Benchmarks continue to trade higher; Capital Goods lead

Indian equity benchmarks continued to trade jubilantly in noon session, as investors cheered BJP’s stunning victory in Uttar Pradesh assembly elections, which gives it room for adding more representatives in the Rajya Sabha. On Saturday, the BJP won an unexpected 312 out of 403 seats in the assembly elections of the India’s largest state, raising expectations of continued political stability, smooth implementation of a proposed goods and services tax and reforms in areas such as labour laws and land acquisition. Furthermore, sentiments also got a boost with the report that Industrial production bounced back into expansion in January, kicking off the financial year’s last quarter on a positive note albeit amid expectations that it will bear the brunt of demonetisation. The index of industrial production (IIP) rose 2.7% in January from a year ago, the second fastest monthly growth this financial year behind 5.7% recorded in November 2016. Some support also came with the report that India's foreign exchange reserves rose $1.2 billion to reach $364 billion as on February 17, 2017. Buoyed by a strong domestic market and a stable Rupee, the central bank has been buying foreign currency in order to strengthen its foreign exchange reserves.  Meanwhile, the government will issue the consumer price inflation (CPI) data and wholesale price inflation (WPI) data for February due later on Tuesday.

On the global front, Asian markets were trading mostly higher on Tuesday, as investors awaiting the outcome of the Federal Reserve's meeting and a batch of economic and political events later this week. However, Japanese market declined from 15-month highs in the previous session, tracking the lackluster cues overnight from Wall Street and as the yen fluctuated. Further, Chinese shares saw some early gains rolled back after combined retail sales for January and February rose only 9.5% from a year earlier, missing expectations of 10.5%. Fixed-asset investment expanded 8.9% and industrial output grew 6.3%, both beating forecasts.

Back home, barring Telecom index, which was down 0.44%, all the other sectoral indices were in green. Among them, Capital Goods index gained the most by 2.87 per cent, followed by Banks 2.33 per cent, Realty 1.92 per cent and Basic Materials 1.88 per cent. In scrip specific development, NBCC (India) rallied after the state-owned company secured a contract worth about Rs 250 crore in Mauritius. On the other hand, Alkem Laboratories declined after the USFDA issued a form 483 with three observations to Alkem Laboratories after an inspection at its facility in Himachal Pradesh, India.

The market breadth remained optimistic, as there were 1736 shares on the gaining side against 823 shares on the losing side, while 164 shares remained unchanged.

The BSE Sensex is currently trading at 29444.07, up by 497.84 points or 1.72% after trading in a range of 29356.05 and 29561.93. There were 26 stocks advancing against 4 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.56%, while Small cap index up by 1.21%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.87%, Bankex up by 2.33%, Realty up by 1.92%, Basic Materials up by 1.88% and Industrials up by 1.85%, while Telecom down by 0.44% was the sole losing index on BSE.

The top gainers on the Sensex were ICICI Bank up by 5.84%, Larsen & Toubro up by 4.13%, HDFC up by 3.43%, ITC up by 2.56% and Asian Paints up by 2.22%. On the flip side, Coal India down by 5.64%, Bharti Airtel down by 0.92%, GAIL India down by 0.28% and Lupin tad down by 0.01% were the top losers.

Meanwhile, in a positive surprise, industrial production bounced back into expansion in January, mainly due to good performance of mining and manufacturing sectors, coupled with sharp increase in output of capital goods segment. As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, Index of Industrial Production (IIP) with base 2004-05 for the month of January 2017, stood at 191.3, which is 2.7 percent higher as compared to the level in the month of January 2016 and (-) 0.4 percent in December 2016. The cumulative growth for the period April-January 2016-17 over the corresponding period of the previous year stood at 0.6 percent.

On the sectoral basis, the Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2017 stood at 146.1, 199.2 and 195.6 respectively, with the corresponding growth rates of 5.3 percent, 2.3 percent and 3.9 percent as compared to January 2016. The cumulative growth in these three sectors during April-January 2016-17 over the corresponding period of 2015-16 has been 1.4 percent, (-) 0.2 percent and 5.0 percent respectively.

In terms of industries, 9 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of January 2017, as compared to the corresponding month of the previous year. The industry group ‘Electrical machinery & apparatus n.e.c.’ has shown the highest positive growth of 42.4 percent followed by 21.8 percent in ‘Radio, TV and communication equipment & apparatus’ and 12.4 percent in ‘Basic metals’. On the other hand, the industry group ‘Office, accounting and computing machinery’ has shown the highest negative growth of (-) 16.0 percent followed by (-) 14.8 percent in ‘Food products and beverages’ and (-) 13.4 percent in ‘Other transport equipment’.

As per Use-based classification, the capital goods segment grew by 10.7 per cent in January against a contraction of 21.6 per cent in the same month of last financial year. The basic goods category expanded by 5.3 percent against 1.9 percent growth in January 2016. On the other hand, the intermediate goods category contracted by 2.3 percent. The consumers goods segment contracted by 1 percent in January. It comes over a 0.1 percent decline in January 2016, despite quickening of remonetisation process. In the consumer goods segment, durable items expanded by 2.9 percent, but non-durable contracted by 3.2 percent. IIP as a whole had contracted by 1.6 percent in January 2016.

The CNX Nifty is currently trading at 9083.50, up by 148.95 points or 1.67% after trading in a range of 9060.50 and 9122.75. There were 45 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were ICICI Bank up by 5.99%, Larsen & Toubro up by 4.28%, Ultratech Cement up by 3.52%, HDFC up by 3.26% and Yes Bank up by 3.12%. On the flip side, Coal India down by 5.55%, Idea Cellular down by 1.49%, Bharti Airtel down by 1.33%, Bosch down by 0.32% and Lupin down by 0.27% were the top losers.

Asian markets were trading mostly in green, Shanghai Composite was up by 0.05%, Hang Seng was higher by 0.01%, KOSPI Index increased by 0.77%, FTSE Bursa Malaysia KLCI was littlie up by 0.02%, Jakarta Composite inched higher by 0.61% and Taiwan Weighted was up by 0.48%. On the other hand, Nikkei 225 declined by 0.07%.