Benchmarks trade in green; Nifty holds 10,650 mark

Indian equity benchmarks continued their trade in green in morning session on account of buying in frontline blue chip counters. The rupee strengthened against the dollar in the opening trade on fresh selling of the US currency by exporters and banks. Benchmark indices continued to trade higher despite Brent crude oil hit December 2014 high of $70 a barrel. Traders took support from private report that economic indicators like PMIs, vehicle sales and steel demand suggest that growth momentum in India has gathered pace in December. However, prices are also on an uptrend with retail inflation likely to have firmed up further to 5.4% in December owing to a lower base of comparison. As per the report, exports continued to stay strong, growing at double digit levels of 23.2 per cent year-on-year in December. While, import growth is expected to have accelerated to 25.5 per cent YoY, on the back of favourable base effect and robust consumption trends in the month. Separately, some encouragement also crept in with the statement of NITI Aayog Vice Chairman Rajiv Kumar, who dismissing concerns of fiscal slippage has said the next Union Budget will not be a populist one. He said that there shouldn’t be a fear of fiscal risk because of slippage, because if at all, a fiscal slippage happens, it would only be for the right reasons.

Additionally, farm minister Radha Mohan Singh has said that India’s agriculture sector will expand more than 4% in 2017-18, trying to allay concerns raised by the statistical office’s projection of sluggish growth in one of the most important segments of the economy. The minister added that increased horticulture and fisheries production, a robust kharif harvest and near-normal planting in the ongoing rabi season will hold the growth at a healthy rate. Investors took note that India is set to unveil another revamp of the goods and services tax (GST) regime next week aimed at making compliance simpler. The GST Council meeting on January 18 is expected to take up changes in the definitions of terms such as supply and handicrafts as part of this effort besides replacing the three forms that need to be submitted with one.

Meanwhile, select steel stocks were buzzing as the Union Steel Minister Birender Singh said that exports should account for 6-7 per cent of India’s total steel production in the next few years, up from the 1.5 per cent at present. Telecom stocks Bharti Airtel, Idea Cellular and Reliance Communications were trading in red on report that the telecom regulator may reduce international termination rate (ITR) - a charge paid by international operators to local networks that receive calls - by almost half from the current 53 paise a minute, a move that would deal a body blow to India’s top telcos which receive bulk of international calls.

Traders were seen piling up position in Industrials, Metal and Capital Goods stocks, while selling was witnessed in IT, TECK and Realty sector stocks. In scrip specific development, auto stocks were buzzing on report that the auto industry registered a growth of 11.27% in April-December 2017 over the same period last year. Tata Consultancy Services (TCS) was trading in red on reporting a marginal fall of 0.25% in its net profit at Rs 6,069 crore for the third quarter ended December 31, 2017, as compared to net profit of Rs 6,084 crore for the same quarter in the previous year.

On the global front, the Asian markets were trading mostly in green. China reported trade data for December with exports up 10.9%, compared to a gain of 9.1% seen, imports posted a 4.5% rise, compared to a 13.0% increase expected and the trade balance came in at $54.69 billion surplus, compared to surplus of $37 billion seen. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,500 and 10,650 levels respectively. The market breadth on BSE was positive in the ratio of 1568:950, while 116 scrips remained unchanged.

The BSE Sensex is currently trading at 34587.76, up by 84.27 points or 0.24% after trading in a range of 34558.36 and 34638.42. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.21%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were Industrials up by 0.70%, Metal up by 0.66%, Capital Goods up by 0.61%, Auto up by 0.49% and Energy up by 0.43% while, IT down by 0.24%, TECK down by 0.12% and Realty down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.40%, ICICI Bank up by 1.08%, Larsen & Toubro up by 0.72%, HDFC up by 0.59% and Reliance Industries up by 0.56%.

On the flip side, TCS down by 1.17%, Dr. Reddy’s Lab down by 0.58%, Sun Pharma down by 0.54%, Asian Paints down by 0.54% and Wipro down by 0.50% were the top losers.

Meanwhile, State Bank of India's (SBI) Ecowrap report has said that the country's consumer price index (CPI)-based inflation for December is expected to remain at an elevated level and range between 5 and 5.2 per cent. SBI in its report pointed that CPI inflation came in at 4.88 per cent in November 2017, surpassing the already high expectations of the market and for December 2017 as well the numbers are expected to remain elevated. It further projected CPI inflation to come in between 5-5.2 per cent.

However, the report also pointed that the higher rate of inflation is “primarily due to base effect” and said that “The average for Q3 FY18 will come around 4.5 per cent on yearly basis compared to 3 per cent  in Q2 FY18, adding that “we expect the Q4 FY18 average at 4.8 per cent”. “Inflation for the Jan'18-Jun'18 period is likely to be on the higher side owing primarily to base effect (average inflation for Jan'17-Jun'17: 2.89 per cent).

The report added that some inflation numbers in the first half of 2018 could print over 5.5 per cent and this could be a source of negative surprise and it expects that on a net basis CPI inflation will remain modest in FY19 at 4.5 per cent. It had previously observed that inflation in Southern states is higher than other parts of the country mainly due to higher rural inflation over urban inflation.

The CNX Nifty is currently trading at 10675.35, up by 24.15 points or 0.23% after trading in a range of 10671.40 and 10690.25. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 1.74%, Zee Entertainment up by 1.58%, Maruti Suzuki up by 1.44%, ICICI Bank up by 1.07% and Bharti Infratel up by 1.07%.

On the flip side, TCS down by 1.21%, UPL down by 1.06%, Asian Paints down by 0.57%, Sun Pharma down by 0.50% and Dr. Reddy’s Lab down by 0.43% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 0.1 points or 0% to 6,386.44, KOSPI Index increased 1.37 points or 0.06% to 2,489.28, Shanghai Composite increased 3.31 points or 0.1% to 3,428.65, FTSE Bursa Malaysia KLCI increased 4 points or 0.22% to 1,820.88, Taiwan Weighted increased 67.49 points or 0.62% to 10,877.55 and Hang Seng increased 90.93 points or 0.29% to 31,211.32.

On the other hand, Nikkei 225 decreased 44.65 points or 0.19% to 23,665.78.