Benchmarks end choppy day with minimal losses

Indian equity benchmarks ended the choppy day of trade with minimal losses, as traders remained on sidelines ahead of ahead of key corporate earnings later this week and the federal budget next month. Market participants also opted to stay away from buying risky assets ahead of the outcome of meeting organised by government think tank NITI Aayog, and attended by a host of ministers including Finance Minister Arun Jaitley, NITI Aayog functionaries and leading economists. Some concerns also came with rating agency ICRA’s latest report stating that credit growth of Infrastructure finance firms will remain subdued over the short term. However, losses remained capped with the World Bank projecting India’s growth rate to 7.3 per cent in 2018 and 7.5 for the next two years. It said that with an “ambitious government undertaking comprehensive reforms”, India has “enormous growth potential” compared to other emerging economies. The 2018 Global Economics Prospect released by the World Bank also said that India, despite initial setbacks from demonetisation and Goods and Services Tax (GST), is estimated to have grown at 6.7 per cent in 2017.

Traders also got some solace with domestic rating agency CRISIL expecting India Inc’s revenue growth to hit a five-year high of 9 per cent for the October-December 2017 period, on higher realizations in steel, aluminium, cement and crude oil-linked sectors, and a pick-up in consumption-driven sectors such as auto and aviation. However, profits will continue to contract, primarily due to the rising commodity prices. Traders also took some comfort with the Cabinet approving key changes in India’s Foreign Direct Investment (FDI) policy by easing investment norms across sectors including aviation, construction and single brand retail among others. These amendments are government’s broader strategy to liberalize and simplify the FDI policy to facilitate ease of doing business and turn India into a global investment hotspot.

On the global front, European counters were trading in red in early deals ahead of the first earnings season of the year. British industrial output looks set to make a strong contribution to economic growth in the final months of 2017 but construction is likely to drag. Asian markets closed mostly in red, amid oil prices touching three-year highs due to production cuts and a fall in inventories.

Back home, stocks related to IT pack remained buzzing, as US authorities said that the Trump administration is not considering any proposal that would force H-1B visa holders to leave the country. The announcement by the US Citizenship and Immigration Services (USCIS) came days after reports emerged that the Trump administration was considering tightening H-1B visa rules that could lead to deportation of 7,50,000 Indians. Stocks related to oil companies edged higher, despite the international oil prices hitting their highest levels since 2014. Telecom stocks are ringing loud in early deals, as the Telecom Commission (TC) has decided to relax spectrum holding caps, giving a boost to M&As and spectrum sale. In scrip specific development, Tech Mahindra moved up on entering into partnership with edX.org, while Power Grid advanced on receiving nod to invest Rs 92.13 crore.

Finally, the BSE Sensex slipped 10.12 points or 0.03% to 34,433.07, while the CNX Nifty was down by 4.80 points or 0.05% to 10,632.20.

The BSE Sensex touched a high and a low of 34,565.63 and 34,311.63, respectively and there were 9 stocks on gaining side as against 22 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index slipped 0.31%, while Small cap index down was by 0.04%.

The top gaining sectoral indices on the BSE were IT up by 1.84%, TECK up by 1.46%, Realty up by 1.16%, Energy up by 0.17% and Telecom was up by 0.12%, while Auto down by 0.68%, Consumer Durables down by 0.65%, Consumer Discretionary Goods & Services down by 0.40%, Utilities down by 0.39% and Capital Goods was down by 0.37% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.64%, Wipro up by 2.66%, Coal India up by 1.33%, Adani Ports & SEZ up by 1.05% and Infosys up by 0.99%. On the flip side, Dr. Reddy’s Lab down by 1.45%, Tata Motors - DVR down by 1.31%, NTPC down by 1.25%, Asian Paints down by 1.22% and Bajaj Auto down by 1.10% were the top losers.

Meanwhile, in order to protect the domestic industry from serious injury, India’s Directorate General of Safeguards (DGS) has recommended a 70 percent safeguard duty on import of solar power equipment from China and Malaysia for a period of 200 days. In a January 5 recommendation to the finance ministry, the DGS said that solar cells are being imported into India in such increased quantities and under such conditions so as to cause or threaten to cause serious injury to the domestic industry manufacturing like or directly competitive products.

The safeguard duty would be levied if the finance ministry accepts the recommendations of the DGS. Acting on an application filed by an association of five domestic solar cell and module manufacturers, including the Adani Group, DGS recommended a provisional safeguard duty be imposed at the rate of 70 percent ad valorem on the imports of solar cells whether or not assembled in modules or panels. Before final duties or import taxes are levied, DGS will hold further investigation into the injury caused by cheap imports. It would also hold a public hearing on the issue. Besides, the DGS has stated that the existing critical circumstances justify the immediate imposition of a provisional Safeguard Duty to save local units from further serious injury, which would be difficult to repair in case the safeguard measure is delayed.

DGS highlighted that India’s annual manufacturing capacity for solar cells stands at around 3GW as compared with the average requirement of 20GW. It also indicated that the import of solar equipment jumped from 1,271MW in 2014-15 to 4,186MW in the next year and to 6,375 MW in 2016-17. It mentioned that current fiscal imports are pegged at 9,474 MW as compared to a domestic production of 1,164 MW. Adding further, it said that the growth rate of such imports as a percentage of the domestic production was a remarkable 1,371 per cent during the intervening year 2015-16. It also stated that even the overall growth rate of the imports relative to its domestic production is very significant, rising from 519 per cent in 2014-15 to 814 per cent in 2017-18.

The CNX Nifty traded in a range of 10,655.50 and 10,592.70. There were 17 stocks in green as against 33 stocks in red on the index.

The top gainers on Nifty were TCS up by 3.47%, Wipro up by 2.90%, HCL Tech up by 2.47%, Tech Mahindra up by 1.64% and HPCL up by 1.48%. On the flip side, UPL down by 1.57%, Eicher Motors down by 1.56%, NTPC down by 1.39%, Dr. Reddy’s Lab down by 1.25% and Asian Paints down by 1.19% were the top losers.

European markets were trading in red; Germany’s DAX decreased 122.51 points or 0.92% to 13,263.08, France’s CAC shed 23.13 points or 0.42% to 5,500.81 and UK’s FTSE 100 was down by 1.69 points or 0.02% to 7,729.33.

Asian equity markets ended mostly in red on Wednesday after bond yields jumped in the US and inflation data from China painted a mixed picture of the economy. The benchmark ten-year US Treasuries rose to a nearly ten-month closing high on Tuesday after the Bank of Japan surprised markets by reducing its purchases of long-dated Japanese bonds. Consumer prices in China rose an annual 1.8 percent in December, the National Bureau of Statistics said. That missed expectations for an increase of 1.9 percent but was up from 1.7 percent in November. The bureau also said that producer prices jumped an annual 4.9 percent, exceeding forecasts for a gain of 4.8 percent but down from 5.8 percent in the previous month. Japanese shares ended in the red as traders locked in some profits after recent strong gains. However, Chinese shares extended their rally and to close at the highest in seven weeks, led by banking and consumer stocks.