Benchmarks trade flat with positive bias

Indian equity benchmarks continued to trade flat with positive bias in morning session on first trading day of New Year. The rupee opened up against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 595.04 crore in the previous trading session as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) purchased shares worth a net Rs 461.37 crore, as per provisional data. The sentiment were upbeat on report that in the near term, most money managers believe the stock markets will remain positive in 2018, with 53% estimating the Sensex will stay in the range of 34,000-35,000 by the time the Union Budget is presented. An increase to 35,000 would mean a gain of 2.8%. The Budget, which will be the government’s last full-fledged one before its term ends in May 2019, will likely be presented on February 1. Traders took support with report that the government has extended by 10 days the last date for filing of final sales return GSTR-1 till January 10 under the Goods and Services Tax. Businesses with turnover of up to Rs 1.5 crore will have to file GSTR-1 for July-September by January 10, 2018, as against December 31, 2017 earlier.

Meanwhile, investors took note that India Inc has commended the Modi government’s overall stewardship of the economy but criticized slow progress in reducing stress in key sectors such as exports and agriculture in a nationwide poll on New Year’s Eve. About 55% of participants in the private poll believe that growth will hover at 6.5-7% in 2018-19, a clear sign that the headwinds which battered the economy in 2015-17 will take a much longer time to abate. Overseas investors have pulled out close to Rs 5,900 crore from domestic equities in December, with widening fiscal deficit and higher crude prices making market participants cautious on macro-economic front. The outflow comes following an eight month high inflow of Rs 19,728 crore in November, mainly on account of the Government’s plan to recapitalize PSU banks and surge in India's ranking in the World Bank's ease of doing business. Market experts, however, believe FPIs may not be able to repeat this showing in 2018 as withdrawal of liquidity and rate hikes in developed economies pick up.

Traders were seen piling up position in Realty, Healthcare and Consumer Durables stocks, while selling was witnessed in TECK, Metal and IT sector stocks. In scrip specific development, shares of auto companies will remain in focus as auto companies will start declaring monthly sales numbers for December 2017. Many auto makers had offered huge year-end discounts during the month, the impact of which is to be seen on sales data later in the day. Bank of India, IDBI Bank, UCO Bank, Bank of Maharashtra, Dena Bank and Central Bank of India was trading in green on report that the government has provided over Rs 7,500 crore fresh equity to six stressed state-run banks to help them meet the prescribed regulatory capital requirement and state its commitment to keep banks well-funded.

On the global front, the Asian markets were closed for the day on account of National holiday. 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 1828:630, while 95 scrips remained unchanged.

The BSE Sensex is currently trading at 34072.73, up by 15.90 points or 0.05% after trading in a range of 34032.70 and 34101.13. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.59%, while Small cap index was up by 0.92%.

The top gaining sectoral indices on the BSE were Realty up by 2.31%, Healthcare up by 0.96%, Consumer Durables up by 0.79%, Industrials up by 0.60% and Capital Goods up by 0.53%, while TECK down by 0.21%, Metal down by 0.12% and IT down by 0.10% were the only losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 1.86%, ITC up by 1.01%, Tata Motors up by 0.90%, Tata Motors - DVR up by 0.82% and SBI up by 0.71%.

On the flip side, Hindustan Unilever down by 1.12%, TCS down by 1.03%, Adani Ports & Special Economic Zone down by 0.62%, HDFC down by 0.61% and ICICI Bank down by 0.59% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has admitted that the Indian economy slowed down in 2016-17, with the gross domestic product declining drastically from 8 percent in 2015-16 to 7.1 percent the next year. He said the slower economic growth reflected lower growth in the industry and the services sectors, due to a number of factors including structural, external, fiscal and monetary factors. He further said that lower rate of global economic growth in 2016, along with a reduction in gross fixed investment to GDP ratio, stressed balance sheets of the corporate sector, lower credit growth in industry sector were some of the reasons for the low growth rate in 2016-17.

The finance minister however claimed that despite the slowdown, as per the IMF, India was the fastest growing major economy in 2016 and second fastest growing major economy in 2017 in the world. He said the government has taken various initiatives to boost the growth of the economy, including giving a fillip to manufacturing, concrete measures for transport and power sectors as well as other urban and rural infrastructure, comprehensive reforms in the foreign direct investment policy and special package for textile industry. He added that the Insolvency and Bankruptcy Code was enacted to achieve insolvency resolution in a time bound manner.

Jaitley also said the government had announced various measures in the 2017-18 budget to promote growth in which included a push to infrastructure development by giving infrastructure status to affordable housing, higher allocation to highway construction and focus on coastal connectivity. The introduction of the Goods and Services Tax (GST) has provided a significant opportunity to improve growth momentum by reducing barriers to trade, business and related economic activities.

The CNX Nifty is currently trading at 10532.35, up by 1.65 points or 0.02% after trading in a range of 10516.35 and 10537.85. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.63%, Sun Pharma up by 1.79%, Aurobindo Pharma up by 1.04%, ITC up by 0.97% and Tata Motors up by 0.72%.

On the flip side, Bharti Infratel down by 1.68%, TCS down by 0.99%, Hindustan Unilever down by 0.94%, Vedanta down by 0.88% and Hindalco down by 0.73% were the top losers.