Benchmarks continue weak trade; Nifty below 8400 mark

Indian equity benchmarks continued their weak trade in late morning session on account of selling in Infosys and TCS, post Q3 earnings, which dampened sentiments. The rupee opened down against the US dollar on account of brisk buying of the American currency by banks and importers. The greenback got a slight boost after the US Federal Chair Janet Yellen said the economy was doing well and faced no serious obstacles in the short term, with the labour market looking pretty strong. Retail inflation softened further to nearly three-year low of 3.41% in December, reflecting weakness in demand as consumers grappled with cash crunch following demonetization. The sentiments were under pressure taking cues from a private report which highlighted that India’s GDP growth numbers are expected to see a decline of 2% in the third and fourth quarters of the current fiscal, as effective currency in circulation has contracted significantly. The report stated that the government’s decision to abolish old stock of high denomination currency (demonetization) and issue new notes (remonetisation) could have a mixed impact on the macro economy over a year. Traders were seen piling position in FMCG, Oil & Gas and PSU stocks, while selling was witnessed in IT, TECK and Auto sector stocks. In scrip specific development, SpiceJet was trading in green on reports that the country’s low-cost carrier is set to seal an order for at least 90 new 737 jets from Boeing, an order worth about $10 billion that will help it tap into country’s booming air travel market.

On the global front, Asian shares were trading mostly in green, with investors shrugged off trade data. Customs data showed that Chinese exports sank 6.1 percent in December from a year earlier. In November, China’s exports eked out a 0.1 percent expansion after shrinking for nine straight months. Imports rose 3.1 percent from a year earlier. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,400 and 27,300 levels respectively. The market breadth on BSE was negative in the ratio of 920:1230, while 129 scrips remained unchanged.

The BSE Sensex is currently trading at 27218.44, down by 28.72 points or 0.11% after trading in a range of 27143.07 and 27459.75. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.02%, while Small cap index was down by 0.16%.

The top gaining sectoral indices on the BSE were FMCG up by 0.60%, Oil & Gas up by 0.43%, PSU up by 0.07% and Bankex up by 0.04%, while IT down by 1.72%, TECK down by 1.47%, Auto down by 0.66%, Capital Goods down by 0.54% and Realty down by 0.46% were the losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 2.71%, ONGC up by 2.21%, Axis Bank up by 1.88%, HDFC up by 1.86% and Sun Pharma up by 1.23%.

On the flip side, TCS down by 3.58%, Infosys down by 2.22%, Tata Motors down by 1.55%, Maruti Suzuki down by 1.13% and Larsen & Toubro down by 0.90% 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 8394.60, down by 12.60 points or 0.15% after trading in a range of 8373.65 and 8461.05. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.73%, Axis Bank up by 2.01%, ONGC up by 1.98%, Aurobindo Pharma up by 1.97% and HDFC up by 1.83%.

On the flip side, TCS down by 3.65%, Infosys down by 2.22%, Hindalco down by 2.03%, Tata Motors down by 1.54% and Tata Motors - DVR down by 1.46% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 1.52 points or 0.03% to 5,294.27, Shanghai Composite increased 2.25 points or 0.07% to 3,121.54, Hang Seng increased 102.82 points or 0.45% to 22,931.84 and Nikkei 225 increased 109.7 points or 0.57% to 19,244.40.

On the other hand, Taiwan Weighted decreased 43.72 points or 0.46% to 9,366.46, KOSPI Index decreased 10.24 points or 0.49% to 2,076.90 and FTSE Bursa Malaysia KLCI decreased 3.33 points or 0.2% to 1,674.43.