Post Session: Quick Review

Extending weakness to fifth straight session, Indian equity markets yet again staged dismal session of trade on Friday, as investors were reluctant of taking any position ahead of crucial US jobs report, later in the day. Rather sentiment was spooked on couple of disappointing macro-economic data, which led market-participants for reducing their exposure in local equities. Sentiment took a hit after India’s factory growth showed no sign of improvement last month, as tepid demand restrained output even as price pressures eased. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit was at 51.3 in April, similar to the March level. This data came right after output growth of eight core industries, which have a weight of 37.9% in the overall Index of Industrial Production (IIP), slowed down to 2.5% in the month of March from a year earlier.

However, positive regional counterparts to some extent limited further slide of the markets, which by the close reversed all its gains and settled flat with negative bias. Both, Sensex and Nifty, settled below the psychological 22,450 and 6,700 levels respectively. Meanwhile, broader indices, contrary to the sluggish trend, went home with gains of around half a percent. For the week, both Sensex and Nifty lost over a percent.

On the global front, European and Asian equities edged lower, with investors trading cautiously ahead of widely tracked U.S. jobs data and as tensions in Ukraine escalated. U.S. non-farm payrolls, is expected to have probably advanced by 210,000 jobs in April, up from a gain of 192,000 in March.
Closer home, massive selling took place during the session as benchmarks after making a gap-up start, kept on losing ground to settle near day’s low level.  Leading the downtrend were stocks from Capital Goods, Metal and Auto counters. On the flip side, stocks from Information Technology, Healthcare and Consumer Durable space offset the massive losses, thereby leading a flat session of performance. Auto stock ran out of fuel after reporting their April sales figures. Among the space, while Bajaj Auto dropped close to half a percent on reporting 4% drop in total sales to 331,529 units in April 2014, Maruti Suzuki plunged over a percent on reporting 11.4% fall in total sales at 86,196 units in April 2014, against 97,302 units in the same month last year. Although, TVS Motors Company gained over 6% on reporting 15% rise in April sales, the gains were little to heave the entire pivotal higher. Additionally, airlines stocks failed to take off despite jet fuel prices being slashed by 4% tracing a decline in international rates. On the flip side, IT pivotal was lifted by gains of Infosys, HCL Technologies and TCS stocks.  The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1427:1308, while 123 scrips remained unchanged. (Provisional)

The BSE Sensex lost 13.91 points or 0.06% to settle at 22403.89. The index touched a high and a low of 22575.62 and 22386.95 respectively. Among the 30-share Sensex, 14 stocks gained, while 16 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.46% and 0.57% respectively. (Provisional)

On the BSE Sectoral front, IT up by 1.09, Health Care up by 0.93%, TECK up by 0.87%, Consumer Durables up by 0.54% and PSU up by 0.25% were the gainers while, Capital Goods down by 1.78%, Metal down by 1.41%, Auto down by 0.51%, Power down by 0.32% and Bankex down by 0.11% were the top losers in the space. (Provisional)

The top gainers on the Sensex were Tata Power up by 2.31%, Infosys up by 1.35%, Wipro up by 1.34%, Dr Reddys Lab up by 1.28% and TCS up by 1.17% while, SSLT down by 2.94%, L&T down by 2.59%, Tata Steel down by 2.26%, Hindalco Inds down by 2.00% and Maruti Suzuki down by 1.69% were the top losers in the index (Provisional).

Meanwhile, in not so encouraging news from India's factories, manufacturing production continued to remains sluggish in the country on account of moderate expansion of new businesses and lower output, which resulted from competitive pressures as well as power outages. However, any kind of contraction was prevented as slowdown in export orders was countered by firmer domestic demand during the month, according to HSBC survey.

The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, which is based on data from monthly survey of  purchasing executives in over 500 manufacturing companies, stood at 51.3 in April, unchanged from the level in March. However, activity in the sector expanded for the sixth consecutive month in March. A PMI reading above 50 segregates growth from contraction.

The new orders sub-index, which measures overall demand, slipped in April to 52.5 from 52.7 as demand from abroad waned. However, the export orders reading held above the 50-mark, but suffered its biggest one-month fall in nearly two years. The growth of new export orders eased from March’s 35- month peak to the slowest since January.

However, matter of concern remained the built up in inventory, which was reflective of the poor demand environment. Both pre- and post-production stocks rose in April. While, the holdings of raw materials and semi-manufactured goods rose for the first time in five months, inventories of manufactured goods expanded the quickest since September 2012.

The survey showed that both input and output prices rose at their slowest pace in about a year, a development which might provide some respite to the policy makers after India’s wholesale inflation came at 3 months high in March. While, the rate of cost inflation softened to the slowest since last May, the rate of charge inflation was only marginal and the joint-weakest in the current eleven-month inflationary sequence.

Thus, although the latest data shows that inflationary pressure eased, but the survey highlights that this would not mean that RBI could take down its inflation guards. Moreover, the El Nino is expected to lead to below-normal precipitation, which could lift food inflation over the summer and in turn underpin RBI to maintain its hawkish trend. The RBI had increased the key policy repo rate three times since Raghuram Rajan took over as Governor in September.

India VIX, a gauge for markets short term expectation gained 8.04% at 33.05 from its previous close of 30.59 on Wednesday. (Provisional)

The CNX Nifty lost 2.15 points or 0.03% to settle at 6,694.25. The index touched high and low of 6,737.65 and 6,689.50 respectively. Out of 50 stocks in Nifty, 23 stocks ended in the green and 27 in red.

The major gainers of the Nifty were Tata Power up 2.50%, Lupin up by 2.22%, HCL Tech up by 1.94%, BPCL up by 1.84% and NMDC up by 1.80%.  The key losers were Jindal Steel down by 5.68%, SSLT down by 2.86%, Tata Steel down by 2.43%, L&T down by 2.41% and Maruti down by 2.18%. (Provisional)

Most of European markets were trading in red; France’s CAC 40 was down by 0.33%, UK’s FTSE 100 was up by 0.03% and Germany’s DAX was down by 0.04%.

The Asian markets concluded Friday’s trade mostly in red, with investors treading cautiously ahead of the release of crucial US monthly non-farm payrolls data later in the day. Asian currencies strengthened this week, led by the won advance to a five-year high, as data signaled a continued recovery in the region’s economies and on bets US borrowing costs will remain low. A HSBC Markit purchasing manager’s index survey showed that Indonesian manufacturing activity expanded at the fastest pace in 11 months in April, bolstered by rising demand and better economic conditions. The index rose to 51.1 last month from 50.1 in March. Indonesia’s inflation slowed in April, supported by stable food prices that gave room for the central bank to keep borrowing costs steady. Inflation fell to a seasonally adjusted 7.25%, from 7.32% in the preceding month. Indonesian Trade Balance fell to a seasonally adjusted 0.67B, from 0.79B in the preceding month.

Japanese Household Spending rose to a seasonally adjusted 7.2%, from -2.5% in the preceding month. Japan’s Monetary Base fell to 48.5%, from 54.8% in the preceding month. The percentage of the total work force that is unemployed and actively seeking employment in Japan during the previous month remained unchanged at a seasonally adjusted 3.6%, from 3.6% in the preceding month. Hong Kong Retail Sales rose to a seasonally adjusted annual rate of -1.3%, from -2.3% in the preceding month.