Benchmarks continue to trade in red in noon session

Indian equity markets continued to trade on a daunting note in the noon trade as investors remained wary, ahead of the outcome of the US Federal Reserve's meeting on Wednesday. Investors will wait for clues about future policy and the economic outlook under President-elect Donald Trump from Fed Chair Janet Yellen's press conference. Sentiments remained down-beat with report that foreign portfolio investors (FPIs) sold shares worth a net Rs 2181 crore on December 13, 2016.  However, market participants got some comfort with positive economic data, while the 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. Meanwhile, the demand destruction unleashed by the November 8 demonetization drive saw the bank credit shrinking by a whopping Rs 61,000 crore, or 0.8%, during the fortnight to November 25, 2016. But at the same time, the note ban also had a positive effect, as borrowers, including some default accounts, paid back as much as Rs 66,000 crore during the same period. In contrast, during the same fortnight, banks received huge inflows as people deposited as much as Rs 4.03 trillion into the accounts, which as of December 9 crossed Rs 12 trillion, putting all calculations of the Government into a tizzy.

On the global front, Asian markets were trading mostly higher on Wednesday, tracking the firm closing of US markets. US markets scaled fresh record highs led by a surge in technology and energy stocks ahead of the US Federal Reserve's expected interest rate hike and potential changes in its inflation and growth outlook.

Back home, stocks from Realty, IT and Consumer Durables counters were supporting the markets, while those from Metal, PSU and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, Stocks of state-owned Coal India plunged after the company reported a massive 77% fall in its consolidated net profit at Rs 600 crore for the quarter ended September, hit by drop in sales and higher expenses. On the other hand, Asian Oilfield Services has surged after the company has received Letter of Award (LoA) of contract from Oil India for 2D Seismic Data Acquisition in North Cacher Hills (Karbi analog) the unappraised areas of North East India for an estimated contract value of Rs 63.75 crore.

The market breadth remained pessimistic as there were 1083 shares on the gaining side against 1086 shares on the losing side, while 131 shares remained unchanged.

The BSE Sensex is currently trading at 26660.28, down by 37.54 points or 0.14% after trading in a range of 26624.66 and 26736.34. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.03%, while Small cap index up by 0.11%.

The top gaining sectoral indices on the BSE were Realty up by 1.53%, IT up by 0.34%, TECK up by 0.22%, Consumer Durables up by 0.21% and Oil & Gas up by 0.14%, while Metal down by 0.72%, PSU down by 0.54%, Capital Goods down by 0.38%, FMCG down by 0.27% and Auto down by 0.17% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.41%, Reliance Industries up by 1.69%, Wipro up by 0.91%, Asian Paints up by 0.86% and Tata Motors up by 0.78%. On the flip side, Coal India down by 2.99%, Cipla down by 1.42%, HDFC down by 1.13%, Hero MotoCorp down by 0.90% and Adani Ports &Special down by 0.80% were the top losers.

Meanwhile, government's move to scrap old Rs 500 and Rs 1000 notes has led to retail inflation easing to 2-year low of 3.63 percent in November this year, mainly on the back of lower consumer spending on various food items including vegetables. As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the Consumer Price Index (CPI) (Rural, Urban, Combined) on Base 2012=100 stood at 4.13 percent,  3.05 percent and 3.63 percent respectively compared to 4.78  percent , 3.54 percent  and 4.20 percent respectively in October 2016 and 5.95 percent 4.71 percent 5.41 percent.

The data also showed that Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for November 2016 declined considerably to 2.87 percent 0.75 percent and 2.11 percent respectively compared to 3.86 percent, 2.33 percent, 3.32 percent respectively in October 2016 and 5.75 percent 6.53 percent and 6.07 percent in November 2015.

The overall food inflation was 2.11 percent last month, lower than 3.32 percent recorded in October. Inflation in vegetables category was in the negative zone at (-)10.29 percent in November this year. However, inflation in fruits stood at 4.60 percent, slightly up from October's 4.42 percent. Cereals and products at 4.86 percent too showed a rise in inflation print during the month against 4.40 percent.

Prices of paan, tobacco and intoxicants rose 6.29 percent from a 7.09 percent rise in October. Inflation in the category of ‘prepared meals, snacks, sweets’ was 5.82 percent in November vis-à-vis 6.17 percent in October. This is a proxy for eating out. Similarly, the growth in prices of non-alcoholic beverages slowed to 3.7 percent in November from 4.13 percent in October.

Food and beverages inflation rose 2.56 percent in November compared with a 3.71 percent rise in October. Clothing and footwear inflation was 4.98 percent and fuel inflation at 2.8 percent -- down from October’s inflation of 5.24 percent and 2.81 percent, respectively.

While the demonetization played a major role in lower inflation numbers, higher base effect too played a part. Going further, lowering inflation will make the context favourable for a rate cut by the Reserve Bank of India (RBI) at its next monetary policy review due in February 2017.

The CNX Nifty is currently trading at 8202.90, down by 18.90 points or 0.23% after trading in a range of 8190.70 and 8229.40. There were 16 stocks advancing against 34 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Axis Bank up by 2.40%, Reliance Industries up by 1.75%, HCL Tech up by 1.46%, Tata Power up by 1.16% and Asian Paints up by 1.05%. On the flip side, Coal India down by 3.14%, Aurobindo Pharma down by 2.80%, Bosch down by 1.62%, ACC down by 1.45% and Cipla down by 1.41% were the top losers.

Asian markets were trading mostly in green; KOSPI Index gained 0.03%, Shanghai Composite rose 0.29%, Nikkei 225 added 0.08% and Hang Seng was up by 0.55%. On the flip side, Taiwan Weighted decreased 0.15%, Jakarta Composite slipped 0.16% and FTSE Bursa Malaysia KLCI was down by 0.23%.