Benchmarks made a flat closing ahead of IIP data

Indian equity benchmarks ended Friday’s session on a flat note due to profit booking at higher levels in late trades after the Sensex and Nifty hit their intraday high near 20,950 and 6,250 levels. Investors also remained on sidelines ahead of the November month’s index of industrial production data scheduled to be released after market hours. Earlier, markets after flat opening gained traction and traded jubilantly for most part of the day after Infosys’ third quarter earnings beat street’s expectation for the third consecutive quarter. The IT bellwether, on the consolidated basis, registered a growth of 21.36% in net profit at Rs 2875 crore as compared to Rs 2369 crore in the same quarter previous year. Total income of the company rose 25.90% to Rs 13757 crore for quarter under review as against Rs 10927 crore in corresponding quarter previous year.

The up-move got extended after India’s trade deficit narrowed to $10.14 billion in December from $17.59 billion a year earlier. Exports registered growth of 3.49% to $26.35 billion for the month of December, while imports during the same month contracted by 15.25 percent over at $ 36.49 billion as compared to $43.05 billion in December, 2012. Some support also came in after Economic Affairs Secretary Arvind Mayaram underscored that inflation is expected to come down in the coming months, but added that country would need to bridge the demand-supply gap of essential food items to keep prices under check in the long run.

Firm opening in European counters too supported the sentiments with CAC, DAX and FTSE all trading higher by over half a percent in early deals. However, Asian equity benchmarks exhibited mixed trend as release of Chinese trade data indicated slowing growth momentum in the world’s second-largest economy weighed on investors’ sentiments.

Back home, frontline gauges pared most of their intra-day gains on sell-off in banking shares after IndusInd bank reported a rise in its net performing assets (NPAs) for the third quarter ended December 31. The bank’s gross NPAs for the quarter under review stood at 1.18%, as compared to 0.99% in the same quarter of the previous year. Besides, bank’s Net NPA stood at 0.31% during the quarter as compared to 0.30% in the corresponding quarter last year. Some concern also came in on report that global rating agency Moody’s cautioning that low growth and high inflation could weaken the country’s debt profile and raise financing cost. Meanwhile, banking shares tanked ahead of key wholesale and consumer price data next week, which will help determine whether the Reserve Bank of India will resume raising interest rates after tightening monetary policy by a total of 50 basis points over September and October.

The NSE’s 50-share broadly followed index Nifty gained by merely three points and managed to hold its psychological 6,150 level, while Bombay Stock Exchange’s sensitive Index -- Sensex rose by around fifty points to end above the psychological 20,750 mark.

However, the broader markets continued to reel under selling pressure for second consecutive day and ended the session with a cut of around a percentage point. The market breadth remained in favour of decliners, as there were 1,034 shares on the gaining side against 1,505 shares on the losing side, while 142 shares remained unchanged.

Finally, the BSE Sensex gained 45.12 points or 0.22%, to settle at 20758.49, while the CNX Nifty added 3.10 points or 0.05% to settle at 6,171.45.

The BSE Sensex touched a high and a low of 20971.23 and 20625.17, respectively. The BSE Mid cap index was down by 0.94%, while the Small cap index lost 0.62%.

The top gainers on the Sensex were Infosys up 2.84%, Wipro up 2.55%, ITC up 2.22%, TCS up 1.70%, and Dr Reddys Lab up 1.47%, on the flip side ICICI Bank down 2.56%, Coal India down 2.37%, Mahindra & Mahindra down 2.13%, Hindalco Inds down 2.08%, and SSLT down by 1.97%,were the top losers on the index.

On the BSE Sectoral front IT up by 2.16%, Teck up by 1.76%, FMCG up by 1.43%, Oil & Gas up by 0.59% and Healthcare up by 0.19%, were the top gainers, while Realty down by 1.55%, Bankex down by 1.54%, Metal down by 1.53%, Power down by 1.38% and Capital Goods done by 1.29%, were the top losers on the sectoral front.

Meanwhile, as per the ZyFin Business firm, a leading macro analytics firm focused on emerging markets, highlighted that Indian economic growth is likely to improve in the coming future on the back of increasing exports and industrial activity in the country. ZyFin Research's Business Cycle Indicator (BCI) that reflects various macroeconomic trends on a monthly basis has registered 4.7 percent growth in December 2013 compared to the same period in the previous year. In November, BCI had improved by 4.2 per cent on year-on-year basis.

Further, ZyFin firm noted that an improvement in BCI for December was led by improving foreign trade statistics, slight decline in petrol import bill and forex reserves among others. ZyFin BCI is a real-time indicator of the Index of Industrial Production (IIP), providing an estimate of the IIP two months prior to the country’s official release. A continuous uptrend in BCI for the three consecutive months signifies an improving business cycle and if this uptick extends for two more months, a more sustainable growth can be expected in industrial activity in India.

However, the analytics firm added that existing downtrend in key real economic variables like production of aluminium, pig iron and electricity, declining domestic air passenger traffic and constricted money supply has become a concerns for economic growth. Highlighting that recovery in consumer demand is essential for a sustained economic growth, ZyFin's Consumer Outlook Index for December has also showed some early indications of improvement in consumer demand in India.

The CNX Nifty touched a high and low of 6,239.10 and 6,139.60 respectively.

The top gainers on the Nifty were Infosys up by 3.05%, ITC up by 2.22%, TCS up by 2.14%, Wipro up by 2.05%, and Dr. Reddy's Laboratories up by 1.49%, On the other hand, IndusInd Bank down by 3.17%, IDFC down by 3.15%, Coal India down by 2.59%, Ranbaxy Laboratories down by 2.55%, and Ambuja Cements down by 2.52%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.50%, Germany's DAX was up by 0.58%, and United Kingdom's FTSE 100 was up by 0.73%.

The Asian markets concluded Friday’s trade on a mixed note after growth in Chinese exports in December showed a marked decrease from the prior month. Chinese exports grew 4.3% on year in December, a touch slower than expectations for 4.5% growth. The result suggested a substantial slowdown from November’s better-than-expected 12.7% growth. The country’s trade surplus last month was $25.6 billion, compared with expectations for a surplus of $32.2 billion. Chinese economic data so far this year has pointed to a picture of weakness in the world’s second-largest economy, with releases earlier in the month showing a deceleration in activity for both the services and manufacturing sectors.  In addition, inflation numbers on Thursday suggested that the Chinese economy is cooling.

China’s trade balance fell more-than-expected last month to 25.60B, from 33.80B in the preceding month. Japan’s index of leading economic indicators rose less-than-expected last month to a seasonally adjusted 110.8, from 109.8 in the preceding month whose figure was revised down from 109.9. Philippines Industrial Production rose to a seasonally adjusted annual rate of 21.3%, from 20.8% in the preceding month whose figure was revised down from 25.3%.