Indian markets slip into negative territory

Reversing gears, Indian frontline indices have now slipped into negative territory on account of selling in frontline blue-chip counters. Market participants remained on the sidelines and refrained from any buying activity ahead of the key consumer price inflation (CPI) data, which will be released later today. Street also watched out for some major companies to declare their Q3 earnings during the day. A total of 677 firms are supposed to report their third quarter results during the day including Hindalco Industries, HPCL, Nalco, and NMDC among others. Sentiments remained subdued with the report that Industrial production contracted in December 2016 due to a sharp decline in production of consumer goods, confirming a demonetisation led contraction in demand. Index of Industrial Production (IIP) was 0.4% lower in December 2016 from the same period a year ago. The number was well below the 5.7% growth in November and consensus expectation of around 1% growth in December. Adding anxiety among investors, Moody's in its report indicates that demonetisation has negatively impacted the performance of Indian auto asset-backed loans in the short term and the effect will last until March. However, losses remained capped with a report that the government’s revenue collection during April-January, 2016-17 has shown healthy growth, indirect tax collection jumped 23.9 percent to Rs 7.03 lakh crore on the back of robust central excise mop-up, while direct tax collection rose by 10.79 percent to Rs 5.82 lakh crore. The total direct and indirect tax collections at the end of January stood at Rs 12.85 lakh crore, more than half the Rs 16.26 lakh crore target for 2016-17. Some support also came in from reports that Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 504.51 crore on February 10, 2017.

On the global front, Asian markets edged higher on Monday amid renewed optimism over U.S. President Donald Trump's corporate tax reform plans as well as higher crude oil prices. Japanese market was trading with a positive bias, after the country reported a preliminary GDP growth of 1% for the December quarter. News about a smooth meeting between Donald Trump and Japanese Prime Minister Shinzo Abe during the weekend also lifted investors’ sentiments, though market participants brushed aside news about a ballistic missile launch by North Korea on Sunday. On Wall Street, stocks once again ended the session at new record closing highs on Friday, reflecting optimism about corporate tax reform under President Donald Trump. Reports that Trump spoke by phone with Chinese President Xi Jinping and agreed to honor the 'One China' policy also eased concerns about tensions between the two countries.

Back home, stocks from IT, Metal and Power counters were supporting the markets, while those from Realty, PSU and Capital Goods counters were adding to the underlying cautious undertone. In scrip specific development, IFCI declined after the company has reported a net loss of Rs 45.17 crore for third quarter ended December 31, 2016 as compared to a net profit of Rs 154.33 crore for the same quarter in the previous year. On the flip side, Keerthi Industries zoomed after the company commenced operation of 2.24 MV Waste Heat Recovery Project on and effective from December 15, 2016, to generate electrical energy from the waste heat and the flue gases evolved during the cement manufacturing process.

The market breadth remained pessimistic, as there were 1005 shares on the gaining side against 1524 shares on the losing side, while 144 shares remained unchanged.

The BSE Sensex is currently trading at 28304.95, down by 29.30 points or 0.10% after trading in a range of 28301.76 and 28458.80. 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 0.45%, while Small cap index down by 0.51%.

The top gaining sectoral indices on the BSE were IT up by 0.39%, Metal up by 0.38%, TECK up by 0.27%, Power up by 0.09% and Bankex up by 0.06%, while Realty down by 1.31%, PSU down by 1.00%, Capital Goods down by 0.59%, Consumer Durables down by 0.56% and Oil & Gas down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.34%, NTPC up by 1.20%, Hindustan Unilever up by 1.12%, Power Grid up by 1.10% and Mahindra & Mahindra up by 0.86%. On the flip side, Coal India down by 1.77%, SBI down by 1.52%, Hero MotoCorp down by 0.92%, Tata Motors down by 0.86% and Maruti Suzuki down by 0.81% were the top losers.

Meanwhile, in a big disappointment, the industrial production growth contracted by 0.4 percent in December 2016, after recording a 13 month high growth of 5.7 percent in November. The index of industrial production (IIP) stood at 183.5 mainly on account of weakness in manufacturing. The cumulative growth of industrial production for the period April-December 2016 over the corresponding period of the previous year stood at 0.3 percent.

According to the data released by the Ministry of Statistics and Programme Implementation, Central Statistics Office (CSO) IIP, with base 2004-05 for the month of December 2016, the Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors stood at 144.5, 189.3 and 194.7 respectively, with the corresponding growth rates of 5.2 percent, (-) 2.0 percent and 6.3 percent, as compared to December 2015. The cumulative growth in these three sectors during April-December 2016 over the corresponding period of 2015 has been 0.9 percent, (-) 0.5 percent and 5.1 percent respectively.

Growth in output of consumer durables decelerated to 10.3 percent in December as compared to 16.6 percent a year ago. The consumer non-durable goods output declined by 5.0 percent in December against 2.7 percent contraction a year ago. Overall, consumer goods production recorded a contraction of 6.8 percent in the month against growth of 3.2 percent in last year. The capital goods output registered a decline of 3.0 percent in the month. Though, the Basic Goods registered a growth of 5.3 percent in the December 2016 over December 2015.

In terms of industries, 17 out of the 22 industry groups in the manufacturing sector showed negative growth during the month of December 2016 as compared to the corresponding month of the previous year. The industry group ‘Office, accounting and computing machinery’ showed the highest negative growth of (-) 23.9 percent followed by (-) 22.9 percent in ‘Other transport equipment’ and (-) 14.4 percent in ‘Luggage, handbags, saddlery, harness & footwear; tanning and dressing of leather products’. On the other hand, the industry group ‘Basic metals’ showed the highest positive growth of 11.1 percent followed by 9.8 percent in ‘Radio, TV and communication equipment & apparatus’ and 3.0 percent in ‘Coke, refined petroleum products and nuclear fuel’.

The CNX Nifty is currently trading at 8790.70, down by 2.85 points or 0.03% after trading in a range of 8786.45 and 8826.90. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.17%, Kotak Mahindra Bank up by 1.78%, Eicher Motors up by 1.61%, Yes Bank up by 1.43% and Tata Steel up by 1.32%. On the flip side, Bank Of Baroda down by 7.98%, Idea Cellular down by 3.03%, Aurobindo Pharma down by 2.46%, BHEL down by 2.22% and Coal India down by 1.69% were the top losers.

Asian markets were trading in green; FTSE Bursa Malaysia KLCI gained 0.47%, Shanghai Composite increased 0.52%, Jakarta Composite jumped 0.64%, Taiwan Weighted surged 0.45%, Nikkei 225 added 0.43%, KOSPI Index gained 0.13% and Hang Seng was up by 0.40%.