Indian benchmarks end a disappointing day modestly in red

It turned out to be a disappointing performance from the Indian benchmark indices on Wednesday, as they failed to snap the session in the positive territory and settled slightly below the neutral line. Investors turned jittery after Centre and state governments failed to reach consensus on the issue of dual control at Goods and Services Tax (GST) Council meeting. States such as Kerala and West Bengal are understood to have stuck to their stance and have sought exclusive control over businesses with an annual turnover of Rs 1.5 crore. Sentiments also dampened with the report that India's services industry contracted for a second month in a row in December as orders shrank amid a severe cash shortage. The Nikkei/Markit Services Purchasing Managers' Index was little changed at 46.8 in December from November's 46.7 (a reading below 50 indicates contraction). A new business sub-index, an indicator of domestic and foreign demand, fell to a 39-month low of 46.0 in December from 46.7, even though firms cut prices of their goods despite input costs rising at a faster pace.  Market participants remained cautious over the report that indicate Fiscal impact of the recent measures announced by prime minister Narendra Modi aimed at helping economically weaker sections could be around Rs 3500 crore. Prime Minister had announced three broad schemes including interest rate sops for housing for the poor and farm loans besides financial incentives for pregnant women. Meanwhile, metal stocks came under pressure after the process plant and Machinery Association of India, which represents the Capital Goods and Process Equipment manufacturing industry, urged the government to reduce import duty on steel to 7.5% from 12.5% to correct the inverted duty structure.

On the global front, Asian markets ended mostly higher on Wednesday, boosted by a round of factory surveys from China, the euro zone and United States that pointed to more momentum in the global economy. US factory activity accelerated to a two-year high in December, while manufacturing in the euro zone grew at its fastest pace in five years and China's factory activity was better than expected. Further, Japan's stock market edged higher on account of upbeat global economic data and the latest survey from Nikkei revealing its gauge of Japan's manufacturing activity hit a one-year high in December due to sharp rise in production as well as new orders. Meanwhile, European markets slipped into red as investors awaited flash inflation figures for the euro zone.

Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Thereafter, the frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices sea-sawed around the neutral line through the session. Finally the NSE’s 50-share broadly followed index Nifty, registered single digit loss to settle below the crucial 8,200 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by around ten points and managed a close above the psychological 26,650 mark. On the BSE sectoral space, Banking and Oil & Gas pockets remained among top laggards in the space as they got lacerated by over half a percent, while sectors like PSU and Metal too got pounded in the session. On the flipside, Realty and Consumer Durablestried hard to prevent the benchmarks from drifting deeper into the red terrain by amassing over a percent of gain each, while sectors like IT and Capital Goods too witnessed some buying interests in the session.

The market breadth remained optimistic as there were 1614 shares on the gaining side against 1182 shares on the losing side while 126 shares remained unchanged.

Finally, the BSE Sensex declined 10.11 points or 0.04% to 26633.13, while the CNX Nifty was down by 1.75 points or 0.02% to 8,190.50. 

The BSE Sensex touched a high and a low of 26723.37 and 26606.06, respectively and there were 16 stocks on gainers side against 14 stocks on the losers side on the index.

The broader indices made a mixed closing; the BSE Mid cap index ended lower 0.09%, while Small cap index was up by 0.47%.

The top gaining sectoral indices on the BSE were Realty up by 2.44%, Consumer Durables up by 1.21%, TECK up by 1.04%, IT up by 0.90% and Capital Goods up by 0.66%, while Bankex down by 0.82%, Oil & Gas down by 0.55%, PSU down by 0.26% and Metal down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.47%, Bajaj Auto up by 2.59%, Wipro up by 1.76%, Tata Motors up by 1.09% and Hero MotoCorp up by 0.90%. On the flip side, Reliance Industries down by 1.99%, ICICI Bank down by 1.26%, Cipla down by 1.05%, Hindustan Unilever down by 1.04% and Power Grid Corpn. down by 0.98% were the top losers.

Meanwhile, expressing hope that the country will recover in FY18, Vice-Chairman of the NITI Aayog, Arvind Panagariya has said that the second half of the current fiscal will see some decline in the growth due to demonetisation of high value currency notes, but the country would make up for growth rate decline in FY 2017-18.

Panagariya said “in the quarter in which the demonetisation decision was made and possibly even the quarter that follows which will be the last quarter of the fiscal 2016-17, we might see some decline in the growth rate.” He also said that demonetisation impact on the economy will be small and whatever is the loss, the government will recover it in the next fiscal.

Commenting about government's plan on providing big stimulus post-demonetisation, Panagariya said that it is too early to jump on any conclusion and one must wait to see the economic impact of demonetisation. He further said that some room for increased expenditure may nevertheless come from higher revenues and that is generally a good news.

The CNX Nifty traded in a range of 8,218.50 and 8,180.90. There were 24 stocks in green against 27 stocks in red on the index.

The top gainers on Nifty were Bharti Infratel up by 3.15%, Bharti Airtel up by 2.94%, HCL Tech up by 2.89%, Bajaj Auto up by 2.86% and Wipro up by 2.15%. On the flip side, Reliance Industries down by 2.04%, Kotak Mahindra Bank down by 1.93%, ACC down by 1.84%, Bosch down by 1.50% and Ambuja Cement down by 1.49% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 1.37 points or 0.02% to 7,176.52, Germany’s DAX decreased 22.37 points or 0.19% to 11,561.87 and France’s CAC decreased 0.76 points or 0.02% to 4,898.57.

Asian equity markets ended mostly higher on Wednesday, with Japanese shares leading regional gains as trading resumed after a long holiday weekend. The yen softened in the wake of upbeat global economic data and the latest survey from Nikkei revealing its gauge of Japan's manufacturing activity hit a one-year high in December on the back of a sharp rise in production as well as new orders. A firm undertone prevailed as oil recovered some lost ground ahead of US stockpile data and upbeat economic reports from the US, China and Europe bolstered optimism about the 2017 economic outlook. Further, Chinese shares ended higher as improving liquidity in money markets and moderating interest rates lifted market sentiment.