Benchmarks continue to trade above neutral line

Indian equity benchmarks continued their trade above neutral line in morning session on account of buying in front line blue chip counters. The rupee was trading down against dollar in early trade on account of buying in American currency by banks and importers. Foreign portfolio investors (FPIs) sold shares worth a net Rs 44.07 crore on Tuesday, as per provisional data released by the stock exchanges. The sentiments were upbeat on report that India looks set to leapfrog Britain and France next year to become the world’s fifth-largest economy in dollar terms. The report highlighted that despite temporary setbacks, India’s economy has still caught up with that of France and the UK and in 2018 will have overtaken them both to become the world’s fifth largest economy in dollar terms. Separately, the State Bank of India’s (SBI’s) Composite Index, an indicator of manufacturing activity that helps estimate periods of contraction and expansion, has showed that Indian manufacturing activity in December improved marginally over the previous month taken over a yearly period, while the index fell more sharply on a month-wise comparison, amid the worries of GST rollout weighing down the manufacturing sector.

Meanwhile, investors took note that Grant Thornton in its latest International Business Report (IBR) has said that business leaders in India remained largely positive, but their level of optimism has dropped to its lowest level in four years. According to the report, Asia Pacific business optimism has hit a 2-year high, mainly on account of improvements from its two biggest economies, China and Japan, and region-wide positivity on prospects for increased trade. Separately, India’s Goods and Services Tax (GST) collections fell to the lowest since the tax regime was put in place in what could further queer the pitch for the Centre to keep up with the budgeted fiscal math for FY18. The decline is partly because of sharp cuts in the tax on close to 200 items from November 15. Total collections under GST in November slipped for the second straight month to Rs 80,808 crore, down from over Rs 83,000 crore in the previous month.

Traders were seen piling up position in Healthcare, Power and Utilities TECK sector stocks. In scrip specific development, public sector banks were buzzing in today’s trade on report that the Ministry of Finance is likely to issue the first tranche of recapitalization bonds to public sector banks (PSBs) in early January. The recapitalization bonds will not be sold in open market and will be issued to all banks. Apart from this, the government will also infuse capital worth Rs 8,000 crore on the basis of performance. Reliance Communications (RCom) was trading firm after yesterday the company announced its exit from the Reserve Bank of India’s Strategic Debt Restructuring (SDR) framework, with zero equity conversion and zero loan write-offs for lenders and bond holders. Upon completion of all transactions as announced, the balance debt in RCom is expected to be approximately Rs 6,000 crore only, representing reduction of over 85 per cent of total debt.

On the global front, Asian markets were trading mostly in green. South Korea exports likely rose for a 14th straight month in December, wrapping up the year with an upbeat tone as global demand for memory chips and petroleum goods from Asia’s third biggest exporter continued. A preliminary data from the government showed that South Korea’s exports from December 1 to December 20 soared 16.4 percent from a year earlier, while imports jumped 19.5 percent over the same period. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,000 and 10,500 levels respectively. The market breadth on BSE was positive in the ratio of 1487:895, while 134 scrips remained unchanged.

The BSE Sensex is currently trading at 34099.26, up by 88.65 points or 0.26% after trading in a range of 34014.88 and 34123.14. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.33%, while Small cap index was up by 0.43%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.94%, Power up by 0.55%, Utilities up by 0.50%, PSU up by 0.38% and Energy up by 0.30%, while there were no losers on BSE sectoral front.

The top gainers on the Sensex were Sun Pharma up by 4.37%, Dr. Reddy’s Lab up by 1.94%, Hindustan Unilever up by 0.97%, Power Grid up by 0.77% and NTPC up by 0.68%.

On the flip side, Coal India down by 0.47%, Wipro down by 0.45%, ICICI Bank down by 0.31%, Bajaj Auto down by 0.27% and Bharti Airtel down by 0.24% were the top losers.

Meanwhile, amid the worries of GST rollout weighing down the manufacturing sector, the State Bank of India’s (SBI’s) Composite Index, an indicator of manufacturing activity that helps estimate periods of contraction and expansion, has showed that Indian manufacturing activity in December improved marginally over the previous month taken over a yearly period, while the index fell more sharply on a monthwise comparison.

The SBI Composite Index has mainly two indices - SBI Monthly Composite Index and SBI Yearly Composite Index. As per the data, the annual SBI Composite Index rose to 53.1 in December compared to 53 in the previous month, while the month-on-month index declined to 50.6, showing low growth in the month compared to 51.2 in November. This indicates a possible slowdown in IIP growth in the next couple of months.

The SBI Research said that a consistent negative (positive) month-on-month forecast in the index will lead to negative (positive) growth rate in year-on-year index after a while. Though, it also said that it believe even though the momentum may have slowed down, the outlook for some of the sectors appear largely positive.

It further added that one such sector is the fertilizer sector, as the financials of the 26 fertilizer companies reported an improvement in operations in terms of operational and post-tax growth in the first half of the fiscal. The bottom line of the sector grew by 34 per cent, while the top line grew by only 2 per cent. The new project announcement in the fertilizer sector is showing an upward trend with 13 projects in FY14 to 34 projects in FY17 entailing an investment of Rs 23,614 crore in FY17 from Rs 10,172 crore in FY14. This indicates some renewed interest in the sector.

The CNX Nifty is currently trading at 10542.40, up by 10.90 points or 0.10% after trading in a range of 10515.65 and 10548.20. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 4.56%, Dr. Reddy’s Lab up by 1.98%, Cipla up by 1.51%, Hindustan Unilever up by 0.96% and Aurobindo Pharma up by 0.84%.

On the flip side, HPCL down by 0.75%, Bosch down by 0.74%, Indian Oil down by 0.62%, ICICI Bank down by 0.58% and Ultratech Cement down by 0.58% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 0.5 points or 0.02% to 2,427.84, FTSE Bursa Malaysia KLCI increased 7.01 points or 0.4% to 1,767.00, Nikkei 225 increased 7.48 points or 0.03% to 22,900.17, Hang Seng increased 8.31 points or 0.03% to 29,586.32, Jakarta Composite increased 31.33 points or 0.5% to 6,252.34 and Taiwan Weighted increased 56.67 points or 0.54% to 10,478.58.

On the other hand, Shanghai Composite decreased 4.34 points or 0.13% to 3,301.79.