Indian benchmarks erase early gains, end on a flat note

Indian stocks markets showed a volte-face on the penultimate day of December series futures and options contract expiry, as what started on a promising note ended as a dismal show. The optimism in domestic markets petered out completely by the end of trade. Marketmen were optimistic for most part of the session as local sentiments remained upbeat with the report that India Inc raised Rs. 38,645 crore in November through private placement of corporate debt bonds, a surge of 57% from the year-ago level, for business expansion and propping up working capital requirements. Investors also got some confidence with NITI Aayog Vice Chairman Arvind Panagariya’s statement, who expressing his support for the demonetisation of high-value currency, said that demonetisation was a move towards formal economy. He said it is the government's drive to promote digital transactions and a less cash economy so as to move from the informal to greater formalisation of the economic system. However, the sanguinity in local markets came under check as profit booking in some blue-chip counters like Reliance Industries, Tata Steel and Hero Motocorp put downside pressure on the frontline indices and dragged them even below the psychological 8,050 (Nifty) and 26,250 (Sensex) levels. Besides, continues selling by foreign portfolio investors (FPIs) and rupee's depreciation against dollar also played their role in pounding investors’ morale. FPIs have pulled out close to $10 billion or a whooping Rs 65,000 to Rs 68,000 crore from country’s debt and equity markets since November 8, triggering one of the largest sell-off in two months in India since 2013.  Traders also remained cautious with the reports that of the Rs 15.4 lakh crore worth of Rs 500 and Rs 1,000 notes that were scrapped as a resulted of PM Narendra Modi’s November 8 declaration, as much as Rs 14 lakh crore has been deposited in banks. The value of scrapped currency exceeded the government’s expectation. This also means that expectation that RBI will be able to give a substantial dividend to the government will be belied.

On the global front, Asian stock markets ended mostly higher on Wednesday, tracking the positive cues overnight from Wall Street and higher commodity prices. Upbeat US consumer confidence and housing data too lent some support. Chinese shares ended lower, with sentiment dampened by a regulator's latest measures to put insurers' aggressive stock investments under stricter supervision. The vice chairman of the China Insurance Regulatory Commission (CIRC) reportedly said that insurers were not platforms to enrich speculators. Meanwhile, European shares were trading in a cautious note in early trade, with gains in mining stocks underpinning the market, while British builder Bovis Homes slumped after a profit warning.

Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the key indices capitalized on the momentum and touched intraday highs in late afternoon session. However, the indices failed to hold onto the highs and suffered a setback in final hour of trade as sudden bouts of profit booking emerged in the local markets. Finally, the NSE’s 50-share broadly followed index Nifty, added single digit gains and settled below the crucial 8,050 support level, while Bombay Stock Exchange’s Sensitive Index or Sensex declined by three points and ended below the psychological 26,250 mark. However, broader markets managed a touch better than the larger peers as the BSE’s midcap and smallcap indices settled with gains of 0.53% and 0.87% respectively.

The market breadth remained optimistic as there were 1523 shares on the gaining side against 1092 shares on the losing side, while 184 shares remained unchanged. Finally, the BSE Sensex declined by 2.76 points or 0.01% to 26210.68, while the CNX Nifty gained 2.76 points or 0.01% to 8,034.85.

The BSE Sensex touched a high and a low of 26415.05 and 26191.72, respectively and there were 16 stocks on gainers side against 14 stocks on the losers side on the index. 

The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.53%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were FMCG up by 0.61%, TECK up by 0.34%, IT up by 0.22%, Realty up by 0.21% and Power up by 0.15%, while Oil & Gas down by 0.27%, Capital Goods down by 0.09%, Metal down by 0.07% and Bankex down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.06%, Wipro up by 1.15%, Dr. Reddys Lab up by 1.15%, Lupin up by 0.63% and Mahindra & Mahindra up by 0.57%. On the flip side, Reliance Industries down by 1.15%, Tata Steel down by 1.13%, Hero MotoCorp down by 0.96%, Tata Motors down by 0.72% and ICICI Bank down by 0.67% were the top losers.

Meanwhile, Finance Ministry has directed financial advisors of all ministries and departments to strictly adhere to monthly and quarterly expenditure plans, to improve the quality of public expenditure. It said that beginning next fiscal, the financial advisors of the ministries/departments have to ensure adherence to the stipulated Monthly Expenditure Plan and Quarterly Expenditure Plan. This step is being taken to avoid rush of expenditure, particularly in the closing months of the financial year.

The Finance Ministry is also considering bringing a proposal under which the central ministries will have to refund the Budget grants which cannot be profitably utilized and these funds should be returned to the treasury without waiting for the financial year to end. It further said if there are any savings they would be surrendered before the close of the financial year and any fund not utilised before the close of that financial year would stand lapsed at the close of the financial year. Ministry made it clear that any such savings and funds will not be kept in reserve they have to submit it to the ministries in the state treasury.

Further, the Ministry has decided to move towards outcome based budgeting as part of the overhaul of budget making exercises, under which the Union Budget would be presented in Parliament on February 1, instead of age-old tradition of unveiling it on the last day of the month. Plan expenditure, which entails government spending on social welfare schemes and asset creation, was hiked by 15.3 percent to over Rs 5.5 lakh crore for 2016-17 fiscal. However, from next fiscal the classification of expenditure as ‘Plan/Non Plan’ will be replaced with ‘Capital and Revenue’ Expenditure.

The CNX Nifty traded in a range of 8,100.55 and 8,028.40. There were 29 stocks in green against 22 stocks in red on the index.

The top gainers on Nifty were Bharti Infratel up by 2.43%, Coal India up by 2.28%, Idea Cellular up by 2%, Indusind Bank up by 1.66% and Tech Mahindra up by 1.36%. On the flip side, Tata Motors - DVR down by 1.75%, Yes Bank down by 1.42%, Reliance Industries down by 1.27%, Hero MotoCorp down by 1.07% and Ambuja Cements down by 0.94% were the top losers.

The European markets were trading mostly in red; Germany’s DAX decreased 2.86 points or 0.02% to 11,469.38 and France’s CAC decreased 3.32 points or 0.07% to 4,844.96, while UK’s FTSE 100 increased 21.51 points or 0.3% to 7,089.68.

Asian equity markets ended mostly in green on Wednesday as many regional markets resumed trading after the long holiday. Higher oil prices and upbeat US consumer confidence and housing data too lent some support. Japanese shares ended on a flat note as the yen showed little reaction to mostly positive industrial production and retail sales data. While industrial output figures for November showed further signs of pick up in the world's third largest economy, retail sales rose more than expected to post a surprise 1.7 percent jump in November from a year earlier. Chinese shares ended lower, with sentiment dampened by a regulator's latest measures to put insurers' aggressive stock investments under stricter supervision. The vice chairman of the China Insurance Regulatory Commission (CIRC) had reportedly said that insurers were not platforms to enrich speculators.