Indian equities slip to day’s low; Metal, PSU stocks drag

Indian equity markets have drifted to the session’s lows in the noon trades on sustained capital outflows by foreign funds and heavy selling by retail investors amid a weak trend overseas. Foreign portfolio investors (FPIs) continued their relentless sell-offs and sold domestic equities worth Rs 1178.08 crore on December 21, 2016. Sentiments remained down-beat with Prime Minister Narendra Modi’s top economic adviser Bibek Debroy’s statement that the negative shock from demonetisation will last until the end of March, though he also said that improved growth next year should fully compensate for the loss. Also, the minutes of last rate-setting meeting of the Reserve Bank of India’s monetary policy committee (MPC) showed that it shifted its focus towards inflation, while playing down concern about economic growth. Moreover, the broader markets too traded on a daunting note with over one percent losses, underperforming their larger peers by quite a margin. Traders remained cautious with Chief Executive Officer of NITI Aayog Amitabh Kant’s statement that just one per cent of India's more than 1.25 billion population pays Income Tax and the country cannot afford as high as 95 percent of its economy making cash transactions. Meanwhile, investors will keep an eye on the two-day Goods & Services Tax (GST) Council meet which begins later in the day. The GST Council will discuss drafts of the model GST, integrated GST and states' compensation Bills.

On the global front, Asian markets lost ground on Thursday, tracking a negative close on the Wall Street overnight. The shares on most major Asian indices wavered in a tight range as thin trading persists this Thursday, as investors wound down ahead of the Christmas/ Year-end holiday-break. Japanese market edged down from one-year highs as market participants took profit from recent gainers such as financials in otherwise thinning trade ahead of the holiday season. Further, Singapore shares hit their lowest in more than three weeks and were headed for a fourth straight session of declines, pulled down by financial and industrial stocks.

Back on street, all sectoral indices on the BSE were trading in the red with Metal index emerging as the top loser down by around two and half percent followed by PSU and Capital Goods indices among others. In scrip specific development, Sun Pharmaceutical Industries gained on the company’s plans to acquire a branded oncology product, Odomzo, from Novartis. The agreement has been signed between subsidiaries of both the companies and will close following anti-trust clearance and further closing conditions. On the flip side, Aurobindo Pharma declined on the report that USFDA has issued Form 483 observations against Unit I of Aurobindo Pharma in Hyderabad, India.

The market breadth remained pessimistic as there were 456 shares on the gaining side against 1784 shares on the losing side, while 121 shares remained unchanged.

The BSE Sensex is currently trading at 26011.98, down by 230.40 points or 0.88% after trading in a range of 26004.96 and 26248.45. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.41%, while Small cap index down by 1.20%.

The top losing sectoral indices on the BSE were Metal down by 2.44%, PSU down by 1.43%, Capital Goods down by 1.37%, Bankex down by 1.22% and Power down by 1.17%, while there were no gainers on BSE sectoral indices.

The only gainers on the Sensex were Hindustan Unilever up by 0.61%, Sun Pharma up by 0.33% and Tata Motors up by 0.05%. On the flip side, Tata Steel down by 3.00%, Adani Ports &Special down by 2.30%, SBI down by 2.21%, ONGC down by 2.11% and Bharti Airtel down by 1.84% were the top losers.

Meanwhile,  Reserve Bank of India’s monetary policy committee (MPC) expressed concern over rising risk from global oil prices, and domestic non-oil and non-food inflation, in the December policy all the members of Monetary Policy Committee Meeting (MPC) have voted for keeping the policy repo rate unchanged at 6.25 per cent.

RBI Governor Urjit Patel has said that the central bank needs to stay focused on the medium term and strive to achieve the inflation target of 5 percent for Q4 of 2016-17 and securing 4 percent the central point of the notified target range as the impact of demonetisation of Indian currency notes of Rs 500 and Rs 1000 on the economy is uncertain, though temporary. He also said that more recently, the steady easing of food inflation has brought about a decline in overall inflation expectations in the latest round of the survey and also added that the risk arising out of global financial conditions are also not showing any signs of abating.
Patel further said that inflation in advanced economies is turning up incipiently and is expected to rise significantly in 2017 from 2016 levels. He added that the RBI in its fifth bi-monthly policy kept interest rate unchanged despite calls for lowering it while it slashed the economic growth projection by half a per cent to 7.1 in the first policy review post demonetisation. 

The CNX Nifty is currently trading at 7989.40, down by 71.90 points or 0.89% after trading in a range of 7988.95 and 8046.45. There were 7 stocks advancing against 43 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Bharti Infratel up by 0.60%, Hindustan Unilever up by 0.58%, Zee Entertainment up by 0.54%, Sun Pharma up by 0.24% and Wipro up by 0.15%. On the flip side, Hindalco down by 3.17%, Tata Steel down by 2.74%, Adani Ports &Special down by 2.46%, SBI down by 2.41% and Bank of Baroda down by 2.38% were the top losers.

Asian markets were trading in red; Hang Seng decreased 0.74%, Nikkei 225 slipped 0.3%, Taiwan Weighted fell 0.93%, Jakarta Composite shed 0.35%, Shanghai Composite decreased 0.16%, FTSE Bursa Malaysia KLCI dipped 0.13% and KOSPI Index was down by 0.07%.