Benchmarks continue to trade in green with marginal gains

Indian equity benchmarks continued their trade in green with marginal gains in morning session on account of buying in frontline blue chip counters. The rupee opened higher against the dollar riding on the back of comforting macro data points. Foreign Portfolio Investors (FPIs) offloaded shares worth a net Rs 814.11 crore in the previous trading session, as per provisional data. However, Domestic Institutional Investors (DIIs) net bought shares of Rs 1,342.70 crore. The sentiments were upbeat after 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 GST, affecting business sentiment. A foreign brokerage report said that inflation is peaking off and the Reserve Bank of India (RBI) is expected to cut rates by 25 bps in August if monsoon is normal. It added that inflation risks are overdone. January inflation stood at 5.1%, a shade below December’s 5.2%, and it is tracking February inflation at 4.7% with tomato/onion prices slipping.

Investors took note that after hitting a 17-month high of 5.21% in the month of December 2017, India’s retail inflation cooled down to 5.07% in January 2018, due to easing prices of vegetables, fruits and fuel components. The consumer price index (CPI) number for January was in line with the RBI’s revised inflation projection of 5.1% for the quarter ended March, up from its previous forecast of 4.3-4.7%. Separately, India’s industrial output registered a growth of 7.1% in the month of December 2017, as compared to 2.4% in December 2016, led by robust performance by manufacturing as well as higher offtake of capital goods and non-durable consumer goods.

The upside was however capped as CARE Ratings in its report highlighted that revenue growth of India Inc nearly halved to 9.3 per cent in the third quarter from 17.7 per cent a year-ago, due to a combination of factors, including the ongoing restocking process and adjustment to GST at the SME level. Similarly, net profit too clipped lower at 24.6 per cent for the three months to December 2017 from 25.3 per cent a year-ago. Banking stocks were under pressure on report that more than Rs 2 lakh crore worth of stressed loans may be headed to bankruptcy court after the Reserve Bank dumped various restructuring schemes and pronounced such courts as the final arbiter of a defaulting company’s future. These loans are mostly from infrastructure sectors such as power, telecom, roads and ports and are in different stages of restructuring under plans such as strategic debt restructuring (SDR) or the so-called sustainable structuring of stressed assets (S4A). Separately, a report by India Ratings highlighted that persistent rise in bond yields is likely to shave Rs 30,500 crore from the banks’ balance-sheets in the current financial year, with state-run lenders being the worst hit.

Traders were seen piling position in Realty, Consumer Durables and Telecom sector stocks, while selling was witnessed in PSU, Bankex and Power sector stocks. In scrip specific development, Bank of India was trading in red on reporting a loss of Rs 2,341.2 crore for the December quarter due to losses in bond trading and a high provisions for bad loans where its classification and the regulator’s diverged. The bank had reported a net profit of Rs 101.7 crore a year ago. Its asset quality performance deteriorated and provisioning requirement more than doubled. Punjab National Bank (PNB) was trading in red on detecting some fraudulent and unauthorized transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance. Based on these transactions other banks appear to have advanced money to these customers abroad.

On the global front, the Asian markets were trading mixed. Japan’s economy posted its longest continuous expansion since the 1980s boom as fourth quarter growth was boosted by consumer spending, and moved Prime Minister Shinzo Abe’s revival plan another step closer to vanquishing decades of stagnation. The long run of growth is also an encouraging sign for the Bank of Japan, hinting that the economy may at last be building up momentum to lift consumer prices toward its 2% inflation target. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 34,300 and 10,550 levels respectively. The market breadth on BSE was positive in the ratio of 1580:871 while 104 scrips remained unchanged.

The BSE Sensex is currently trading at 34326.52, up by 26.05 points or 0.08% after trading in a range of 34264.83 and 34473.43. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.80%, while Small cap index was up by 1.05%.

The top gaining sectoral indices on the BSE were Realty up by 1.47%, Consumer Durables up by 1.12%, Telecom up by 0.92%, Industrials up by 0.85% and IT up by 0.85%, while PSU down by 0.87%, Bankex down by 0.64%, Power down by 0.38% and Utilities down by 0.28% were the only losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.43%, Wipro up by 1.95%, Adani Ports & Special Economic Zone up by 1.40%, Reliance Industries up by 1.05% and Coal India up by 0.88%.

On the flip side, Power Grid down by 2.17%, SBI down by 1.91%, Axis Bank down by 1.54%, Sun Pharma down by 1.40% and Asian Paints down by 1.30% were the top losers.

Meanwhile, sustaining its recovery for the second straight month, India’s industrial output registered a growth of 7.1% in the month of December 2017, as compared to 2.4% in December 2016, led by robust performance by manufacturing as well as higher offtake of capital goods and non-durable consumer goods. Though, the pace of growth has slowed down as compared to a revised 8.8% growth in the previous month. The Index of Industrial Production (IIP) growth for November, 2017, has been revised upwards to 8.8% from provisional estimates of 8.4% released last month.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of December 2017, stood at 130.3, which is 7.1% higher as compared to the level in the month of December 2016. The cumulative growth for the period April-December 2017 over the corresponding period of the previous year stood at 3.7%.

On the sectoral basis, the manufacturing sector, which constitutes 77.63% of the index, clocked the sharpest growth at 8.4% during the month as compared to 0.6% in December 2016. However, the mining and electricity sector growth slowed down to 1.2% and 4.4% respectively, in December 2017, as against 10.8% and 6.4% respectively, in the same month last year. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of December 2017 stood at 115.5, 131.6 and 143.9 respectively. The cumulative growth in these three sectors during April-December 2017 over the corresponding period of 2016 has been 2.8%, 3.8% and 5.1% respectively.

The capital goods, a barometer of investments, showed a sharp increase in output by 16.4% in December 2017 as against a decline of 6.2% a year ago. Similarly, consumer durables grew 0.9% in December 2017 compared to a decline of 5% in December 2016. Consumer non-durables also grew 16.5% in December 2017, against a contraction of 0.2% in the year-ago period. As per Use-based classification, the growth rates in December 2017 over December 2016 are 3.7% in Primary goods, 6.2% in Intermediate goods and 6.7% in Infrastructure/Construction Goods.

In terms of industries, 16 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of December 2017 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of other transport equipment’ has shown the highest positive growth of 38.3% followed by 33.6% in ‘Manufacture of pharmaceuticals, medicinal chemical and botanical products’ and 29.8% in ‘Manufacture of computer, electronic and optical products’. On the other hand, the industry group ‘Manufacture of tobacco products’ has shown the highest negative growth of (-) 28.2% followed by (-) 22.3% in ‘Other manufacturing’ and (-) 14.9% in ‘Manufacture of electrical equipment’.

The CNX Nifty is currently trading at 10552.05, up by 12.30 points or 0.12% after trading in a range of 10527.95 and 10590.55. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 3.39%, Bajaj Finance up by 2.99%, Bharti Airtel up by 2.23%, Vedanta up by 1.73% and Wipro up by 1.59%.

On the flip side, Bharti Infratel down by 3.31%, Power Grid down by 2.37%, SBI down by 2.22%, Axis Bank down by 1.84% and Sun Pharma down by 1.49% were the top losers.

The Asian markets were trading mixed; FTSE Bursa Malaysia KLCI increased 1.16 points or 0.06% to 1,834.18, KOSPI Index increased 25.05 points or 1.05% to 2,420.24 and Hang Seng increased 271.46 points or 0.91% to 30,110.99.

On the other hand, Nikkei 225 decreased 47.26 points or 0.22% to 21,197.42, Shanghai Composite decreased 8.39 points or 0.26% to 3,176.57 and Jakarta Composite decreased 1.1 points or 0.02% to 6,577.07.

Taiwan Stock Exchange was closed on account of National holiday.