Broader markets outperform in a flat market; BSE Midcap index up 1%

Benchmark indices continue to trade in a narrow range with negative bias weighed down by financial shares. However, the downside is limited due to buying seen among capital goods and power counters.

By 10:50 am, the S&P BSE Sensex was lower by 19 points at 26,099 and Nifty50 has slipped 8 points at 7,938.

The broader markets continue to outperform significantly- BSE Midcap and Smallcap indices are up almost 1% each. Market breadth is positive on the BSE with 1,587 shares advancing and 561 shares declining.

The top gainers from the Sensex pack are Tata Motors, Coal India, Adani Ports, BHEL and Lupin, all are up between 1%-2%.

Shares of aviation companies like Jet Airways (India), InterGlobe Aviation and SpiceJet – continue to maintain their upward march with all three stocks currently trading at fresh 52-week highs on back of heavy volumes on reports that cut in Aviation Turbine Fuel (ATF) prices.

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Updated at 9:40 am

Markets have kicked off the first day of 2016 on a negative note tracking mixed trend across global markets along with selling among metal and financials leading the decline.

Further, the combined output of eight crucial infrastructure sectors contracted by 1.3% in November, pulled down by a steep fall in steel production.

The industries carry a total weight of nearly 38% in the Index of Industrial Production (IIP) continue to be hit by falling international crude oil prices coupled with weakening global consumer and industrial demand.

By 9:40 am, the S&P BSE Sensex was lower by 67 points at 26,051 and Nifty50 has slipped 24 points at 7,922.

The broader markets continue to outperform- BSE Midcap and Smallcap indices are up 0.3% each.

"Earnings expectations have now reset to a lower base. Consensus earnings growth for 2016 is about 14% and valuations at a P/E of 15 on 1-year forward earnings are at long-term averages. Hence, 2016 should be a decent year for equities and fixed income markets, "says Mihir Vora- Director and Chief Investment Officer, Max Life Insurance.  

He further adds, “We expect 15% returns from equities in the next year. The key risks are more global in nature in terms of an accelerated Chinese slowdown, further sharp de-valuation of the Yuan etc. Our advice to investors is to keep a long-term view on asset allocation. Stick to the investing discipline as per your risk-appetite and do not get swayed by sentiment.”

On Thursday, markets scaled higher on the last day of December derivatives series due to strength in energy and index heavyweight shares such as HDFC and Infosys.  

Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 1123.41 crore yesterday as per provisional data released by the stock exchanges.

In the currency front, the rupee depreciated by five paise to trade at 66.20 against the US dollar on the first trading day of 2016 due to fresh buying of the American currency by banks and importers.

Among overseas markets, Asian stocks were mixed. US stocks closed lower yesterday with trading lighter than usual ahead of the New Year's Day holiday.

Back home, metal stocks are witnessing weak trend as an official survey showed activity in China's manufacturing sector contracted for a fifth straight month in December.

The official manufacturing Purchasing Managers' Index (PMI) stood at 49.7 in December, in line with expectations and up only fractionally from November.  

Tata Steel, Hindalco, Coal India and SAIL are down 0.2%-1%.

Automobile companies will start announcing monthly sales volume data for December 2015 from today.  Shares of Bajaj Auto, Hero Moto and Maruti Suzuki are down between 0.2%-1%. However, Tata Motors is up over 1%.  

PSU OMCs and auto stocks will be in focus after the PSU OMCs cut petrol price by 63 paise a litre and diesel price by Rs 1.06 a litre, the third reduction this month on the back of softening in global oil rates. The revised prices take effect from today. BPCL, HPCL and IOC are trading higher by almost 1% each.

HDFC is trading lower by almost 1%. The company has recorded 50% decline in profit on sale of investment to Rs 57 crore for the quarter ended December.

IT shares like Wipro, TCS and Infosys are down marginally on weak economic data in the US.

KEC International has rallied 6% to Rs 165, also its 52-week high on the NSE after the company announced that it has secured new orders of Rs 1,001 crore in its transmission & distribution, cables and solar business.