Benchmarks make pessimistic start amid weak macro-economic data

Indian equity benchmarks made a pessimistic start and are trading with a cut of one third of a percent amid weak macro-economic data. The Central Statistics Office’s (CSO) data showed that India’s retail inflation rate slightly rose to 3.77% in September as compared to 3.69% in August, driven by higher food, fuel prices and a depreciating rupee. On the other hand, the country’s industrial output eased in August with a slower rise of 4.3% as compared to 6.52% in July. Traders remained on sidelines ahead of the macro data of wholesale price inflation for September scheduled to be release later in the day. Market participants remained cautious on Securities and Exchange Board of India’s (SEBI) report that capital garnered by Indian companies through issuance of shares to institutional investors dived by 78% to Rs 7,000 crore during the April-August period of the financial year 2018-19 as compared to Rs 31,153 crore raised during the corresponding period of the previous financial year.

Global cues too remained sluggish with all the Asian counters trading in red at this point of time, as worries over Sino-US trade disputes, a possible slowdown in the Chinese economy and higher US borrowing costs tempered optimism despite a rebound in global equities late last week. The US markets ended significantly higher on Friday on the back of bargain hunting, while the major averages regained some ground following a two-day sell-off.

Back home, banking sector stocks edged lower despite Reserve Bank of India’s (RBI) data showing that bank credit rose by 12.51% to Rs 89.82 lakh crore in the fortnight ended September 28, while the deposits grew by 8.07% to Rs 117.99 lakh crore. Telecom sector stocks remained in focus with telecom industry body, the Cellular Operators’ Association of India’s (COAI) statement that the import duty hike on certain communication products will increase industry’s import costs by about 10% adding to financial woes, but asserted that operators are fully aligned to the interest of the nation.

The BSE Sensex is currently trading at 34620.15, down by 113.43 points or 0.33% after trading in a range of 34612.75 and 35008.65. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.09%, while Small cap index was up by 0.52%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.60%, IT up by 1.05%, TECK up by 0.83%, Energy up by 0.51% and Power up by 0.16%, while Auto down by 1.27%, Consumer Durables down by 1.12%, Bankex down by 1.04%, Consumer Disc down by 1.01% and Capital Goods down by 0.97% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 1.72%, ITC up by 1.37%, Sun Pharma up by 1.30%, Infosys up by 0.95% and TCS up by 0.87%. On the flip side, Hindustan Unilever down by 3.39%, ICICI Bank down by 2.71%, Mahindra & Mahindra down by 2.20%, Maruti Suzuki down by 2.01% and Axis Bank down by 1.76% were the top losers.

Meanwhile, with a sharp decline in the mining sector output and poor offtake of capital goods, India’s industrial production measured by Index of Industrial Production (IIP) slowed down to a three-month low of 4.3% in the month of August 2018, as compared to 6.6% in the previous month and 4.8% in the same of last year. The industrial growth is the lowest since May when industrial production grew at 3.9%.

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 August 2018, stood at 127.4, which is 4.3% higher as compared to the level in the month of August 2017. The cumulative growth for the period April-August 2018 over the corresponding period of the previous year stands at 5.2%.

On the sectoral basis, the mining sector production contracted by 0.4% in August compared to a growth of 9.3% in the year-ago month. Power generation grew at the rate of 7.6% in the month as against 8.3% in the year-ago month. However, the manufacturing sector output grew at 4.6% in August compared to 3.8% a year ago. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of August 2018 stand at 92.2, 129.8 and 167.2 respectively. The cumulative growth in these three sectors during April-August 2018 over the corresponding period of 2017 has been 3.9%, 5.4% and 5.8% respectively.

Besides, the capital goods output growth decelerated to 5% during the month from a 7.3% expansion year ago. As per Use-based classification, the growth rates in August 2018 over August 2017 are 2.6% in primary goods, 2.4% in intermediate goods and 7.8% in Infrastructure/ Construction Goods. The consumer durables and consumer non-durables have recorded growth rates of 5.2% and 6.3% respectively.

In terms of industries, 16 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of August 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of furniture’ has shown the highest positive growth of 29.2% followed by 18.9% in ‘Manufacture of wearing apparel’ and 12.7% in ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’. On the other hand, the industry group ‘Printing and reproduction of recorded media’ have shown the highest negative growth of (-) 19.2% followed by (-) 17.0% in ‘Manufacture of tobacco products’ and (-) 7.3% in ‘Manufacture of computer, electronic and optical products’.

The CNX Nifty is currently trading at 10432.85, down by 39.65 points or 0.38% after trading in a range of 10428.45 and 10524.60. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 3.10%, Indiabulls Housing up by 2.33%, Cipla up by 1.64%, ONGC up by 1.56% and Sun Pharma up by 1.23%. On the flip side, GAIL India down by 3.92%, Eicher Motors down by 3.49%, Hindustan Unilever down by 3.48%, ICICI Bank down by 2.93% and Mahindra & Mahindra down by 2.21% were the top losers.

Asian markets are trading in red; Nikkei 225 declined 351.25 points or 1.57% to 22,343.41, Taiwan Weighted decreased 120.30 points or 1.21% to 9,925.51, Straits Times shed 10.98 points or 0.36% to 3,058.19, Jakarta Composite slipped 13.90 points or 0.24% to 5,742.59, Hang Seng dropped 259.76 points or 1.02% to 25,541.73, KOSPI fell 12.10 points or 0.56% to 2,149.75 and Shanghai Composite was down by 20.65 points or 0.8% to 2,586.26.