Benchmarks trade cautiously in early deals

Indian equity benchmarks have made a cautious start and are trading near its neutral line in early deals on Monday, as traders remained concerned with the first advance estimates, released by the Central Statistics Office (CSO) on Friday that the economic growth is expected to be 7.1 percent in FY 2016-17 as compared to the growth rate of 7.6 percent in FY 2015-16. Manufacturing sector is estimated to grow by 7.4 percent as compared to growth of 9.3 percent in 2015-16. The growth rate in per capita income is estimated at 5.6 percent during 2016-17, as against 6.2 percent in the previous year. However, traders took some support with Finance minister Arun Jaitley’s statement that the impact of demonetization on the economy would be “transient” but in the medium and long run, the GDP would be “bigger and cleaner” and it will also help lower interest rates.

On the global front, Asian markets were trading mostly in green at this point of time, following the Dow Jones coming within inches of hitting the 20,000 mark at the close of trade last week. The US markets ended higher following the release of the Labor Department's closely watched monthly employment report for December. Back home, the market breadth indicating the overall health of the market was strong, with 1,163 shares gaining and 690 shares declining, while a total of 85 shares were unchanged. On the sectoral front, sugar stocks remained in focus on report that the government does not have any immediate plans to cut import duty on sugar as the country would have sufficient supply of the sweetener considering fall in consumption this year and a likely bumper crop next year.

The BSE Sensex is currently trading at 26748.88, down by 10.35 points or 0.04% after trading in a range of 26726.98 and 26860.88. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.30%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Metal up by 0.58%, Bankex up by 0.49%, Realty up by 0.45%, FMCG up by 0.40% and Capital Goods up by 0.34%, while IT down by 0.57%, TECK down by 0.50%, Utilities down by 0.44%, Telecom down by 0.31% and Oil & Gas down by 0.27% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.02%, Adani Ports &Special up by 0.74%, ITC up by 0.72%, Axis Bank up by 0.66% and Tata Steel was up by 0.64%. On the flip side, Dr. Reddys Lab down by 1.98%, Wipro down by 1.31%, GAIL India down by 0.95%, Power Grid down by 0.90% and TCS was down by 0.88% were the top losers.

Meanwhile, the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, in its First Advance estimates of national income at constant (2011-12) and current prices, for the financial year 2016-17, has estimated that India’s per capita income, a gauge for measuring living standard, to cross Rs 1 lakh in 2016-17, up from Rs 93,293 in the previous fiscal. This is higher by 10.4 percent compared to Rs 93,293 during 2015-16. At constant prices, the growth rate in per capita income is estimated at 5.6 percent during 2016-17, as against 6.2 percent in the previous year.

Taking the financial, insurance, real estate and professional services into consideration, the estimated growth in GVA for this sector during 2016-17 is placed at 9.0 percent as compared to growth of 10.3 percent in 2015-16. However, the public administration and defence and other services had its GVA at basic prices for 2016-17 from this sector is expected to grow by 12.8 percent as compared to growth of 6.6 percent in 2015-16. For 2016-17, manufacturing sector is estimated to grow by 7.4 percent as compared to growth of 9.3 percent in 2015-16.

According to the first advance estimates, the growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘electricity, gas, water supply and other utility services’, ‘construction’ and ‘Trade, hotels, transport, communication and services related to broadcasting’ is estimated to be 4.1 percent, (-)1.8 percent, 6.5 percent, 2.9 percent and 6.0 percent respectively. The CSO has said that India’s Gross Domestic Product (GDP) is expected to slow down to 7.1 percent during 2016-17 from 7.6 percent in the previous fiscal mainly due to slump in manufacturing, mining and construction activities.

The CSO projections on national income are in line with the Reserve Bank of India’s estimates, which too had lowered the GDP growth prospects to 7.1 percent. The CSO did not figure in the impact of demonetisation, effected on November 9 and the estimates are based on sectoral data available till October. The first advance estimates of GDP have been released in accordance with the release calendar of National Accounts with an approach for compiling the advance estimates is based on benchmark-indicator method. The second advance estimate of national income for 2016-17 and the quarterly GDP estimate for the October-December 2016 quarter will be released on February 28.

The CNX Nifty is currently trading at 8250.70, up by 6.90 points or 0.08% after trading in a range of 8233.45 and 8263.00. There were 28 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.12%, Eicher Motors up by 1.79%, Yes Bank up by 1.42%, Idea Cellular up by 1.37% and Hero MotoCorp was up by 1.18%. On the flip side, Dr. Reddys Lab down by 1.97%, Wipro down by 1.31%, BPCL down by 1.12%, Asian Paints down by 1.02% and Power Grid was down by 0.93% were the top losers.

Asian markets were trading mixed; KOSPI Index gained 2.39 points or 0.12% to 2,051.51, Hang Seng increased 8.87 points or 0.04% to 22,511.88 and Shanghai Composite was up by 17.55 points or 0.56% to 3,171.88. On the flip side, Taiwan Weighted decreased 25.1 points or 0.27% to 9,347.12, Jakarta Composite slipped 16.47 points or 0.31% to 5,330.56 and FTSE Bursa Malaysia KLCI was down by 4.36 points or 0.26% to 1,671.13.