Markets manage to eke out small gains ahead of IIP, CPI data

After taking a respite in the last session, Indian equity markets resumed their northbound journey on Wednesday. However, what looked as splendid session in morning deals, turned out to be merely a flat one with positive bias at last, as investors opted to remain on the sidelines ahead of Index of Industrial Production (IIP) data for January and Consumer Price Index (CPI) data for the month of February, scheduled to be released after markets hour. While IIP is likely to extend its contraction of -0.6 per cent in December to -1.10 per cent in January, consumer price inflation (CPI) is likely to ease at 8.10 per cent in February, as compared to 8.79 per cent registered in the month of January.

After a sluggish opening, markets regained their lost ground and started moving northward with consistent buying from foreign institutional investors (FIIs) in the past several consecutive sessions supported the sentiments. FIIs bought shares worth a net of Rs 1,471.23 crore on March 11, 2014, as per provisional data from the stock exchanges. Markets continue to trade northward on hopes that business friendly -Narendra Modi led government would emerge victorious at General Election 2014. However, gains on the up-side remained capped and sentiments remained dampened as traders stayed concerned with India’s merchandise exports falling for the first time in eight months and set to miss its export target for the fiscal with exports moving into the negative zone in February 2014.

Global cues too remained sluggish with European markets making a dismal opening with CAC, DAX and FTSE all trading with deep cut in early deals on China growth fears, while Ukraine tensions too weighed on market sentiments. All the Asian equity markets ended the session in negative terrain, led by the Japanese index which is down by over two and a half percent amid concern that China’s economy may be faltering.

Back home, sentiments also remained dampened after Indian rupee traded lower at Rs 61.20 per dollar mark at the time of equity markets closing as compared to previous close of 60.94, tracking losses in other regional equity markets amid worries about China’s economic health. Meanwhile, stocks related to metal counter continued to end lower for third day in a row after latest data showed China’s exports slumped in February 2014. On the flip side, defensive sectors were among the top sectoral gainers on the BSE with FMCG and Healthcare indices ending over 1.20 percent each followed by Consumer Durables. Software and Technology counters too added gains of around half a percent on rupee weakness.

The NSE’s 50-share broadly followed index Nifty rose marginally and ended above its psychological 6,500 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged around thirty points to end above the psychological 21,850 mark. Broader markets too were ended slightly in the green. The market breadth remained in favour of advances, as there were 1,312 shares on the gaining side against 1,440 shares on the losing side, while 168 shares remained unchanged.

Finally, the BSE Sensex gained 29.80 points or 0.14%, to settle at 21856.22, while the CNX Nifty added 5.00 points or 0.08% to settle at 6,516.90.

The BSE Sensex touched a high and a low of 21965.95 and 21768.14, respectively. The BSE Mid cap index was up by 0.07%, while the Small cap index gained 0.01%.

The top gainers on the Sensex were Sun Pharma up by 4.08%, Hero MotoCorp up by 2.16%, ITC up by 2.08%, Coal India up by 1.64% and TCS up by 1.33%, while BHEL down by 2.70%, Tata Motors down by 2.35%, Hindalco Inds down by 2.34%, SBI down by 1.81% and ONGC down 1.72% were the top losers in the index.

On the BSE Sectoral front, Healthcare up by 1.23%, FMCG up by 1.22%, Consumer Durables up by 0.86%, IT up by 0.56% and Teck up by 0.48% were the top gainers, while PSU down 0.85%, Capital Goods down by 0.73%, Oil & Gas down by 0.73%, Auto down by 0.66% and Power down by 0.58% were the top losers in the space.

Meanwhile, in order to encourage domestic technology in the manufacturing of telecom equipment and devices, the National Manufacturing Competitiveness Council (NMCC) has floated a plan to set up a billion-dollar venture capital fund. The NMCC notified that the fund will invite proposals in a transparent manner and select a few consortiums, pre-dominantly comprising Indian-origin scientists and technologists and the total cost of the start-ups, from conception to proof of concept and then manufacturing, will be met through equity infusion. NMCC’s notification is currently under the consideration of the Department of Telecom (DoT).

As per the NMCC’s proposal, venture capital fund will provide 85 percent of the equity without management control and the remaining 15 percent would be provided through the selected entrepreneurs in the form of sweat equity. The promoter of the company will have full control of management. Further, the notification added that if the start-up does not succeed in the venture, the money given will be written off, but in case the venture becomes commercially viable then the proposed fund will maintain an equity holding above 51 per cent to prevent any foreign entity from gaining control over the firm.

The NMCC’s latest move is aimed to make India a global technology manufacturing hub. In spite of being a major consumer of telecom network and device products, India presently imports almost all of its telecom requirements. However, the government has also taken several measures like preferential market access policy in order to boost local manufacturing, but not much investment has come in till now.

The CNX Nifty touched a high and low of 6,546.15 and 6,487.30 respectively.

The top gainers of the Nifty were Sun Pharmaceuticals Industries up by 4.46%, Asian Paints up by 2.99%, ITC up by 2.32%, Hero MotoCorp up by 2.26% and Coal India up by 1.94%. On the other hand, BHEL down by 2.77%, Tata Motors down by 2.37%, Hindalco Industries down by 2.21%, PNB down by 2.15% and IDFC down 1.90% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 1.42%, Germany's DAX was down by 1.27% and United Kingdom's FTSE 100 was down by 0.95%.

The Asian markets concluded Wednesday’s trade in red taking their lead from another sell-off on Wall Street, while Tokyo took a hit as the yen climbed against the dollar with profit-takers moving in following last week’s greenback rally. Indonesia’s central bank is widely expected to hold its key interest rate steady at a meeting scheduled on Thursday, in spite of a recent trade deficit, as the country’s inflation pace has declined and the rupiah has strengthened significantly this year. It is expected that Bank Indonesia may keep its reference rate steady at 7.50% for a fourth consecutive month.

Japanese Household Confidence rose to a seasonally adjusted annual rate of 38.3, from 40.5 in the preceding month while Japanese tertiary industry activity index rose to a seasonally adjusted 0.9%, from -0.5% in the preceding month whose figure was revised down from -0.4%. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 1.8%, from 2.4% in the preceding month. Japan’s BSI large manufacturing conditions rose to a seasonally adjusted annual rate of 12.5, from 9.7 in the preceding quarter. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.9%, from 3.2% in the preceding month.