Benchmarks witness consolidation on Tuesday

Indian equity benchmarks witnessed consolidation on Tuesday as traders opted to book profit after yesterday’s rally. Though, markets started the session on an optimistic note with traders reacting positively to the Index of Industrial Production (IIP) numbers, as strong manufacturing growth and a rebound in the consumer durables sector lifted India's factory production to 7.5% in January from 7.1% in December. As per the street expectation it was likely to come at 6.6%. The cumulative growth for the period April-January 2017-18 over the corresponding period of the previous year stood at 4.1%. Some support also came with report that Inflation as measured by the CPI slowed to 4.44% in February from 5.07% in January, mostly due to easing food and fuel prices. Inflation in the food and beverages segment slowed to 3.38% in February from 4.58% in the previous month. Markets gained momentum as some support came with report that foreign direct investment (FDI) has increased steadily in the country with total capital inflows reaching $208.99 billion during April 2014 to December 2017 period. The main sectors that received maximum foreign inflows include services, computer software and hardware, telecommunications, construction, trading and automobile.

However, markets took U-turn and entered into red terrain as traders turned anxious with private report raising concerns that even as the economy has largely recovered from the shocks of demonetization and GST implementation, micro enterprises with borrowings of under Rs 10 lakh are yet to fully recover. The report reiterated that the situation has improved in all segments except those with borrowings less than Rs 50 lakh, where the systemic exposure has not caught up with pre-demonetization levels. Separately, a report showed that India’s monsoon rains are expected to be slightly below normal this year, while parts of Australia’s eastern grain belt could be drier as an El Nino weather pattern may develop in the second half of 2018.

On the global front, European markets were trading mostly in green in early deals as investors awaited the latest inflation figures from the United States. The DIHK Chambers of Industry and Commerce said that labor shortages in Germany are threatening the whole economy as companies struggle to fill around 1.6 million job vacancies. Asian markets ended mostly in green ahead to the release of crucial US inflation data.

Back home, some concerns came with a foreign brokerage report showed that CPI inflation is expected to rise over the next few months and average close to 4.7% in 2018-19, driving Reserve Bank to keep key policy rates on hold in the coming financial year. It said that the headline CPI inflation may average close to 4.7 per cent in 2018-19 (as against 3.6 per cent estimated in 2017-18). On the sectoral front, realty stocks remained buzzing in today’s trade with ICRA’s report which enlightened that in what can be seen as a possible recovery in the housing market, sales improved by 29.3% year-on-year during the April to December period last year, while the time taken to clear the inventory went down to 12 quarters. The report added that real estate companies sold 17.26 million sq ft during the nine months, against 13.35 million sq ft in the year-ago period.

Finally, the BSE Sensex shed 61.16 points or 0.18% to 33,856.78, while the CNX Nifty was up by 5.45 points or 0.05% to 10,426.85.

The BSE Sensex touched a high and a low of 34,077.32 and 33,722.96, respectively and there were 16 stocks on gaining side as against 15 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index surged 1.00%, while Small cap index was up by 1.14%.

The top gaining sectoral indices on the BSE were Telecom up by 1.74%, Oil & Gas up by 1.63%, Realty up by 1.56%, PSU up by 1.39% and Consumer Durables was up by 1.32%, while IT down by 1.56%, TECK down by 1.06% and FMCG was down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.23%, Sun Pharma up by 2.04%, Wipro up by 1.65%, Dr. Reddy’s Lab up by 1.60% and Bharti Airtel up by 1.22%. On the flip side, TCS down by 5.22%, Kotak Mahindra Bank down by 1.46%, Coal India down by 1.02%, NTPC down by 0.94% and Maruti Suzuki down by 0.66% were the top losers.

Meanwhile, the Minister of state for commerce and industry C.R. Chaudhary has said that the inflow of Foreign Direct Investment (FDI) into India has reached to $208.99 billion during April 2014 to December 2017 period. He indicated that the main sectors that received maximum FDI equity inflows include services, computer software and hardware, telecommunications, construction, trading and automobile.

The minister has indicated that the number of functional export oriented units (EOU) has reduced to 2,197 so far in 2017-18 from 2,239 in 2016-17. He added that the number of functional units in 2015-16 was 2,269 and 2,293 in the previous fiscal.

Chaudhary further said that on the recommendations of the Public Accounts Committee, a committee under the development commissioner Kandla SEZ (special economic zone) has been constituted to identify the shortcomings in the EOU scheme. He also said that the committee would also conduct a comparative study of the benefits accrued to SEZ units and EOUs to find out the reasons for shifting of export oriented units to special economic zone sector and suggest remedial actions.

The CNX Nifty traded in a range of 10,478.60 and 10,377.85. There were 29 stocks in green as against 21 stocks in red on the index.

The top gainers on Nifty were HPCL up by 4.32%, BPCL up by 4.05%, Bharti Infratel up by 2.65%, GAIL India up by 2.59% and Sunpharma up by 2.31%. On the flip side, TCS down by 5.44%, Kotak Mahindra Bank down by 1.62%, NTPC down by 1.26%, Hindalco down by 1.08% and Ambuja Cement down by 0.85% were the top losers.

European markets were trading mostly in green; Germany’s DAX gained 18.88 points or 0.15% to 12,437.27 and France’s CAC was up by 19.56 points or 0.37% to 5,296.27, while UK’s FTSE 100 was down by 3.05 points or 0.04% to 7,211.71.

Asian markets closed mostly in green on Tuesday. But investors moved cautiously as the recent global rally lost steam, while trade tensions returned and markets look ahead to the release of crucial US inflation data. A strong jobs report on Friday and Donald Trump's decision to meet Kim Jong-un helped fuel a surge in global equities at the end of last week, overshadowing US tariffs and fears of a trade war. But concerns returned following comments from a European trade commissioner that the EU would ‘stand up to bullies’ while Trump said he will look into cutting levies the bloc imposes on US goods. Attention is now on the inflation release later in the day, which will be pored over for an idea about the Federal Reserve's timetable for hiking interest rates. A strong reading could hit markets worried about the impact of higher borrowing costs on the investment environment. Japanese shares ended higher as a softer yen helped lift exporters, offsetting weakness in steelmakers and automakers. Though, Chinese shares ended lower to snap a three-day winning streak after the country unveiled a massive cabinet reshuffle plan, including the merger of its banking and insurance regulators to better handle financial risks.