Benchmarks trade on a lackluster note; Nifty below 8200 mark

Indian equity benchmarks traded on lackluster note in late morning session tracking mixed global cues as investors awaited for the Fed policy outcome. Fed is widely expected to raise rates for the first time in 2016 at its two-day meeting that started on Tuesday, with markets pricing in a chance of 0.25% to 0.50% hike. Any aggressive rate hike could hit the market more which is already under pressure over the demonetisation move. The sentiments remained under pressure after the domestic rating agency ICRA said that with consumption being affected by the demonetisation of higher currency old notes, tax revenues of the state governments for the current financial year is likely to be weaker than budgeted. Meanwhile, the Asian Development Bank (ADB) has lowered India’s gross domestic product (GDP) growth forecast to 7% in FY17 from its earlier estimate of 7.4%, citing adverse impact of demonetisation in the short run. The multilateral agency has however retained its earlier projection of 7.8% GDP growth for the country in FY18. Separately, cautiousness prevailed as per latest RBI data, the demand destruction unleashed by the demonetisation drive saw the bank credit shrinking by a whopping Rs 61,000 crore, or 0.8%, during the fortnight to November 25. This plunge in bank credit came after another Rs 59,000-crore dip in the previous fortnight to November 11. Traders failed to draw support from positive economic data that retail inflation fell to a two-year low in November due to the ongoing cash crunch following the demonetization drive, the country’s current account deficit (CAD) narrowed by more than a percentage point to 0.6 percent of GDP at $ 3.4 billion in the July-September, on account of lower trade deficit.

Traders were seen piling up position in Realty, Consumer Durables and Oil & Gas stocks, while selling was witnessed in Metal, PSU and Auto sector stocks. In scrip specific development, Coal India was trading in red after many foreign brokerages cut their target prices for the stock after the mining company reported a 77 percent plunge in consolidated net profit to Rs 600 crore for the quarter ended September 30. The drop in profit was led by a sharp fall in average selling price (ASP) at e-auctions and higher-than-expected mining and staff costs. Amtek Auto was trading under pressure on reporting a standalone net loss of Rs 755.18 crore for the quarter ended on September 30, 2016, due to fall in income. It had posted a net loss of Rs 158.62 crore for the quarter ended September 30, 2015.

On the global front, Asian shares were trading mostly in green, ahead of critical meeting by the US Federal Reserve, which is widely expected to raise interest rates. Japan’s Nikkei was trading flat in green, led by financial and energy stocks. The Bank of Japan quarterly tankan survey showed that sentiment among big manufacturers rose to plus 10 over the three months to December from plus 6 in the previous quarter. A plus figure means the percentage of respondents saying business conditions are favorable exceeds those saying they aren’t. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,200 and 26,700 levels respectively. The market breadth on BSE was positive in the ratio of 1074:949, while 116 scrips remained unchanged.

The BSE Sensex is currently trading at 26649.55, down by 48.27 points or 0.18% after trading in a range of 26624.66 and 26736.34. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.02%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were Realty up by 1.50%, Consumer Durables up by 0.39%, Oil & Gas up by 0.35%, Power up by 0.15% and IT up by 0.13%, while Metal down by 0.71%, PSU down by 0.47%, Auto down by 0.43%, Capital Goods down by 0.39% and Bankex down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.72%, Axis Bank up by 1.45%, NTPC up by 0.79%, Wipro up by 0.79% and Asian Paints up by 0.78%.

On the flip side, Coal India down by 3.16%, HDFC down by 1.12%, Cipla down by 1.00%, Larsen & Toubro down by 0.78% and Hero MotoCorp down by 0.68% were the top losers.

Meanwhile, India’s current account deficit (CAD), the difference between the value of all imports and the value of all exports, has improved significantly in the Second Quarter (July-September) of 2016-17. India’s CAD narrowed to $3.4 billion or 0.6 per cent of GDP in Q2 of 2016-17, significantly lower than $8.5 billion or 1.7 per cent of GDP in Q2 of 2015-16, but higher than $0.3 billion or 0.1 per cent of GDP in the preceding quarter. The contraction in the CAD on year-on-year basis was mainly on account of a lower trade deficit of $25.6 billion brought about by a larger decline in merchandise imports relative to exports. 

As per the data released by Reserve Bank of India (RBI), during April-September 2016, CAD had narrowed to 0.3 per cent of GDP from 1.5 per cent in April-September 2015, on the back of the contraction in the trade deficit. India’s trade deficit narrowed to $49.5 billion in 2016-17 from $ 71.3 billion in 2015-16. Though, it said that private transfer receipts, mainly representing remittances by Indians employed overseas registered a decline of 10.7 percent amounting to $ 15.2 billion, from the previous level a year ago.

In the year 2016-17, net services receipts moderated on annual basis, mainly due to the fall in earnings from software, financial services and charges for intellectual property rights. Net FDI inflows during 6 months rose by more than 28.8 percent over the level during the corresponding period of the previous year. On the other hand, portfolio investment recorded a net inflow of $ 8.2 billion in Q2 of 2016-17 as against $ 3.5 billion net outflow in the year-ago period.

Meanwhile, in the financial account, net inflows of both foreign direct investment and portfolio investment were significantly higher in Q2 on year-on-year basis. Non-resident Indian (NRI) deposits declined to $ 2.1 billion in Q2 of 2016-17 from $4.2 billion in Q2 of 2015-16. During the period ended September, there was an accretion of USD 15.5 billion to foreign exchange reserves.

The CNX Nifty is currently trading at 8196.45, down by 25.35 points or 0.31% after trading in a range of 8192.00 and 8229.40. There were 14 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 1.82%, Axis Bank up by 1.27%, Tata Power up by 1.16%, Asian Paints up by 0.96% and NTPC up by 0.91%.

On the flip side, Coal India down by 3.20%, Aurobindo Pharma down by 2.35%, ACC down by 1.52%, Bosch down by 1.47% and HDFC down by 1.34% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 0.48 points or 0.02% to 2,036.46, Shanghai Composite increased 0.57 points or 0.02% to 3,155.61, Nikkei 225 increased 22.97 points or 0.12% to 19,273.49 and Hang Seng increased 147.65 points or 0.66% to 22,594.35.

On the other hand, Taiwan Weighted decreased 11.16 points or 0.12% to 9,370.98, Jakarta Composite decreased 8.4 points or 0.16% to 5,285.22 and FTSE Bursa Malaysia KLCI decreased 3.78 points or 0.23% to 1,641.50.