Indian equity markets trade flat with positive bias; IT stocks drag

In the extremely range-bound session of trade, Indian benchmark indices altering between positive and negative territory, were now trading flat with bit of positive bias as investors and traders were adopting a cautious approach, amid concerns that rising crude oil prices will fuel inflation and raise import bill and hurt India’s economy growth. Sentiments got some support with the report of Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley indicated that India appears to be much better placed with improved macro-economic fundamentals, as measures to eliminate shadow economy and tax evasion are expected to have positive impact on GDP. India expects to grow at around 7 percent in the first half of the next financial year.

Market participants got some relief with the report that Reserve Bank of India (RBI) replaced as much as 44% of the currency extinguished by demonetisation with new notes by December 30, 2016. The report also expresses hopes that India's currency supply is likely to return to near normal by February end and growth, which has been hit by the withdrawal of Rs 500 and Rs 1,000 notes, is likely to bounce back faster than earlier expected.  However, some traders turned jittery after President Pranab Mukherjee issued a note of caution that the Narendra Modi government’s demonetization decision could likely lead to a temporary slowdown in the economy and hurt the poor. The President called for policymaking that would reduce the suffering of the poor, and seemed to question the focus shift in the government’s poverty alleviation programmes and policies from an entitlement-based approach to an entrepreneurial one. Meanwhile, IT stocks continued to trade under pressure on reports two US Congressmen have reintroduced a bill to curb the use of H-1B visas, on which the Indian IT sector is particularly dependent. The new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently.

On the global front, Asian markets were trading mostly higher on Friday, despite the dollar's recent weakness dampening sentiments among investors, who are also shying away from risky positions before the release of key U.S. jobs data. Employment is expected to increase by about 175,000 jobs in December, while the unemployment rate is expected to tick up to 4.7 percent. Further, Japan's Nikkei share average dropped as automakers dragged after incoming US President Donald Trump threatened to slap punitive taxes on Toyota cars imported into the United States from Mexico.

Back home, stocks from Banking, PSU and Metal counters were supporting the markets’ uptrend, while those from IT, Teck and Realty counters were adding to the underlying cautious undertone. In scrip specific development, Tata Motors rose after the company inked a three-year agreement with Castrol under which the lubricants maker would supply commercial vehicle oils to the homegrown auto major in over 50 markets including SAARC and ASEAN region, Middle East, Africa, Russia and Latin America. Moreover, Wockhardt gained after the company announced that German regulator has issued European Union Good Manufacturing Practice (EU GMP) certificate to the company's Ankaleshwar facility in Gujarat.

The market breadth remained pessimistic as there were 1109 shares on the gaining side against 1212 shares on the losing side, while 146 shares remained unchanged.

The BSE Sensex is currently trading at 26896.03, up by 17.79 points or 0.07% after trading in a range of 26848.37 and 27009.61. There were 21 stocks advancing against 9 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.26%, while Small cap index down by 0.04%.

The top gaining sectoral indices on the BSE were Bankex up by 1.07%, PSU up by 0.68%, Metal up by 0.58%, Oil & Gas up by 0.57% and Power up by 0.34%, while IT down by 2.51%, TECK down by 1.99%, Realty down by 0.62% and FMCG down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.06%, Dr. Reddys Lab up by 1.36%, GAIL India up by 1.27%, Asian Paints up by 1.15% and HDFC Bank up by 0.97%. On the flip side, Infosys down by 2.60%, TCS down by 2.42%, Wipro down by 1.62%, Maruti Suzuki down by 0.40% and Axis Bank down by 0.34% were the top losers.

Meanwhile, after different reports suggested different amount of scrapped Rs 500 and Rs 1,000 notes that had been deposited back to the banks by the December 30 deadline, the Reserve Bank of India (RBI) has said that the total quantum of scrapped Rs 500 and Rs 1000 currency notes deposited in banks and post offices by the December 30, deadline is being reconciled and the final tally will be released soon. It also said that it is taking all steps to complete the process expeditiously so as to release firm figures of specified bank notes (SBNs) received at an early date. Referring to various estimates on scraped notes, the RBI said, such estimate may not indicate the actual numbers.

The RBI further said that its earlier figures were based on aggregation of accounting entries done at the large number of currency chests all over the country. It said that now the scheme has come to an end on December 30, these figures would need to be reconciled with the physical cash balances to eliminate accounting errors/possible double counts etc. Till this is completed, any estimate may not indicate the actual numbers of the SBNs that have been returned. As per RBI’s last declared data, as of December 10, withdrawn banknotes amounting to Rs 12.44 lakh crore had been returned to the RBI and currency chests.

Prime Minister Narendra Modi, on November 8, announced that Rs 1,000 and Rs 500 currency notes were no longer a legal tender, saying the move was aimed at eliminating black money, counterfeit currency and terror financing. Citizens were given up to December 30 to deposit the old currency in banks. About Rs 15.4 lakh crore was to be taken out of the system by way of demonetisation.

The CNX Nifty is currently trading at 8276.50, up by 2.70 points or 0.03% after trading in a range of 8259.40 and 8306.85. There were 32 stocks advancing against 18 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were ONGC up by 3.08%, Yes Bank up by 2.46%, Indusind Bank up by 2.02%, Bosch up by 1.42% and Bank of Baroda up by 1.42%. On the flip side, Tech Mahindra down by 3.65%, HCL Tech down by 3.02%, Infosys down by 2.57%, TCS down by 2.42% and Wipro down by 1.56% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite rose 0.26%, KOSPI Index increased 0.33%, FTSE Bursa Malaysia KLCI gained 0.52%, Taiwan Weighted added 0.17% and Hang Seng was up by 0.24%. On the flip side, Nikkei 225 decreased 0.44% and Shanghai Composite was down by 0.15%.