Benchmarks turn red after a positive start

Indian equity benchmarks have pared initial gains to enter into red terrain in early deals on Friday, as traders opted to book profits at higher levels. Selling in Infosys and TCS, post Q3 earnings, too dampened sentiments. Though, Infosys reported 7.01% rise in its consolidated net profit at Rs 3,708 crore for the quarter ended December 31, while the company has reported 11.25% rise in its consolidated net profit at Rs 6814 crore for Q3FY17.

Losses remained capped as some support came with report that the Index of Industrial Production (IIP) rose to a 13-month high of 5.7% in November, belying expectations of an adverse impact from demonetization and against a contraction of 1.8% in October, mainly due to base effect. Traders took some encouragement with report that the Inflation measured by the Consumer Price Index (CPI) eased to 3.41% in December versus 3.63% seen in November 2016, mainly due to softening of food prices.

On the global front, Asian markets exhibiting mixed trend at this point of time, as investors weighed whether President-elect Donald Trump would stress growth-boosting steps when he takes office. The US markets closed modestly in red but were well off the days’ low. Back home, most of the Tata group stocks remained on buyers’ radar, as Tata Sons has named Natarajan Chandrasekaran, the CEO and MD of TCS, as their new chairman. The market breadth indicating the overall health of the market was weak, with 779 shares gaining and 1,069 shares declining, while a total of 94 shares were unchanged.

The BSE Sensex is currently trading at 27229.75, down by 17.41 points or 0.06% after trading in a range of 27216.52 and 27459.75. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index shed 0.33%, while Small cap index was down by 0.39%.

The few gaining sectoral indices on the BSE were FMCG up by 0.51%, Consumer Durables up by 0.14% and Oil & Gas was up by 0.05%, while IT down by 0.85%, TECK down by 0.82%, Auto down by 0.70%, Realty down by 0.59% and Metal was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.86%, HDFC up by 1.39%, GAIL India up by 1.19%, Coal India up by 1.14% and Hindustan Unilever was up by 1.01%. On the flip side, TCS down by 2.74%, Tata Motors down by 1.32%, Tata Steel down by 0.88%, Adani Ports down by 0.80% and Maruti Suzuki was down by 0.80% were the top losers.

Meanwhile, in a positive surprise the industrial production growth accelerated to 13-month high of 5.7 percent in November 2016 against a contraction of 1.8% from provisional estimates last month. The major boost to the numbers came from better performance of manufacturing, mining and electricity sectors coupled with larger offtake of capital goods, considered a barometer of investment. Following demonetisation of Rs 1,000 and Rs 500 notes announced on November 8, 2016, it was feared that cash crunch will hit all sectors but lower base effect led the increase in industrial output growth for the month.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2004-05 for the month of September 2016, stood at 175.8, which is 5.7 percent higher as compared to the level in the month of November 2015. The cumulative growth for the period April-November 2016 over the corresponding period of the previous year stands at 0.4 percent.

On the sectoral basis, growth of manufacturing index grew by 5.5 percent in November, 2016. During April-November period, manufacturing sector contracted by 0.3 percent. The electricity sector growth was at 8.9 percent in November, the cumulative growth for the sector during Apr-Nov 2016 was at 5 percent. Mining sector growth was at 3.9 percent in the November 2016 as compared to the same month last year and the cumulative growth for the sector during Apr-Nov 2016 growth was at 0.3 percent. The Indices of Industrial Production for the Manufacturing, Electricity and Mining sectors for the month of November 2016 stood at 186.0, 189.2 and 123.8 respectively.

In terms of industries, 16 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of November 2016 as compared to the corresponding month of the previous year. As per Use-based classification, the growth rates in November 2016 over November 2015 are 4.7 percent in Basic goods, 15.0 percent in Capital goods and 2.7 percent in Intermediate goods.  The Consumer durables and Consumer non-durables have recorded growth of 9.8 percent and 2.9 percent respectively, with the overall growth in Consumer goods being 5.6 percent.

Further, the industry group ‘Radio, TV and communication equipment & apparatus’ has shown the highest positive growth of 32.2 percent followed by 23.2 percent in ‘Electrical machinery & apparatus n.e.c.’ as well as in ‘Motor vehicles, trailers and semi-trailers’. On the other hand, ‘Furniture; manufacturing n.e.c.’ has shown the highest negative growth of (-) 16.5 percent followed by (-) 5.2 percent in ‘Office, accounting and computing machinery’ and (-) 3.2 percent in ‘Tobacco products’.

The CNX Nifty is currently trading at 8394.30, down by 12.90 points or 0.15% after trading in a range of 8389.50 and 8461.05. There were 18 stocks advancing against 32 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were ONGC up by 1.78%, HDFC up by 1.27%, Tech Mahindra up by 1.13%, GAIL India up by 1.12% and Hindustan Unilever was up by 1.10%. On the flip side, TCS down by 2.83%, Hindalco down by 2.32%, Idea Cellular down by 1.94%, Zee Entertainment down by 1.27% and Bharti Infratel was down by 1.24% were the top losers.

Asian markets were trading mixed; Shanghai Composite gained 3.64 points or 0.12% to 3,122.93, Jakarta Composite rose 5.61 points or 0.11% to 5,298.36, Hang Seng increased 103.45 points or 0.45% to 22,932.47 and Nikkei 225 was up by 154.09 points or 0.81% to 19,288.79.

On the flip side, Taiwan Weighted decreased 46.63 points or 0.5% to 9,363.55, KOSPI Index shed 11.54 points or 0.55% to 2,075.60 and FTSE Bursa Malaysia KLCI was down by 2.72 points or 0.16% to 1,675.04.