Benchmarks trade lower in early deals on weak IIP data

Indian equity benchmarks have made a weak start and are trading in red in early deals on Monday with frontline gauges declining below their crucial 26,700 (Sensex) and 8,250 (Nifty) levels. Sentiments remained dampened with Industrial production shrinking an annual 1.9% in October, worsening from a 0.7% rise in the previous month and 9.8 per cent growth in the year-ago month. Industrial production has contracted in four out of seven months so far this fiscal. In the April-October period, production declined 0.3 per cent compared with 4.8 per cent growth last year.

On the global front, Asian markets were trading mostly in red at this point of time, as traders opted to book profit after posting its biggest weekly rise in nearly three months last week. Extending their northward journey for fifth day in a row, the US markets ended the Friday’s session firmly in green. The strength on Wall Street reflected a continuation of the upward momentum seen following President-elect Donald Trump's surprise victory in last month's elections.

Back home, sentiments remained downbeat, as investors remained cautious amid mixed global cues after the announcement of first-ever pact between Opec and non-Opec members on crude output cut since 2001. Traders also remained on sidelines ahead of domestic trade deficit data, November CPI inflation and WPI inflation to be announced later in the week, while globally Fed rate decision is awaited.

The BSE Sensex is currently trading at 26630.11, down by 117.07 points or 0.44% after trading in a range of 26593.34 and 26725.31. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.59%, while Small cap index was down by 0.14%.

The few gaining sectoral indices on the BSE were Energy up by 0.25%, PSU up by 0.11%, Consumer Durables up by 0.10% and Metal was up by 0.03%, while IT down by 1.09%, Auto down by 1.02%, TECK down by 0.98%, Bankex down by 0.66% and FMCG was down by 0.63% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.73%, Reliance Industries up by 1.00%, HDFC up by 0.69%, Sun Pharma up by 0.45% and SBI up by 0.38%. On the flip side, Tata Motors down by 1.89%, Infosys down by 1.76%, Bajaj Auto down by 1.74%, Hero MotoCorp down by 1.53% and Axis Bank down by 1.47% were the top losers.

Meanwhile, India’s industrial production showed steep decline in the month of October due to sharp drag in capital goods and weak performance of overall manufacturing, indicating that the situation could be worse in November when the impact of demonetization will be visible. Country’s Index of industrial production (IIP) declined to a three-month low of (-) 1.9 percent in October, compared to rise of 0.7 percent in September and a growth of 9.9 percent in October last year.

As per the quick estimates data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, the general Index for the month of October 2016 stood at 178.0, 1.9 percent lower as compared to the level in the month of October 2015. The cumulative growth for the period April-October 2016 over the corresponding period of the previous year stood at (-) 0.3 percent.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2016 stood at 129.4, 183.6 and 203.9 respectively, with the corresponding growth rates of (-) 1.1 percent,(-) 2.4 percent and 1.1 percent as compared to October 2015. The cumulative growth in these three sectors during April-October 2016 over the corresponding period of 2015 was (-) 0.2 percent, (-) 1.0 percent and 4.6 percent respectively.

Manufacturing, which is the main segment, constituting over 75% of IIP fell by 2.4%. In terms of industries, twelve out of the twenty two industry groups in the manufacturing sector showed negative growth during the month of October 2016 as compared to the corresponding month of the previous year.

As per Use-based classification, the growth rates in October 2016 over October 2015 were 4.1 percent in Basic goods, (-) 25.9 percent in Capital goods and 2.9 percent in Intermediate goods.  The Consumer durables and Consumer non-durables recorded growth of 0.2 percent and (-) 3.0 percent respectively, with the overall growth in Consumer goods being (-) 1.6 percent.

The CNX Nifty is currently trading at 8214.55, down by 47.20 points or 0.57% after trading in a range of 8207.70 and 8230.65. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.74%, Zee Entertainment up by 0.76%, Reliance Industries up by 0.73%, HDFC up by 0.57% and Sun Pharma up by 0.49%. On the flip side, Infosys down by 1.99%, Idea Cellular down by 1.89%, Tata Motors down by 1.76%, Bajaj Auto down by 1.75% and BPCL down by 1.73% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 255.69 points or 1.12% to 22,505.29, Shanghai Composite declined 65.52 points or 2.03% to 3,167.37, Taiwan Weighted slipped 37.62 points or 0.4% to 9,355.45 and KOSPI Index was down by 0.2 points or 0.01% to 2,024.49.

On the flip side, Nikkei 225 was up by 116.73 points or 0.61% to 19,113.10.