Benchmarks trade in fine fettle in early deals

Indian equity benchmarks made a cautious start but are trading in fine fettle in early deals on Wednesday with frontline gauges surpassing their crucial 37,600 (Sensex) and 11,300 (Nifty) levels. Sentiments remained upbeat with report that the Reserve Bank of India (RBI) would infuse Rs 12,500 crore into the system through open market operations (OMOs) on March 14. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of the government securities under OMOs. However, gains remain capped on weak macro-economic data. The latest data from Central Statistics Office (CSO) showed that India’s Index of Industrial Production (IIP) slipped to 1.7% in January from 7.5% a year ago. Subdued performance of the manufacturing sector, especially capital and consumer goods, mainly pulled down the growth in industrial production. Besides, Retail inflation rose to four-month high of 2.57% in February. Consumer Price Index (CPI) stood at 1.97% in January and 4.44% in February 2018.

On the global front, Asian markets are trading mostly in red at this point of time amid reports that British Prime Minister Theresa May's Brexit plan was soundly defeated by lawmakers. The US markets ended mostly higher on Tuesday, taking cues from global stocks which rose after last-minute tweaks to Britain's deal to leave the European Union that eased some fears of a no-deal Brexit.

Back home, markets regulator SEBI has withdrew the 20% limit on investments by Foreign Portfolio Investors in corporate bonds of an entity. In a notification, the regulator said the restriction is being withdrawn in accordance with a circular issued by the Reserve Bank of India (RBI). Meanwhile, stocks related to media and entertainment (M&E) industry remained in focus with Ficci-EY report stating that the M&E industry is expected to cross the Rs 2.35-lakh-crore mark (around $ 33.6 billion) by 2021, clipping at 11.6% annually.

The BSE Sensex is currently trading at 37,675.22, up by 139.56 points or 0.37% after trading in a range of 37478.87 and 37703.49. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.31%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Realty up by 1.45%, IT up by 0.65%, Bankex up by 0.60%, Consumer Durables up by 0.58% and FMCG up by 0.53%, while Metal down by 0.91%, Power down by 0.88%, Oil & Gas down by 0.84%, Telecom down by 0.84% and PSU down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Tech up by 2.39%, Indusind Bank up by 2.32%, HDFC Bank up by 1.49%, Hindustan Unilever up by 1.08% and Axis Bank up by 0.92%. On the flip side, NTPC down by 2.85%, ONGC down by 2.40%, Coal India down by 1.57%, Bharti Airtel down by 1.47% and Vedanta down by 1.37% were the top losers.

Meanwhile, with subdued performance of the manufacturing sector, especially capital and consumer goods, India industrial production measured by Index of Industrial Production (IIP) slowed down to 1.7% in January from 7.5% a year ago. 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 2019 stood at 134.5, which was 1.7% higher as compared to the level in the month of January 2018. The cumulative growth for the period April-January 2018-19 over the corresponding period of the previous year stood at 4.4%. Meanwhile, the CSO has revised upwards the growth in IIP for December 2018 to 2.6% from the earlier estimate of 2.4%.

On the sectoral front, the growth in the manufacturing sector slowed to 1.3% in January from 8.7% in January 2018. There was also slump in the power generation segment as the expansion was almost flat at 0.8% compared to 7.6% in the year-ago month. However, the silver lining was the mining sector as it grew by 3.9% in January this year compared to 0.3% in the year-ago period. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2019 stood at 119.2, 135.6 and 150.7 respectively. The cumulative growth in these three sectors during April-January 2018-19 over the corresponding period of 2017-18 has been 3.2%, 4.4% and 5.9%, respectively.

Besides, capital goods segments, a barometer of investment, and intermediate goods segment have witnessed a contraction. The capital goods sector contracted 3.2% in January, down from a growth of 5.9% in the previous month. As per Use-based classification, the growth rates in January 2019 over January 2018 are 1.4% in Primary goods, (-) 3.0% in Intermediate goods and 7.9% in Infrastructure/ Construction Goods. The Consumer durables and Consumer non-durables have recorded growth of 1.8% and 3.8%, respectively.

In terms of industries, 11 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of January 2019 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of food products’ has shown the highest positive growth of 17.0% followed by 16.4% in ‘Manufacture of wearing apparel’ and 10.4% in ‘Printing and reproduction of recorded media’. On the other hand, the industry group ‘Manufacture of furniture’ has shown the highest negative growth of (-) 12.0% followed by (-) 9.0% in ‘Manufacture of fabricated metal products, except machinery and equipment’ and (-) 6.4% in ‘Manufacture of paper and paper products’.

The CNX Nifty is currently trading at 11322.95, up by 21.75 points or 0.19% after trading in a range of 11276.60 and 11342.10. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 2.50%, HCL Tech up by 2.33%, HDFC Bank up by 1.47%, Hindustan Unilever up by 1.09% and Dr. Reddys Lab up by 1.04%. On the flip side, NTPC down by 2.91%, Indian Oil Corporation down by 2.89%, ONGC down by 2.27%, HPCL down by 1.78% and Bharti Airtel down by 1.66% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 declined 239.61 points or 1.11% to 21,264.08, Straits Times shed 24.14 points or 0.75% to 3,188.11, Hang Seng decreased 168.76 points or 0.58% to 28,752.11, KOSPI dropped 10.58 points or 0.49% to 2,146.60 and Shanghai Composite was down by 11.30 points or 0.37% to 3,049.01. On the flip side, Taiwan Weighted gained 23.13 points or 0.22% to 10,366.46 and Jakarta Composite was up by 8.15 points or 0.13% to 6,361.92.