Benchmarks trim losses but continue to trade in red

Indian equity benchmarks trimmed losses but continued to trade in red amid consolidation in late afternoon trade as investors awaited retail inflation data for the month of January due later today. The markets trimmed its losses led by IT, TECK, Metal and Power stocks. While, the sell-off continued in Consumer Durables, PSU, FMCG and Realty stocks. Investor sentiments remained positive on the back of gains by European and Asian markets. However, upside remained capped with the report indicating 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. On sectoral front, automobiles stocks traded low after credit rating agency, Moody’s report that demonetisation has negatively impacted the performance of Indian auto asset backed loans in the short term and the effect will last until March.

On the global front, European markets were trading in green with positive U.S. and Asian cues, reflecting optimism with U.S. President Donald Trump's tax reform plans, and generally upbeat global economic data. Asian markets were trading in green as investor sentiments improved after a meeting between Trump and Japanese Prime Minister Shinzo Abe ended without trouble, avoiding tough talk on currency and trade issues. Back home, in scrip specific development, Trent traded higher after the company received an approval for raising of funds through issue of Commercial Paper up to an amount not exceeding Rs 100 crore.

The BSE Sensex is currently trading at 28303.17, down by 31.08 points or 0.11% after trading in a range of 28197.38 and 28458.80. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.61%, while Small cap index was down by 0.62%.

The top gaining sectoral indices on the BSE were IT up by 0.72%, TECK up by 0.55%, Metal up by 0.15% and Power up by 0.14%, while Consumer Durables down by 1.18%, PSU down by 1.04%, Realty down by 0.95%, Capital Goods down by 0.60% and FMCG down by 0.53% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.44%, Power Grid up by 1.38%, Mahindra & Mahindra up by 1.13%, Wipro up by 1.09% and Hindustan Unilever up by 1.03%. On the flip side, Coal India down by 1.74%, SBI down by 1.70%, Maruti Suzuki down by 1.33%, ITC down by 1.15% and Hero MotoCorp down by 1.04% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has expressed hope that the Universal Basic Income (UBI) scheme, which got a mention in government's economic survey will be implemented over the next one year in some parts of the country at least on experimental basis. UBI will aim to provide a minimum amount of cash to poor people to meet their basic needs.

The Economic Survey, authored by Chief Economic Advisor Arvind Subramanian, had suggested that the Centre may come out with UBI scheme under which the government should provide minimum cash to poor people to meet their basic needs. Finance Minister stated that under the proposed system UBI could be given to people and subsidies can be done away with.

He added that the economic surveys prepared by Arvind Subramanian has been unconventional, very different from the past and float ideas for the future, universal basic income being one of them and government has also started thinking on it to experiment in some part of the country which can help to bring poverty rates down. Jaitley further said that with the current pace of reforms it would be possible to significantly reduce poverty, create world class infrastructure and achieve high level of global competitiveness.

The CNX Nifty is currently trading at 8784.85, down by 8.70 points or 0.10% after trading in a range of 8754.20 and 8826.90. There were 23 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 2.51%, Hindalco up by 2.00%, Yes Bank up by 1.73%, Tata Power up by 1.53% and Infosys up by 1.49%. On the flip side, Bank of Baroda down by 9.04%, Idea Cellular down by 3.12%, Aurobindo Pharma down by 2.57%, BHEL down by 1.99% and SBI down by 1.77% were the top losers.

All Asian markets were trading in green; KOSPI Index increased 3.57 points or 0.17% to 2,078.65, FTSE Bursa Malaysia KLCI increased 9.32 points or 0.55% to 1,708.26, Shanghai Composite increased 20.14 points or 0.63% to 3,216.84, Jakarta Composite increased 26.46 points or 0.49% to 5,398.13, Taiwan Weighted increased 44.73 points or 0.46% to 9,710.32, Nikkei 225 increased 80.22 points or 0.41% to 19,459.15 and Hang Seng increased 136 points or 0.58% to 23,710.98.

All European markets were trading in green; UK’s FTSE 100 increased 7.45 points or 0.1% to 7,266.20, France’s CAC increased 20.4 points or 0.42% to 4,848.72 and Germany’s DAX increased 34.09 points or 0.29% to 11,701.06.