698.86 crore on December 08, 2016.  Meanwhile, defending the ban on high-currency notes, the government told the Supreme Court that it is not sitting around doing nothing and all the problems will be over in another 10-15 days. On the concern note, oil marketing companies declined after the government announced 0.75% discount on digital purchases of petrol and diesel from state owned outlets, while Auto stocks slipped after the report that the total vehicle sales across categories witnessed a decline of 5.48% at 15.63 lakh units during the month of November 2016. Several pharma stocks also observed selling pressure on the report that the Indian pharmaceutical industry will grow at a slower pace due to sluggish growth in the US market, increased competition leading to price erosion in high single digits and generic adoption reaching saturation levels.

On the global front, Asian equity markets made a mixed closing on Friday as investors turned jittery after the European Central Bank (ECB) trimmed the size of its asset purchase programme and also extended till end 2017. South Korea's benchmark slipped as lawmakers prepared to vote on whether or not to impeach President Park Geun-hye, while Japanese stocks rose to their highest level in a year, supported by Wall Street gains and solid buying of exporters on the back of a weaker yen. China stocks ended higher after a government report showed consumer inflation in the country picked up for a third straight month in November on signs of improving demand. Market participants looked ahead to next week's Federal Reserve meeting amid bets that the US central bank will raise interest rates for the first time in a year.

Back home, the local benchmarks started the session on cheerful note, tracking overnight good gains in US markets and mixed trade in the regional markets. Thereafter, the frontline indices traded in tight range, above neutral line for most part of the session, as investors largely stayed on the sidelines in the absence of any fresh triggers. Finally, the NSE’s 50-share broadly followed index Nifty, ended higher by around two tenth of a percent to settle above the crucial 8,250 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated fifty two points and closed near the psychological 26,750 mark. Moreover, the broader markets traded in tandem with their larger peers and finished the session with modest gains. On the BSE sectoral space, Realty counter remained the top gainer in the space with around two percent gains followed by the high beta- Banking index which ended with gain of over a percent. Good buying was also observed in FMCG, PSU and IT counters. On the flipside, Auto counter languished at the bottom of the table with cut of around half a percent, while the Metal and Capital Goods sectors settled with moderate cuts. The market breadth remained optimistic as there were 1449 shares on the gaining side against 1173 shares on the losing side, while 178 shares remained unchanged.

Finally, the BSE Sensex gained 52.90 points or 0.20% to 26747.18, while the CNX Nifty added 14.90 points or 0.18% to 8,261.75. 

The BSE Sensex touched a high and a low of 26803.76 and 26707.81, respectively and there were 11 stocks on gainers side against 19 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.21%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Realty up by 1.62%, Bankex up by 1.14%, FMCG up by 0.52%, PSU up by 0.50% and IT up by 0.47%, while Auto down by 0.46%, Metal down by 0.23% and Capital Goods down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.41%, ICICI Bank up by 2.35%, ONGC up by 1.61%, Axis Bank up by 1.51% and ITC up by 1.20%. On the flip side, Bajaj Auto down by 2.05%, Coal India down by 1.60%, HDFC down by 1.56%, Mahindra & Mahindra down by 1.43% and Hero MotoCorp down by 0.84% were the top losers.

Meanwhile, domestic rating agency, ICRA in its latest report on Indian pharmaceutical industry has said that the industry will grow at a slower pace due to sluggish growth in the US market, increased competition leading to price erosion in high single digits and generic adoption reaching saturation levels. It noted that growth from the US has come down to less than 9% in first half of 2016-17 despite consolidation and currency benefits and going forward, the growth momentum is likely to face further pressure, though, there is recovery in domestic growth and consolidation benefits of acquired businesses.

According to the report, aggregate revenues of its sample grew by 9.4% during the Q2 FY2017 as against Q1 FY2017 growth at 8.4%. As per the sample, the domestic market growth in Q2 FY2017 recovered to 14.1% as against Q1 FY2017 growth of 7.0% benefitting from favorable monsoon and relatively lower base. Further, companies witnessed moderate growth from the US market with Q2 FY2017 growth at 10.1% as against 15.1% growth in Q1 FY2017 and 5.2% growth in Q2 FY2016. On overseas markets, the rating agency said the operating environment in emerging markets (EMs) like Latin America, CIS countries and South Africa has been affected by confluence of factors, including devaluation of currency, a frequently evolving regulatory landscape and a weakening macro environment.

ICRA said that increased regulatory scrutiny and consolidation of supply chain in the US market resulting in pricing pressure along with increased R&D expenses will have an impact on profitability of Indian pharmaceutical companies. It added that in spite of these ongoing challenges, several Indian pharma companies are increasing their R&D spend, targeting pipeline of specialty drugs, niche molecules and complex therapies. The rating agency also said that continued regulatory interventions are expected to put some pressure in the near term though long term growth prospects remain healthy, given increasing penetration, accessibility and continued new launches.

The CNX Nifty traded in a range of 8,274.95 and 8,241.95. There were 24 stocks in green against 27 stocks in red on the index.

The top gainers on Nifty were SBI up by 2.58%, Bank of Baroda up by 2.30%, Tata Power up by 2.05%, ACC up by 1.86% and ICICI Bank up by 1.85%. On the flip side, Bharti Infratel down by 2.93%, Bajaj Auto down by 2.11%, Grasim Industries down by 1.73%, Eicher Motors down by 1.72% and M&M down by 1.66% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 11.09 points or 0.16% to 6,942.64 and France’s CAC increased 8.83 points or 0.19% to 4,744.31, while Germany’s DAX decreased 14.88 points or 0.13% to 11,164.54.

Asian equity markets showed a mixed closing on Friday despite Wall Street stocks hitting fresh record highs overnight on data showing US labor market strength and the ECB's announcement of changes to the parameters of the asset purchase program. Investors looked ahead to next week's Federal Reserve meeting amid bets that the US central bank will raise interest rates for the first time in a year. Japanese stocks rose to their highest level in a year, supported by Wall Street gains and solid buying of exporters on the back of a weaker yen. Meanwhile, China stocks ended higher after a government report showed consumer inflation in the country picked up for a third straight month in November on signs of improving demand. Consumer prices rose an annual 2.3 percent, exceeding expectations for 2.2 percent and up from 2.1 percent in October. The producer price index surged 3.3 percent from a year earlier, the fastest pace in more than five years. Though, Seoul shares snapped a three-day winning streak as lawmakers prepared to vote on the possible impeachment of President Park Geun-hye, who has been engulfed in a massive corruption and influence-peddling scandal.