Markets end flat as investors stay cautious ahead of December earnings

Broader markets outperformed with BSE Midcap and BSE Smallcap adding 0.23% and 0.45%, respectively

Benchmark indices ended the day on a flat note as investors were cautious ahead of Union Budget and December quarter earnings that will kick start this week with Infosys, TCS and IndusInd Bank.

Sensex and Nifty swung between gains and losses throughout the day opening in green but later moved to red dragged by oil & gas, power and energy stocks.

S&P BSE Sensex settled the day at 26,726, down 32 points, while the broader Nifty50 ended at 8,236, down 8 points.

Broader markets outperformed the headline indices with BSE Midcap and BSE Smallcap adding 0.23% and 0.45%, respectively.

"The market is consolidating in a narrow range ahead of the kick start of earnings season this week. The participants are lined up with checklist to determine how the effect of cash crunch & the rise in commodity prices have impacted the margins & the profitability. Any underestimated impact is likely to create a cascading effect to the euphoria of a pre-budget rally," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services in a note.

Meanwhile, Oil prices fell as Iran increased exports undermining efforts by other oil producers to curb a global fuel supply overhang and as US drillers increased activity for the 10th week.

Sectors and stocks

Dr Reddy’s was the biggest laggard, down over 3%. Other losers included ONGC, M&M, Coal India and Asian Paints while TCS, ITC, Maruti and Tata Motors were top gainers.

Tata Motors settled 0.62% higher to Rs 500, bouncing back 3% from intra-day low on BSE, after the company said Jaguar Land Rover (JLR) reported 12% rise in total retail sales of 55,375 vehicles in December 2016 over the previous year.

Realty index was outperforming, up 0.69% driven by Prestige, Godtej Properties, India Bulls Real Estate and hoenix while power, oil & gas and pharma were the top sectoral losers on Sensex.

Shares of oil & gas index fell 1% after reports that OMCs have agreed to bear transaction costs for digital payments. IOC, HPCL and BPCL each settled the day over 1% lower.

Even though pharma index was trading in red, shares of Aurobindo Pharma rose as much as 4.32% at intra-day, its highest since Dec 12 after USFDA approved company's generic treatment. The stock ended 0.04% higher.

Among individual stocks, Fortis Healthcare reached its record high of Rs 205, up 7%, extending it’s a month long gain on the BSE, on back of heavy volumes. In past one month, the stock outperformed the market by gaining 18% after media report suggested that the promoters are looking to divest their stake in company engaged in healthcare facilities business. The stock gained 3.38% at closing.

BEML was the most active stock on bourses after the government decided to divest 26% stake in the company to strategic investors. The stocks surged 20% to Rs, 1,189 in intra-day to end 16.2% higher.

Granules India has dipped nearly 11% in early morning trade to end 10% lower after the pharmaceutical company said it has received 11 observations from Infarmed (InstitutoNacional da Farmacia E Do Medicamento), the Portuguese drug regulator, for its facility located at Gagillapur, Telangana.

Global markets

Asian stocks cut early gains as investor caution grew before a news conference by President-elect Donald Trump on Wednesday, where his views on global trade and China will be carefully scrutinized for future policy implications.

The dollar stood tall against rivals on Monday after the latest US payrolls data indicated strong underlying wage growth, strengthening the case for more rate increases in 2017.

MSCI's ex-Japan Asia-Pacific shares index was flat on the day, having risen as much as 0.5 percent after posting a rare loss in the previous session. Australia's S&P/ASX200 rose 0.9% while Hong Kong shares rose 0.2%.

Trading was light because Japan is shut for a holiday.

The caution in Asia is expected to ripple into European markets as they edged lower on Monday in early deals, though a rise among basic resources stocks helped Britain's FTSE 100 index hit a fresh record high.

The pan-European STOXX 600 index was down 0.1%. The FTSE 100 outperformed its continental peers, gaining 0.3% to hit a fresh all-time high of 7,239.26 points.

Photograph: Danish Siddiqui/Reuters