Late sell-off drag benchmarks lower; Nifty holds 10,500 mark

Indian equity benchmarks ended the choppy day of trade in red terrain on Wednesday, mainly on the back of late hour selloff. Markets traded with volatility and altered between green and red throughout the session as traders remained on sidelines ahead of Wholesale Price Index (WPI) data to be released on February 15. Traders took some solace with India’s Retail inflation, measured by the consumer price index (CPI), easing to 5.07% in January 2018, after rising to 5.21% in the month of December. Meanwhile, India’s index of industrial production (IIP) for the month of December 2017 came at 7.1% as compared to 8.4% in last month. As per the street expectations it was likely to come at 6.4%. The cumulative growth for the period April-December 2017 over the corresponding period of the previous year stood at 3.7%. Traders also took some encouragement with a survey by economic think tank NCAER enlightened that the Business Confidence Index rose 9.1% in December quarter 2017 over the previous three months as overall sentiment remained buoyant. The NCAER Business Confidence Index (N-BCI) had declined 12.9% in the September quarter as the economy was still adjusting to the implementation of goods and services tax (GST), affecting business sentiments.

However, it was the last leg of trade which played spoil sports for the domestic markets and key gauges even broke their crucial 10,500 (Nifty) and 34,100 (Sensex) levels, led by selling in banking shares mainly public sector undertaking (PSU) banks after the Reserve Bank of India (RBI) on Monday after market hours came out with a new non-performing assets (NPA) resolution. In the RBI’s new rules, banks would have to harmonise the treatment of specific accounts across their books. If one bank has treated a particular account as an NPA, other lenders on the same account will have to treat it as an NPA in their books as well. However, markets got some support near those crucial levels with Sensex ending comfortably above 34,100 mark, while Nifty somehow managed to end tad above its psychological 10,500 bastion. Investors drew some comfort with Union minister Piyush Goyal’s statement that the country’s economic growth is likely to cross 7.5% in the next fiscal. Some support also came from private report that Inflation is peaking off and the RBI is expected to cut rates by 25 bps in August if monsoon is normal.

On the global front, European counterparts were trading in green in early deals, supported by strong results and German economic data. Strong exports drove robust growth in Germany at the end of last year while inflation stayed subdued in January, suggesting Europe’s biggest economy is on track to extend its upswing well into 2018. Asian stocks ended mostly in green ahead of Lunar New Year holidays and the US inflation report due later in the day, which may provide further cues on interest-rate changes in the world’s largest economy.

Back home, Care Ratings in its latest report ‘Corporate Performance: Q3-FY18’ has said that India Inc witnessed much lower revenue growth in the third quarter of the current fiscal at 9.3% as against 17.7% in the previous year, on the back of factors like ongoing restocking process, adjustment to GST especially at the SME level, limited pick-up in demand and high base effect. Meanwhile, shares of basmati rice producers rallied on back of heavy volumes in otherwise subdued market after the Pabrai Investment Fund bought nearly three percentage point stake in KRBL through open market purchases.

Finally, the BSE Sensex declined 144.52 points or 0.42% to 34,155.95, while the CNX Nifty was down by 38.85 points or 0.37% to 10,500.90.

The BSE Sensex touched a high and a low of 34,473.43 and 34,028.68, respectively and there were 12 stocks on gaining side as against 19 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.17%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Energy up by 0.78%, Telecom up by 0.68%, Industrials up by 0.45%, Capital Goods up by 0.33% and Realty was up by 0.19%, while PSU down by 1.80%, Bankex down by 1.62%, Healthcare down by 0.69%, Power down by 0.68% and Utilities was down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.47%, Reliance Industries up by 1.94%, Wipro up by 1.77%, Bharti Airtel up by 1.76% and Tata Motors - DVR up by 1.75%. On the flip side, Yes Bank down by 4.40%, SBI down by 4.06%, Axis Bank down by 3.35%, ONGC down by 2.62% and Sun Pharma down by 2.53% were the top losers.

Meanwhile, India’s oldest and largest independent think tank, National Council of Applied Economic Research’s (NCAER’s) Business Confidence Index (BCI) registered a substantial increase of 9.1 percent in October-December of 2017, over July-September quarter, as overall sentiment regarding production, domestic sales, exports, imports of raw materials, and pre-tax profits remained buoyant.

NCAER has pointed out that these improved sentiment were broad-based with all the sectors showing rising trends for all these components between the two periods. Besides, it observed that there was a considerable improvement in the situation pertaining to labour employment and wages over the last three months, and expectations about future labour employment and wages were optimistic.

The survey stated that Business Confidence Index fell 12.9 percent in the July-September, as the economy was still adjusting to the implementation of goods and services tax (GST), affecting business sentiment. NCAER is one of the India's oldest economic think tanks, set up in 1956 at the behest of Prime Minister Jawaharlal Nehru, to inform policy choices for both public and private sectors.

The CNX Nifty traded in a range of 10,590.55 and 10,456.65. There were 14 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were Tech Mahindra up by 3.07%, Indiabulls Housing Finance up by 1.99%, Adani Ports & SEZ up by 1.80%, Bharti Airtel up by 1.67% and Reliance Industries up by 1.47%. On the flip side, Yes Bank down by 4.79%, SBI down by 4.59%, Axis Bank down by 3.97%, ONGC down by 3.38% and Bharti Infratel down by 3.07% were the top losers.

European markets were trading in green; France’s CAC increased 37.64 points or 0.74% to 5,146.88, UK’s FTSE 100 gained 48.13 points or 0.67% to 7,216.14 and Germany’s DAX was up by 97.27 points or 0.8% to 12,293.77.

Asian stocks closed mostly in green on Wednesday after slightly firmer lead from Wall Street, which recorded a third consecutive day of gains. Meanwhile, investors awaited the release of US inflation data due later in the day, which may provide further clues on interest-rate changes in the world's largest economy. It is feared that a spike in inflation on the back of a tightening labor market and increased government spending may push Treasury yields higher once again and send equities spiraling lower. Chinese stocks eked out modest gains in thin trade as many traders had already left for the week-long Lunar New Year holiday that starts on Thursday. Though, Japanese shares hit a four-month low as the dollar slid to a 15-month low against the yen and data showed the country's GDP grew at a slower than expected 0.5 percent annual pace in the fourth quarter, marking the eighth straight quarter of expansion.