Benchmarks eke out slender gains; Nifty holds 10,800 mark

Indian equity benchmarks ended the volatile day of trade with modest gains on Monday, as traders remained on sidelines ahead of Karnataka election results due on May 15. Markets started the session on an optimistic note as traders took some encouragement with Fitch’s report stating that India’s economic growth will accelerate to 7.3% in the current fiscal and 7.5% in the next as money supply has recovered to its pre-demonetisation level and disruptions related to the rollout of GST have diminished. Separately, another foreign brokerage report highlighted that despite moderation in factory output growth in March, India’s GDP is expected to grow by 7.7% in January-March, up from 7.2% in the preceding quarter. Some support also came from a report which highlighted that the Finance Ministry has cleared FDI proposal last month which will bring total foreign investment worth Rs 3,250 crore.

However, markets took U-turn and entered into red terrain after India’s wholesale inflation grew 3.18% in April hitting a 4-month high as prices of some vegetables and fuel & power firmed up. Wholesale Price Index (WPI) witnessed a growth of 2.47% in March and 3.85% April 2017. Primary articles, which accounts for more than a fifth of the entire wholesale price index, grew 1.41% in April from 1.03% year a percent ago and 0.24% in March. Sentiments also remained dampened on report that Industrial output grew by 4.4% in March, the slowest in five months, due to a fall in capital goods production and deceleration in mining activity. Industrial growth measured by the Index of Industrial Production (IIP) in 2017-18 too decelerated to 4.3% from 4.6% in the previous fiscal. But, recovery in final hour of trade helped markets to end slightly in green, supported by a private report stating that India was the largest remittance-receiving country in the world, with migrant workers from the country sending home $69 billion in 2017.

On the global front, European markets were trading in red terrain, as traders are watching developments in Italy where the antiestablishment 5 Star Movement and hard-right League party have reached an agreement on a governing program. Asian markets ended mostly in green amid signs of easing US-China trade tension as US President Donald Trump ordered the Commerce Department to get Chinese telecom equipment maker ZTE Corp back into business.

Back home, foreign investors have pulled out Rs 12,671 crore ($2 billion) from the Indian capital markets, in the last eight trading sessions, primarily due to surge in global crude prices and rise in yields of government securities here. On the sectoral front, select stocks in healthcare sector remained on buyers’ radar on a private report that the healthcare industry is expected to grow annually at 16-17% to reach to Rs 8.6 trillion by FY22 on the back of the Centre’s Ayushman Bharat scheme which if implemented successfully can go a long way in meeting the severe shortage of healthcare infrastructure. Select stocks from banking counter edged higher on report that the Finance Ministry is examining a proposal to find innovative ways for dealing with burden of NPA provisions by issuing provision shore-up certificates (PSC) to banks. With the help of this instrument, the operating profit of bank is saved from erosion and the lender would be able to focus on lending activities as being in financially good shape.

Finally, the BSE Sensex gained 20.92 points or 0.06% to 35,556.71, while the CNX Nifty was up by 0.10 points to 10,806.60.

The BSE Sensex touched a high and a low of 35,642.72 and 35,456.56, respectively and there were 16 stocks on gaining side as against 15 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.88%, while Small cap index was down by 1.00%.

The few gaining sectoral indices on the BSE were Bankex up by 0.17%, Oil & Gas up by 0.15%, PSU up by 0.11% and Utilities was up by 0.06%, while Consumer Durables down by 2.50%, Telecom down by 1.14%, Industrials down by 0.97%, Auto down by 0.93% and Capital Goods was down by 0.81% were the few losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.51%, Dr. Reddy’s Lab up by 1.24%, Indusind Bank up by 1.07%, SBI up by 0.98% and Hero MotoCorp up by 0.94%. On the flip side, Mahindra & Mahindra down by 2.17%, Tata Motors - DVR down by 2.05%, Tata Motors down by 2.00%, Yes Bank down by 1.51% and Bharti Airtel down by 1.09% were the top losers.

Meanwhile, With contraction in capital goods segment and sluggish growth in mining sector, India’s industrial production measured by Index of Industrial Production (IIP) slowed down to 4.4% in the month of March 2018, as compared to 7.1% growth recorded in previous month. This is the first time in four months that the IIP recorded less than 7% growth. Besides, the industrial output index grew by 4.4% in March 2017.

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 January 2018, stood at 139.0, which is 4.4% higher as compared to the level in the month of March 2017. The cumulative growth for the period April-March 2017-18 over the corresponding period of the previous year stood at 4.3% lower than 4.6% in the previous fiscal.

On the sectoral basis, the manufacturing segment, which constitutes the bulk of the index at 77.6%, saw sharp slowdown in March 2018 at 4.4% as compared to 8.7% in February. In March last year, manufacturing growth came in at 3.3%. However, mining recorded sharp fall in growth at 2.8% as compared to 10.1% growth in same month last year, while it had contracted 0.3 percent in February 2018. Besides, electricity sector recorded 5.9% growth in March 2018 as compared to 6.2% in same month last year, while, in February 2018, electricity sector grew 4.5%. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2018 stand at 131.3, 138.6 and 156.7 respectively. The cumulative growth in these three sectors during April-March 2017-18 over the corresponding period of 2016-17 has been 2.3%, 4.5% and 5.4% respectively.

On the other hand, capital goods output, a proxy to measure private sector investment activity, contracted by 1.8% during March as compared to a growth of 9.4% in the corresponding period last year. However, consumer durables output showed an increase of 2.9% as against decline of 0.6% in March 2017. The consumer non-durables segment showed an impressive growth of 10.9% in March as against 7.5% in corresponding month last year. As per Use-based classification, the growth rates in March 2018 over March 2017 are 2.9% in Primary goods, 2.1% in intermediate goods and 8.8% in Infrastructure/ Construction Goods. 

In terms of industries, 11 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of March 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of furniture’ has shown the highest positive growth of 41.5% followed by 20.6% in ‘Manufacture of food products’ and 17.2% in ‘Manufacture of motor vehicles, trailers and semi-trailers’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest negative growth of (-) 30.7% followed by (-) 20.6% in ‘Manufacture of tobacco products’ and (-) 18.6% in ‘Manufacture of wearing apparel’.

The CNX Nifty traded in a range of 10,834.85 and 10,774.75. There were 22 stocks in green as against 28 stocks in red on the index.

The top gainers on Nifty were NTPC up by 2.24%, BPCL up by 1.30%, Indusind Bank up by 1.25%, Dr. Reddy’s Lab up by 1.23% and Power Grid up by 1.04%. On the flip side, Titan Company down by 3.49%, Zee Entertainment down by 2.75%, Tata Motors down by 2.21%, Mahindra & Mahindra down by 2.19% and Bharti Infratel down by 2.05% were the top losers.

The European markets were trading in red; Germany’s DAX decreased 30.34 points or 0.23% to 12,970.90, UK’s FTSE 100 shed 13.6 points or 0.18% to 7,710.95 and France’s CAC was down by 12.99 points or 0.23% to 5,528.95.

Asian equity markets ended mostly higher on Monday as the United States and China prepared to continue trade talks in Washington. Investors held hopes for a thaw in US-China trade tensions after US President Donald Trump said on Sunday that he will help Chinese technology company ZTE Corp. ‘get back into business, fast,’ as it was hurt by a US ban. Chinese shares ended higher as trade tensions eased and investors awaited MSCI's final A-share inclusion list. Further, Japanese shares hit a 3-1/2 month high as the yen slipped against its major counterparts on improved risk appetite and cosmetics maker Shiseido posted better-than-expected earnings.