Benchmarks slip into red in morning deals

Indian equity benchmarks erased gains and slipped into red in morning deals, as investors assessed the impact of the Omicron variant of Covid-19 that has spread to 25 countries, including India. Traders turned cautious as private report increased its current account deficit (CAD) forecast to 1.9 per cent of GDP at $60 billion for 2021-22 as compared to $45 billion earlier, following the record $23.27 billion trade deficit in November. It said trade deficit -- the difference between a country's imports and exports -- has been rising and remains sticky, driven by weaker exports, surging domestic activity and higher commodity prices. However, losses remained capped as some support came as a private survey showed activity in India's dominant services sector continued to grow at a robust pace in November 2021 supported by a strong recovery in domestic demand, but elevated price pressures remained a major concern. The Services Purchasing Managers' Index, compiled by IHS Markit, eased to 58.1 in November from 58.4 in October, but November’s rate of growth was the second-best in over a decade and well above the 50-mark separating growth from contraction for a fourth straight month. 

On the global front, Asian markets were trading mostly in green as investors kept an eye on the spread of the new coronavirus variant and measures governments are taking to restrain it. Back home, on the sectoral front, stocks related to Telecom sector remained in watch as Telecom Secretary K Rajaraman said spectrum auctions for the 5G services are expected to be held early next year. The Telecom Regulatory Authority of India (Trai) has floated a consultation paper for the spectrum price for the proposed auction that is expected to pave the way for 5G services.

The BSE Sensex is currently trading at 58385.70, down by 75.59 points or 0.13% after trading in a range of 58269.62 and 58757.09. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.40%, while Small cap index was up by 0.57%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.53%, Power up by 1.06%, Industrials up by 0.94%, Realty up by 0.90% and Utilities up by 0.84%, while Telecom down by 0.84%, Healthcare down by 0.61%, Energy down by 0.60% and FMCG down by 0.44% were the losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.92%, Ultratech Cement up by 1.24%, Axis Bank up by 0.77%, Infosys up by 0.76% and Indusind Bank up by 0.55%. On the flip side, Bharti Airtel down by 1.76%, Nestle down by 1.68%, Dr. Reddy's Lab down by 1.47%, Sun Pharma down by 1.03% and Reliance Industries down by 1.02% were the top losers.

Meanwhile, rating agency Crisil in its latest report has said that retail prices of cement are likely to rise again by another Rs 15-20 over the next few months and touch an all-time high of around Rs 400 per bag this fiscal. The rise in price has been attributed to inputs commodity cost pressure such as coal and diesel supported by rising demand.

It mentioned amid rise in price the earnings before interest, tax, depreciation, and amortisation (EBITA) of cement makers will decline by Rs 100-150 per tonne this fiscal because of high input costs. The recent rally in prices of imported coal (up more than 120 per cent on-year in the first half) and petcoke (up 80 per cent) is likely to increase power and fuel costs by Rs 350-400 per tonne (up around 40 per cent on-year) this fiscal as a large part of the cost inflation is yet to be absorbed.

Further, it stated cement sales volume is expected to rise 11-13 per cent this fiscal, albeit on a low base. This will largely offset the impact of cost pressure on cash accruals and keep credit profiles stable, analysing 17 cement companies, which have a volume market share of 75 per cent in India.

Cement demand saw a robust growth of over 20 per cent in the first half of this fiscal, but should moderate to 3-5 per cent in the second half, primarily because of a high-base effect, translating to 11-13 per cent growth for this fiscal. Besides, it said at the regional level, South India witnessed the steepest hike of Rs 54 per bag in October over the previous month, followed by the central region with Rs 20 per bag. The north saw a hike of Rs 12 riding on healthy demand, while in the west the price increased by Rs 10 per bag. The east saw a moderate increase of Rs 5 per bag.

The CNX Nifty is currently trading at 17376.35, down by 25.30 points or 0.15% after trading in a range of 17351.60 and 17489.80. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 1.66%, Ultratech Cement up by 1.50%, UPL up by 1.25%, Indian Oil Corporation up by 1.24% and ONGC up by 1.18%. On the flip side, Bharti Airtel down by 1.84%, SBI Life Insurance down by 1.56%, Dr. Reddy's Lab down by 1.55%, Nestle down by 1.43% and Reliance Industries down by 1.08% were the top losers.

Asian markets were trading mostly in green; Taiwan Weighted strengthened 138.89 points or 0.79% to 17,724.88, Jakarta Composite soared 76.14 points or 1.17% to 6,583.82, Hang Seng increased 130.01 points or 0.55% to 23,788.93 and KOSPI rose 45.55 points or 1.57% to 2,945.27.

On the flip side, Shanghai Composite declined 3.05 points or 0.09% to 3,573.84, Straits Times trembled 6.14 points or 0.2% to 3,092.11 and Nikkei 225 slipped 182.25 points or 0.65% to 27,753.37.