Benchmarks erase gains in late morning session

Indian equity benchmarks erased early gains and started trading in red in late morning session on account of selling in frontline blue chip counters. Traders took cautious approach with the news that 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. Furthermore, a private report highlighted that India’s growth momentum witnessed a recovery in January but it is not broad-based and overall economic activity remains below pre-demonetization levels. The slowdown that started in the October-December quarter of 2016, post demonetization is spilling over into the first quarter of 2017 (January-March). The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. February 2017 series to next month i.e. March 2017 series. The near month February 2017 derivatives contracts will expire on Thursday i.e. February 23, 2017.

Traders were seen piling position in Consumer Durables, Oil & Gas and Metal stocks, while selling was witnessed in Telecom, FMCG and Realty sector stocks. Select frontline steel companies were trading in green 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. In scrip specific development, Granules India was trading in green on media report that World Bank’s private sector lending arm International Finance Corporation (IFC) is going to make a debt investment worth $47.5 million in Indian pharma company to partly fund its expansion plans.

On the global front, Asian shares were trading mostly in green, as investors looked ahead to minutes from the US Federal Reserve’s latest meeting. A gauge of Japanese manufacturing activity for February rose to its highest level since 2014. The flash estimate of the purchasing managers’ index rose to 53.5 from January’s 52.7 on a 100-point scale on which numbers above 50 show an expansion. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,900 and 28,700 levels respectively. The market breadth on BSE was positive in the ratio of 1325:944, while 132 scrips remained unchanged.

The BSE Sensex is currently trading at 28611.63, down by 49.95 points or 0.17% after trading in a range of 28603.41 and 28726.10. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.22%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.89%, Oil & Gas up by 0.66%, Metal up by 0.64%, Energy up by 0.46% and IT up by 0.46%, while Telecom down by 1.55%, FMCG down by 0.52%, Realty down by 0.25%, Auto down by 0.21% and Utilities down by 0.10% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.13%, GAIL India up by 0.95%, Asian Paints up by 0.93%, Axis Bank up by 0.74% and Tata Motors up by 0.68%.

On the flip side, Bharti Airtel down by 1.97%, ITC down by 1.54%, Coal India down by 0.86%, Maruti Suzuki down by 0.59% and HDFC Bank down by 0.50% were the top losers.

Meanwhile, demonetisation doesn’t seem to have impacted much the confidence of Indian consumers, as for the second quarter in a row, India's consumer confidence index remained high, topping the global list of countries on the same parameter. Data released by the market research agency Nielsen showed that India's consumer confidence index for the fourth quarter of the calendar year 2016 was 136, three points higher as compared to what it achieved in the third quarter of 2016.

Nielsen, felt confident about spending in the fourth quarter, with 70 per cent in urban areas saying this was the best time to buy what they want and need over the next 12 month, though there were concerns articulated by them as well. A prominent one was job security, with 17 per cent saying they felt insecure about their jobs. Some 16 per cent surveyed also said that state of the economy was a worrying factor and another 14 per cent were concerned about terrorism. 65 per cent Indians choose to save spare cash, while 54 per cent said they would buy new technology products and 53 per cent said they would go on a vacation. 78% of respondents indicated a change in spending to save on household expenses, five points lower than last quarter (83% in Q3 2016).

Some of the other countries figuring prominently on the index this quarter were the Philippines and the US at number two and three respectively. Confidence in the Asia-Pacific region in the December quarter stood at 111 points, up two points from the previous quarter. The Consumer Confidence Index is fielded quarterly in 63 countries, including India, to measure the perceptions of local job prospects, personal finances, immediate spending intentions and related economic issues of online consumers around the world. Over 30,000 online respondents from 63 countries were polled as part of the survey.

The CNX Nifty is currently trading at 8868.75, down by 10.45 points or 0.12% after trading in a range of 8865.25 and 8897.15. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 1.93%, HCL Tech up by 1.84%, BPCL up by 1.36%, Grasim Industries up by 1.09% and Yes Bank up by 1.00%.

On the flip side, Bharti Infratel down by 2.33%, Bharti Airtel down by 2.00%, ITC down by 1.67%, Ambuja Cement down by 1.32% and Zee Entertainment down by 1.16% were the top losers.

The Asian markets were trading mostly in green; Taiwan Weighted increased 3.03 points or 0.03% to 9,756.23, Shanghai Composite increased 9.64 points or 0.3% to 3,249.60, Jakarta Composite increased 10.37 points or 0.19% to 5,369.66, KOSPI Index increased 19.38 points or 0.93% to 2,103.77 and Nikkei 225 increased 126.03 points or 0.65% to 19,377.11.

On the other hand, Hang Seng decreased 50.04 points or 0.21% to 24,096.04 and FTSE Bursa Malaysia KLCI decreased 3.98 points or 0.23% to 1,708.60.