Markets end choppy session on quiet note

Indian equity benchmarks ended the choppy day of trade on quiet note on Tuesday, as traders remained on sidelines ahead of corporate results for the third quarter FY18 to be released later this month. After a positive start, markets turned choppy and altered between green and red throughout the session to end flat. Though, traders took some support with report that the eight core industries growing by 6.8% in November 2017, compared to the production during November 2016. The growth in November was driven by a 16.6% increase in steel production over November 2016. Traders also got some solace with government’s decision to ease norms for rectification of GST returns. The Finance Ministry has permitted businesses to rectify mistakes in their monthly returns - GSTR-3B - and adjust tax liability, a move that will help them file correct returns without fear of penalty. Better than expected Nikkei India Manufacturing Purchasing Managers’ Index (PMI) too provided some comfort to the market participants. The seasonally adjusted Manufacturing PMI rose to 54.7 in December from 52.6 in November, indicating a healthy growth in manufacturing sector since December 2012.

However, traders remained concerned with report that retail inflation for industrial workers rose to 3.97% in November 2017 as compared to 3.24% for the previous month, mainly due to surge in prices of food items, kerosene and cooking gas. The year-on-year inflation measured by monthly CPI-IW (Consumer Price Index-Industrial Workers) stood at 3.97% for November, 2017 as compared to 3.24% for the previous month (October, 2017) and 2.59% during the corresponding month (November 2016) of the previous year. The traders took note of report which has pointed oil, inflation as risk factors, stating that India's economic growth is likely to pick up in the New Year but rising oil prices and a firming inflation may spoil the party.

Weak opening in European counters too dampened sentiments. Activity in the UK manufacturing sector slowed slightly in the last month of the year, but continued to expand at a solid pace. Asian markets ended mostly in green terrain, after a survey of Chinese manufacturing proved surprisingly upbeat, while the euro lurked within striking distance of its 2017 top against an ailing US dollar.

Back home, oil marketing companies i.e. Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) edged lower following further increase in Brent crude oil prices on ongoing supply cuts. Banking shares remained under pressure, as the country’s largest PSU bank SBI has lowered the base rate by 30 basis points to 8.65 per cent, setting trend for other banks to follow. It is also set to initiate insolvency proceedings against at least a dozen defaulting companies. However, select auto stocks remained in top gear as car sales picked up in December. The improved consumer sentiment on the back of a broader economic revival, a surging stock market and year-end stock clearance offers pushed up sales of passenger vehicles in December. Select cement stocks edged higher despite cement production increasing by 17.3% in November 2017 over same month in 2016.

Finally, the BSE Sensex slipped 0.49 points to 33,812.26, while the CNX Nifty was up by 6.65 points or 0.06% to 10442.20.

The BSE Sensex touched a high and a low of 33,964.14 and 33,703.37, respectively and there were 14 stocks on gaining side as against 17 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.62%, while Small cap index was down by 0.63%.

The top gaining sectoral indices on the BSE were Metal up by 0.63%, Power up by 0.32%, Industrials up by 0.13%, Basic Materials up by 0.09% and Auto was up by 0.09%, while Telecom down by 1.41%, Realty down by 0.95%, Healthcare down by 0.73%, Consumer Discretionary Goods & Services down by 0.66% and FMCG was down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 4.24%, Tata Motors up by 3.16%, ONGC up by 2.36%, Coal India up by 1.46% and NTPC up by 1.19%. On the flip side, Bharti Airtel down by 2.24%, SBI down by 1.35%, Maruti Suzuki down by 1.24%, Larsen & Toubro down by 1.01% and Hero MotoCorp down by 0.92% were the top losers.

Meanwhile, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its Year Ahead Outlook has stated that India is likely to witness mergers and acquisitions (M&A) activity worth $50 billion in the year 2018, on the back of plenty of stressed corporate assets on offer attempting valuations. Besides, it observed that the country’s M&A transactions saw a quantum jump of 170 percent in valuations and over 70 percent in the number of transactions in 2017.

As per the different data compilations, there were a total of 944 transactions (664 domestic and 280 cross-border) in 2017 worth $46.5 billion ($3.1 billion domestic and $33.4 billion cross-border). This was against a total of 553 transactions (358 domestic and 195 cross-border) worth $17.5 billion ($7.2 billion domestic and $10.3 billion cross-border) in 2016. The chamber pointed out that there has been a quantum leap in M&A transactions in India with more focus on sectors such as healthcare, telecom, energy, real estate, media & entertainment, banking, insurance, oil, cement and consumer products.

The report further highlighted that the M&A opportunities in 2018 would remain robust given the fact that lot more assets continue to remain under stress. It also noted that some big-ticket projects referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code would see change in promoters in areas like real estate, steel etc. It also suggested easing of guidelines and legislative support in the Income Tax Act and the Competition Act to boost M&A activity in India. It added that amendments in the Stamp Act, 1899 to bring uniformity of Stamp Duty in all Indian states particularly to M&A transactions can prove to be a catapult for the future M&A’s in India.

The CNX Nifty traded in a range of 10,495.20 and 10,404.65. There were 20 stocks in green as against 30 stocks in red on the index.

The top gainers on Nifty were Tata Motors up by 3.24%, UPL up by 2.41%, Bharti Infratel up by 2.35%, ONGC up by 2.11% and Tech Mahindra up by 2.09%. On the flip side, Eicher Motors down by 3.91%, Indiabulls Housing Finance down by 2.56%, Bharti Airtel down by 2.12%, BPCL down by 1.77% and Aurobindo Pharma down by 1.67% were the top losers.

European markets were trading in red; Germany’s DAX decreased 114.33 points or 0.89% to 12,803.31, France’s CAC declined 43.66 points or 0.82% to 5,268.90 and UK’s FTSE 100 was down by 31.01 points or 0.4% to 7,656.76.

Asian equity markets ended mostly in green on Tuesday, the first trading day of 2018, as a survey of Chinese manufacturing beat forecasts and North Korean leader Kim Jong Un said he is open to talks with South Korea, and may consider sending a delegation to next month's Winter Olympics in PyeongChang. Chinese shares ended higher after the China Caixin manufacturing PMI showed a reading of 51.5 in December, beating expectations and also touching a four-month high. Separately, official data showed Sunday that China's manufacturing activity edged down slightly in December, but largely maintained momentum. Meanwhile, Japanese markets were closed for a bank holiday.