Benchmarks snap four days winning streak

Snapping four days winning streak, Indian equity benchmarks ended the session slightly in the red on Thursday as investors opted to book profit at higher levels. Markets traded in narrow range for entire session with NSE’s Nifty ending above its crucial 7,700 level, while BSEs’ Sensex, which resumed trading after a halt of over three hours due to a network outage, managing to settle above crucial 25,800 mark. Sentiments remained down-beat after World Bank in its reports suggested that India’s inflation still remains uncomfortably high and the new government should avoid fiscal slippage as it seeks to revive the economy.

However, losses remained capped as some support came with the statement of Agriculture Minister that the monsoon will pick up pace next week and the government is prepared to deal with any eventuality in case of a shortfall. Meanwhile, activity in Indian services sector, which represents around 60% of Indian GDP, witnessed a solid rate of expansion in the month of June on the back of stronger new business inflows and better economic conditions. The HSBC services Purchasing Managers’ Index (PMI), based on the survey of around 350 private service sector companies, rose to 17-month high at 54.4 in June from 50.2 in May, above the crucial 50 mark for the second consecutive month that separates growth from contraction.

On the global front, European counters edged higher in early deals with investors awaiting the outcome of the European Central Bank’s policy meeting and a report on American jobs. Street widely expects payrolls to increase by 212,000 in June, marking the fifth consecutive month of job gains above 200,000, thereby cementing views that the U.S. economic recovery is gaining momentum. Though, Asian markets ended mixed after Chinese official gauges of services dropped to 55 from 55.5 in May, while the HSBC Services PMI jumped to 15-month high of 53.1 from 50.7 in May.

Back home, stocks related to healthcare sector edged higher, led by Ranbaxy Laboratories which surged over a percent after USFDA granted approval to its subsidiary Ohm Laboratories to manufacture and sell generic Diovan in the US. Stocks related to Auto sector too remained on buyers’ radar as most of the companies reported better-than-expected sales numbers for the month of June. Additionally, software stocks continued to edge higher for second day in a row on positive economic data in US, the biggest outsourcing market for the Indian IT firms.

The NSE’s 50-share broadly followed index Nifty slipped by ten points but managed to end above the psychological 7,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around twenty points but managed to hold the psychological 25,800 mark. Broader markets too struggled to get any traction and ended slightly in the red terrain. The market breadth remained in favor of decliners, as there were 1,287 shares on the gaining side against 1,475 shares on the losing side while 101 shares remain unchanged.

Finally, the BSE Sensex declined by 17.46 points or 0.07%, to 25823.75, while the CNX Nifty lost 10.35 points or 0.13%, to 7,714.80.

The BSE Sensex touched a high and a low of 25999.08 and 25793.70, respectively. The BSE Mid cap index was down by 0.17%, while Small cap index lost 0.14%.

The top gainers on the Sensex were Tata Motors up by 3.03%, Wipro up by 2.58%, Sun Pharma up by 1.79%, Mahindra & Mahindra up by 1.41% and TCS up by 0.86%. On the flip side, the key losers were Hero MotoCorp down by 3.17%, Hindalco Inds down by 2.47%, Bajaj Auto down by 2.39%, ONGC down by 1.99% and Tata Power down by 1.88%.

On the BSE Sectoral front, Healthcare up by 1.12%, Auto up by 0.80%, Consumer Durables up by 0.59%, IT up 0.34% and FMCG up by 0.28% were the top gainers in the space, while Realty down by 1.47%, Oil & Gas down by 1.19%, Power down by 0.86%, India Infrastructure down by 0.57% and Metal down by 0.55% were the top losers in the space.

Meanwhile, showing an indication of economic recovery, activity in Indian services sector, which represents around 60% of Indian GDP, witnessed a solid rate of expansion in the month of June on the back of stronger new business inflows and better economic conditions. The HSBC services Purchasing Managers’ Index (PMI), based on the survey of around 350 private service sector companies, rose to 17-month high at 54.4 in June from 50.2 in May, above the crucial 50 mark for the second consecutive month that separates growth from contraction. Output expanded in four of the six monitored categories with the fastest increase witnessed in the Post & Telecommunication and Renting Business Activities sectors. Indicating further expansion in business activity overall, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, increased from 50.7 in May to 53.8 in the month of June.

The HSBC survey indicated that new orders increased for the second consecutive month to 54.3 in June driven by improved demand and the pace of new work expansion was quickest since February 2013. Further, backlogs of work at service providers were accumulated at the sharpest pace in the survey history, indicating robust demand growth and delayed payment from clients. However, the survey signaled a steady inflation reading with input costs across the sector rose in the reported month on account of high prices of fuel. The rate of cost inflation was strongest in five months but below the long-run series trend. Accordingly, services firms passed increased cost burden to consumers, suggesting consumer price inflation could rise in coming months.

Employment level in services sector increased at a marginal pace with the index measuring workforce numbers registering only fractionally above the crucial 50 threshold in June. Indian services companies also maintained their positive outlook for output growth over the next 12 months on the back of supportive factors such as planned increases in marketing budgets, forecasts of stronger demand and ongoing improvements in India’s economy. Referring to Indian economy outlook, the survey noted that faster reforms due to political stability are likely to provide impetus to Indian economy.

The CNX Nifty touched a high and low of 7,754.65 and 7,706.80 respectively.

The major gainers of the Nifty were Tata Motors up by 3.13%, Wipro up by 2.51%, Sun Pharmaceuticals Industries up by 1.64%, Mahindra & Mahindra up by 1.00% and Cipla up by 0.72%. On the flip side, the key losers were Hero MotoCorp down by 3.31%, Bajaj Auto down by 2.40%, Hindalco Industries down by 2.38%, Tata Power Company down by 2.15% and ONGC down by 2.13%.

The European markets were trading in green France's CAC 40 was up by 0.48%, Germany's DAX was up by 0.62% and United Kingdom's FTSE 100 was up by 0.47%.

The Asian markets concluded Thursday’s trade mixed, with China stocks gaining for a fourth day in the longest winning streak since May. An index of China’s services industry from HSBC Holdings Plc and Markit rose to 53.1 in June from 50.7 in May, the highest reading since March 2013. Figures above 50 indicate expansion. Separate data showed the official non-manufacturing gauge slid to 55 in June from 55.5 the month before. Hong Kong Retail Sales rose to a seasonally adjusted annual rate of -4.1%, from -9.8% in the preceding month. Indonesia has received a $500 million loan from the World Bank to bolster the nation’s efforts in reforming the financial sector. Consumer confidence has declined in June amid concern over the availability of jobs and an expected slowdown in Indonesia’s economy in the next six months. The consumer confidence index may decline 0.3% to 94.8 points in June.