Benchmarks trade modestly in red in late morning session

Indian equity benchmarks traded on lackluster note gyrating below neutral line in late morning session on account of selling in front line blue chip counters. The Indian rupee weakened against the US dollar tracking the losses in the Asian currencies markets and also on the pessimism on domestic markets following the lower economic growth projections. The first advance estimates, released by the Central Statistics Office (CSO) on Friday reported 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. Some pressure also mounted after private research report highlighted that the decline in Gross Domestic Product (GDP) for the second half of the year is likely to be bleak than government estimates. It estimated 6 percent growth against the 6.7 percent estimate by the CSO for the second half of the current financial year. Separately, PHD Chamber of Commerce & Industry report raised concern that with businesses facing huge cash crunch, the centre’s demonetization drive will have a significant impact on the country’s economy in the near term. However, the benefits accruing from demonetization will help in sustaining the country's economic growth in the longer term. Traders were seen piling position in FMCG, Realty and Capital Goods stocks, while selling was witnessed in Oil & Gas, Power and Consumer Durables sector stocks. Select steel companies were trading firm on reports that the Steel Ministry sought reduction in import duty on both coking coal and nickel -- vital components of steel making -- a move that may revive the sector.

On the global front, Asian shares were trading mixed, as investors focused on policymaker remarks later this week for direction. Chinese Vice Finance Minister Zhu Guangyao said that the country is confident to have reached an economic growth of 6.7 percent in 2016, within a targeted range set earlier in the year. China, which had been aiming for a 6.5-7 percent economic growth for 2016, boosted government spending, saw a housing rally and record high levels of bank lending last year, which, however, also led to an explosive increase in debt.  Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,250 and 26,800 levels respectively. The market breadth on BSE was positive in the ratio of 1354:828, while 98 scrips remained unchanged.

The BSE Sensex is currently trading at 26737.88, down by 21.35 points or 0.08% after trading in a range of 26720.09 and 26860.88. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were FMCG up by 0.65%, Realty up by 0.33%, Capital Goods up by 0.22%, Bankex up by 0.21% and Metal up by 0.14%, while Oil & Gas down by 0.52%, Power down by 0.45%, Consumer Durables down by 0.35%, PSU down by 0.19% and Auto down by 0.17% were the losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.15%, Adani Ports & Special Economic Zone up by 0.74%, Reliance Industries up by 0.48%, Maruti Suzuki up by 0.47% and Cipla up by 0.40%.

On the flip side, Dr. Reddy’s Lab down by 2.14%, Mahindra & Mahindra down by 1.32%, Power Grid down by 1.19%, Coal India down by 1.14% and Asian Paints down by 0.82% 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 8237.15, down by 6.65 points or 0.08% after trading in a range of 8233.45 and 8263.00. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Aurobindo Pharma up by 1.65%, HCL Tech up by 1.56%, Eicher Motors up by 1.51%, Idea Cellular up by 1.51% and ITC up by 1.17%.

On the flip side, Dr. Reddy’s Lab down by 2.22%, BPCL down by 1.56%, Mahindra & Mahindra down by 1.37%, Coal India down by 1.31% and ACC down by 1.26% were the top losers.

The Asian markets were trading mixed; KOSPI Index increased 3.22 points or 0.16% to 2,052.34, Shanghai Composite increased 14.96 points or 0.47% to 3,169.28 and Hang Seng increased 39.55 points or 0.18% to 22,542.56.

On the other hand, Taiwan Weighted decreased 34.71 points or 0.37% to 9,337.51, Jakarta Composite decreased 22.68 points or 0.42% to 5,324.34 and FTSE Bursa Malaysia KLCI decreased 4.36 points or 0.26% to 1,671.13.

Japan’s stock exchange was closed on account of National holiday.