Domestic bourses turn red as WPI inflation rises to four-month high

Paring all of their early gains, domestic bourses entered into red terrain in noon deals, with Sensex and Nifty breaching their crucial 35,500 and 10,800 levels, respectively. Sentiments turned downbeat after India’s wholesale inflation grew 3.18 percent 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 percent in March and 3.85 percent April 2017. Primary articles, which accounts for more than a fifth of the entire wholesale price index, grew 1.41 percent in April from 1.03 percent year a percent ago and 0.24 percent in March. Selling in counters like consumer durables, industrials and IT too dampened sentiments. However, buying at healthcare counter and bluechip stocks i.e. NTPC and SBI helped markets to cap losses. Positive trade in Asian counters too providing some support to Indian counters.

Back home, stocks related to pharma counter edged higher 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 banking stocks remained in focus 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.

The BSE Sensex is currently trading at 35499.52, down by 36.27 points or 0.10% after trading in a range of 35495.49 and 35642.72. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.71%, while Small cap index was down by 0.62%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.47%, PSU up by 0.15% and Oil & Gas was up by 0.03%, while Consumer Durables down by 1.78%, Industrials down by 0.66%, IT down by 0.64%, Capital Goods down by 0.53% and Auto was down by 0.52% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.36%, Sun Pharma up by 1.83%, NTPC up by 1.67%, Power Grid Corporation up by 1.21% and SBI up by 1.14%. On the flip side, Tata Motors - DVR down by 2.00%, ICICI Bank down by 1.62%, Tata Motors down by 1.36%, Mahindra & Mahindra down by 1.05% and ONGC down by 0.96% 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 is currently trading at 10,790.30, down by 16.20 points or 0.15% after trading in a range of 10789.15 and 10834.85. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 2.36%, Sun Pharma up by 1.89%, NTPC up by 1.70%, BPCL up by 1.48% and Lupin up by 1.33%. On the flip side, Titan down by 2.36%, Vedanta down by 1.78%, Indiabulls Housing Finance down by 1.77%, ICICI Bank down by 1.69% and Tata Motors down by 1.56% were the top losers.

Asian markets are trading mostly in green; FTSE Bursa Malaysia KLCI increased 8.01 points or 0.43% to 1,854.52, Shanghai Composite gained 9.02 points or 0.29% to 3,172.28, Taiwan Weighted jumped 93.41 points or 0.86% to 10,952.39, Nikkei 225 added 115.86 points or 0.51% to 22,874.34 and Hang Seng was up by 339.86 points or 1.09% to 31,461.92. On the flip side, Jakarta Composite decreased 45.04 points or 0.76% to 5,911.79 and KOSPI Index was down by 2.33 points or 0.09% to 2,475.38.