Markets remain sluggish in noon trade; Sensex below 26500 mark

Indian benchmark indices continued to trade in red in noon session as funds and retail investors engaged in reducing positions amid a weak trend in Asian markets. Market participants turned jittery after India's trade deficit widened to $13 billion in November from a provisional $10.16 billion last month, it’s the highest since $13.08 billion in July 2015, and sharply wider than the $10.41 billion gap in October. Though, for the third consecutive month, exports recorded a positive growth of 2.29 per cent year-on-year to $20 billion, but imports grew at a faster pace of 10.4 percent to $33.02 billion. Sentiments on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 611.97 crore on December 15, 2016. However, losses remained capped with Chief Economic Advisor Arvind Subramanian’s word that the Indian economy is ‘well cushioned’ to absorb the impact of US Federal Reserve's rate hike. According to Subramanian, India is seen as better equipped than its other emerging market peers to weather the impact of higher U.S. interest rates because of its stronger economic growth and record high foreign exchange reserves of more than $300 billion.

On the global front, Asian stocks were trading mostly lower, reflecting the differing fortunes for developed and emerging market economies faced with higher U.S. interest rates. Higher US interest rates could result in dollar outflows from emerging markets towards the US. However, Japan's Nikkei climbed, tracking a one-year high on a weaker yen and gains on Wall Street overnight. US shares rose on Thursday, brushing off the initial shock of a more hawkish Fed, led by shares of banks seen as beneficiaries of higher rates.

Back home, stocks from Consumer Durables, IT and Auto counters were supporting the markets, while those from Metal, Oil & Gas and PSU counters were adding to the underlying cautious undertone. In scrip specific development, Claris Lifesciences surged after the company entered into a definitive agreement with US-based Baxter International to sell its wholly owned subsidiary Claris Injectables for approximately $625 million (Rs 4,237 crore). Moreover, Phoenix Mills gained after the company acquired 3.75% equity stake of ASPL from K2A on December 14, 2016.

The market breadth remained pessimistic as there were 1054 shares on the gaining side against 1137 shares on the losing side, while 124 shares remained unchanged.

The BSE Sensex is currently trading at 26478.88, down by 40.19 points or 0.15% after trading in a range of 26466.30 and 26594.55. There were 11 stocks advancing against 18 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in red; the BSE Mid cap index was down by 0.42%, while Small cap index down by 0.06%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.55%, IT up by 0.33%, TECK up by 0.27% and Auto up by 0.21%, while Metal down by 1.09%, Oil & Gas down by 0.91%, PSU down by 0.71%, FMCG down by 0.56% and Power down by 0.49% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.24%, Infosys up by 1.01%, HDFC up by 0.91%, Maruti Suzuki up by 0.81% and Asian Paints up by 0.32%. On the flip side, ONGC down by 2.11%, Adani Ports &Special down by 1.67%, Bharti Airtel down by 1.30%, ITC down by 1.24% and ICICI Bank down by 1.21% were the top losers.

Meanwhile, warding off the fears of adverse impact of US rate hike on Indian economy, Chief economic Advisor (CEA) Arvind Subramanian has said that though the interest rate hike by the US Federal Reserve will bring volatility and uncertainty in capital flows into emerging market economies, but India is very well cushioned to absorb the impact. He further said that “If at all there is an impact, it would only be for a short term. India will be less affected than other countries.”

Subramanian said the Fed rate hike was “anticipated” and that the Reserve Bank of India (RBI) had a few days ago taken “account of this in a very sensible way”. He added that ever since the US elections, there has been a big flow of funds from emerging markets. Given that we are a bright spot, the impact on us will be much less.

Economic affairs secretary Shaktikanta Das too observing that the Fed rate hike has ended the uncertainty surrounding the major global event, said the Indian markets have already factored in the impact of the increase. “Projection for growth outlook remains fairly stable and only marginally improved. Markets had factored in the rate hike and we expect that our markets, the currency market, to stabilise after initial ripples or volatility.

The CNX Nifty is currently trading at 8136.55, down by 17.05 points or 0.21% after trading in a range of 8132.90 and 8178.70. There were 18 stocks advancing against 32 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Zee Entertainment up by 1.61%, Tata Motors up by 1.26%, Infosys up by 1.12%, HDFC up by 0.93% and Bharti Infratel up by 0.87%. On the flip side, Aurobindo Pharma down by 3.06%, Hindalco down by 2.95%, ONGC down by 2.20%, BHEL down by 1.52% and Adani Ports &Special down by 1.50% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted slipped 0.36%, Jakarta Composite decreased 0.24%, FTSE Bursa Malaysia KLCI dipped 0.22% and Shanghai Composite was down by 0.04%. On the flip side, KOSPI Index gained 0.24%, Hang Seng increased 0.07% and Nikkei 225 was up by 0.72%.