Benchmarks trade marginally in green in early deals

Indian equity benchmarks have made a positive start and are trading slightly in green in early deals on Tuesday. Traders took some encouragement with report that yearly SBI Composite Index (year-on-year) for February 2017 improving to 49.5 compared to last month’s index of 47.0, indicating some improvement in sentiment. The monthly Index though declined marginally to 49.2 in February 2017 from 50.9 in Jan 2017 which means IIP growth may continue to contract in January and February 2017. However, gains remained capped with ICRA’s report stating that Indian gross value added (GVA) at basic prices to ease to 6.2 percent in Q3FY17 from 6.9 percent in Q3 FY16 and Gross Domestic Product (GDP) growth likely to decline to 6.5 percent from 7.2 percent a year ago.

On the global front, Asian markets trading mostly in green at this point of time after a Federal Reserve official said a March interest rate hike is not off the table. The US markets remained closed in last session unable to give any cues to the other global markets. Back home, steel stocks remained on the buyers’ radar, as the government has extended anti-dumping duty on import of certain steel products from China for five years with an aim to protect domestic players from the cheap shipments. The levy has been imposed in the range of $ 961.33 - 1,610.67. Stocks related to public sector banking counter too were trading higher, as heads of top ten state-run banks have met finance minister Arun Jaitley to raise concerns over aggressive investigation into non-performing loans which they said has impacted business.

The BSE Sensex is currently trading at 28683.38, up by 21.80 points or 0.08% after trading in a range of 28644.81 and 28726.10. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.58%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Metal up by 1.30%, Consumer Durables up by 1.16%, Oil & Gas up by 1.00%, IT up by 0.80% and Industrials was up by 0.76%, while Telecom down by 1.33% and FMCG down by 0.31% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.72%, Tata Motors up by 1.49%, GAIL India up by 1.03%, Wipro up by 0.98% and Axis Bank up by 0.87%. On the flip side, Bharti Airtel down by 2.04%, ITC down by 1.28%, Coal India down by 0.70%, Maruti Suzuki down by 0.56% and Power Grid down by 0.56% were the top losers.

Meanwhile, domestic rating agency, ICRA in its latest report has said that it expects the note ban to selectively affect some of the sub-sectors of industry and services, dampening the expansion of the Indian gross value added (GVA) at basic prices to ease to 6.2 percent in Q3 FY17 from 6.9 percent in Q3 FY16 and Gross Domestic Product (GDP) growth likely to decline to 6.5 percent from 7.2 percent a year ago. It added that the slippages will be driven by the slowdown in growth of the industry and services, offsetting the healthy agricultural expansion during the period.

However it said that during the third quarter surprise could come from the agricultural sector and the robust kharif harvest is expected to contribute to a turnaround in the performance of agriculture, forestry and fishing to a growth of 5.0 percent from the 1.0 percent contraction in the same quarter previous year. Also, services sector is expected to ease to 8 percent from 9.1 percent in line with moderation in fuel demand following the note ban. Similarly, industrial growth is set to more than halve to 4 percent from 8.6 percent, led by manufacturing, construction and mining and quarrying.

ICRA further said that corporate earnings for manufacturing companies in Q3 FY17 suggest that cost control helped contain the weakness in earnings relative to revenues, which were impacted by low volumes in the period after the note ban. Based on this, and an unfavorable base effect, it expects real manufacturing GVA growth to decline to 5.0 percent in Q3 FY2017 from the high 11.5 percent in Q3 FY2016, while continuing to exceed the volume growth displayed by the Index of Industrial Production.

It also expects cash-intensive construction sector to be one of the worst hit sub-sectors due to demonetisation, as signaled by falling output of its key inputs such as cement. While the annual growth of systemic deposits improved to 15.2 percent as of December 23, 2016 from 10.2 percent, with the surge in deposits after the note ban, growth of non- food credit off-take halved to 5.3 percent from 10.7 percent during this period, reflecting a subdued demand for credit and relatively limited transmission of monetary easing to lending rates.

The CNX Nifty is currently trading at 8890.20, up by 11.00 points or 0.12% after trading in a range of 8873.00 and 8897.15. There were 32 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.68%, HCL Tech up by 1.90%, BPCL up by 1.79%, BHEL up by 1.76% and Tata Steel was up by 1.63%. On the flip side, Bharti Airtel down by 2.04%, Bharti Infratel down by 1.70%, ITC down by 1.45%, Ambuja Cement down by 1.29% and Zee Entertainment was down by 1.14% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite rose 8.44 points or 0.26% to 3,248.40, Jakarta Composite gained 8.74 points or 0.16% to 5,368.02, KOSPI Index surged 22.8 points or 1.09% to 2,107.19, Hang Seng added 35.23 points or 0.15% to 24,181.31 and Nikkei 225 was up by 142.44 points or 0.74% to 19,393.52.

On the flip side, Taiwan Weighted decreased 24.71 points or 0.25% to 9,728.49 and FTSE Bursa Malaysia KLCI was down by 4.5 points or 0.26% to 1,708.08.