Weak trade persists on high WPI data

Indian equity benchmarks continued their weak trade in early afternoon session, on the back of high Wholesale Price Index (WPI) data. India's wholesale inflation grew to 3.93 percent during November, higher from 3.59 percent in October, driven by faster rises in prices of food and fuel products. Some anxiety was also among the local traders with Reserve Bank of India (RBI) data showing that India’s current account deficit (CAD) widened to 1.2 percent of GDP or $ 7.2 billion in July-September, from 0.6 percent of GDP or $ 3.4 billion reported in the same period a year ago. Further, weak Asian cues along with selling in Utilities, Capital Goods, Power and Consumer Durables stocks, too weighed on the sentiments. In the currency front, the rupee firmed up by 16 paise to 64.28 against the US dollar in early trade on selling of greenback by banks and exporters. In scrip specific development, Reliance Communications was trading in green with its arm entering into collaboration with Vietnam’s CMC Telecom to enhance connectivity on their network.

On the global front, Asian markets were trading mostly in red, after the Fed raised rates again as expected. Back home, the BSE Sensex is currently trading at 32943.96, down by 109.08 points or 0.33% after trading in a range of 32919.91 and 33169.74. There were 10 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.41%, while Small cap index was down by 0.80%.

The only gaining sectoral index on the BSE was Healthcare up by 0.03%, while Utilities down by 0.90%, Capital Goods down by 0.85%, Power down by 0.85%, Consumer Durables down by 0.78% and Industrials down by 0.77% were the top losing indices on the BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.94%, Mahindra & Mahindra up by 1.09%, Asian Paints up by 0.85%, Infosys up by 0.58% and Lupin up by 0.37%. On the flip side, TCS down by 3.65%, Wipro down by 1.31%, Tata Steel down by 0.92%, Adani Ports & SEZ down by 0.91% and Larsen & Toubro down by 0.90% were the top losers.

Meanwhile, India’s import of paper and paperboard has gone up by 60 percent to touch an all- time high of 10.5 lakh tonnes, in the first half of financial year 2018 (H1FY18) from 6.5 lakh tonne during the first half of FY17, despite the Centre’s Make in India push. As per the latest data released by the Directorate General of Commercial Intelligence and Statistics, duty-free imports from ASEAN countries under free trade agreements (FTAs) more than doubled to 2.1 lakh tonnes from 0.8 lakh tonnes in H1FY17.

The data also revealed that in the previous six years, imports of paper and paperboard have rose at a CAGR of 15 percent in value terms, from Rs 3,411 crore in FY11 to Rs 8,237 crore in FY17. Besides, Saurabh Bangur, President, Indian Paper Manufacturers Association (IPMA), has said that paper is being imported at a cost which in many cases is less than input cost in India, which is among the few markets where demand is growing. However, he noted that most of the growth in demand is met by imported paper while domestic capacities are lying idle.

Bangur further pointed out that inadequate supply of domestic wood pulp, a key raw material, is a major constraint for the paper industry. He noted that cost of domestic wood in India is higher by almost $30-40 a tonne as compared to other Asian countries. Due to this single factor, the cost of paper production in India is higher by $100 per tonne. IPMA said, to the Ministry of Commerce & Industry, unbridled growth in import of paper is hurting the interests of the domestic industry, which does not enjoy a level playing field compared to duty-free imports from countries where cost of production of paper is a fraction of cost in India as raw material, inputs and energy is much cheaper and easily accessible.

The CNX Nifty is currently trading at 10161.25, down by 31.70 points or 0.31% after trading in a range of 10150.55 and 10230.65. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 1.80%, HCL Tech. up by 1.35%, Tech Mahindra up by 1.35%, HPCL up by 1.28% and Mahindra & Mahindra up by 1.02%. On the flip side, TCS down by 3.59%, Bajaj Finance down by 2.37%, UPL down by 2.26%, GAIL India down by 1.60% and Wipro down by 1.41% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 95.16 points or 0.33% to 29,126.94, Nikkei 225 was down by 63.62 points or 0.28% to 22,694.45, KOSPI Index shed 11.07 points or 0.45% to 2,469.48 and Shanghai Composite dipped 8.55 points or 0.26% to 3,294.49.

On the flip side, FTSE Bursa Malaysia KLCI increased 15.04 points or 0.87% to 1,752.70, Jakarta Composite was up by 20.22 points or 0.33% to 6,074.83 and Taiwan Weighted added 67.31 points or 0.64% to 10,538.01.