Benchmarks bounce off day’s low; Nifty trades above 8,100 level

Bouncing off from day’s low, barometer gauges were trading with vigor tracing positive start of European markets, while upbeat regional counterparts continued to fuel the uptrend of local equity markets right from the start. Sentiment took a bit of a hit after Indian services activity expanded at its weakest rate in three months in August as firms' order books filled up at a slower pace, which led to HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, fall to 50.6 in August from 52.2 in July. However, optimism over continued buying by FIIs, also added to underlying bourses’ strength. Foreign portfolio investors (FPIs) bought shares worth a net Rs 672.81 crore on Tuesday, as per provisional data from the stock exchanges. Thus, clinching gains of around half a percent, both Sensex and Nifty were trading above psychologically crucial 27,100 and 8,100 levels respectively. Meanwhile, broader indices continuing to outperform larger peers, were trading with gains in the range of 0.45%-0.70%.

On the global front, European shares rose early on Wednesday, but remained stuck in a tight range ahead of the European Central Bank's policy meeting even as investors remained split on whether the ECB will unveil immediate stimulus steps to stave off deflation. Meanwhile, Asian shares were mostly higher on Monday, as investors brushed off weak Chinese manufacturing data and bought up technology stocks in Japan.

Closer home, most of the sectoral indices on BSE were trading in positive terrain, stocks from Information Technology, Capital Goods and Auto counters were the prominent gainers. On the flip side, stocks from FMCG, PSU and Bankex counters were the prominent losers. The technology stocks have been trading upbeat since early deals on the back of firm U.S. manufacturing activity data. The U.S. manufacturing activity hit a nearly 3-1/2-year high last month and construction spending rebounded strongly in the month of July. Meanwhile, shares of state-owned oil marketing companies were on investors’ radar after Brent crude prices were trading near 16-month lows as demand continued to remain weak on account of sluggish economic growth in China, the world's second largest economy and the euro zone. Besides, telecom stocks also were ringing loud, tracing third consecutive session rise of Bharti Airtel stocks. The company’s arm has signed an agreement to acquire over 2.7 million subscribers of yuMobile. This transaction is subject to approval from Competition Authority of Kenya (CAK) and is likely to be concluded by fourth quarter of 2014. Thus, the overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1408:1322; while 100 shares remained unchanged.

The BSE Sensex is currently trading at 27126.87, up by 107.48 points or 0.40% after trading in a range of 27067.02 and 27198.80. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.68%, while Small cap index up by 0.48%.

The gaining sectoral indices on the BSE were IT up by 2.12%, TECK up by 1.97%, Capital Goods up by 0.66%, Auto up by 0.56% and Consumer Durables up by 0.42% while, FMCG down by 0.32%, PSU down by 0.17%, Bankex down by 0.13% and Oil & Gas down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.28%, TCS up by 2.70%, Wipro up by 2.47%, Infosys up by 2.31% and Tata Motors up by 1.55%. On the flip side, GAIL India down by 2.23%, ITC down by 1.17%, Hero MotoCorp down by 1.17%, ONGC down by 1.12% and Bajaj Auto down by 1.00% were the top losers.

Meanwhile, the activity in Indian services sector, which accounts for around 60% of Indian GDP, although rose for fourth consecutive month, but expanded at its weakest rate in three months in August as firms' order books filled up at a slower pace. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, fell to 50.6 in August from 52.2 in July. A reading above 50 denotes growth while anything below implies contraction.

The HSBC Survey indicated that new business in the service sector rose for a fourth successive month in August, however the pace of expansion slowed from July. The new business sub-index fell to 51.9 from 52.6, a three-month low. However, service firms were not the only ones reporting lower order volumes. Factory surveys on Monday too showed new orders slowed for companies across Asia and Europe as tensions between Russia and Ukraine escalated and a patchy recovery in China.

Further, sector data indicated that growth of activity was broad-based, as only Hotels & Restaurants companies reported a reduction. However, the fastest increase was witnessed in Post & Telecommunications firms. Meanwhile, backlogs of work held by Indian services companies continued to grow in August, extending the current sequence of accumulation to six months. However, the rate of increase was modest overall. On the inflation front, slower charge inflation was recorded throughout the private sector, as output prices increased at the weakest pace since May 2013. Also interestingly, firms’ optimism about future activity, considered a good gauge for growth, was at a near-year low and suggesting inflation might cool both input prices and those paid by customers rose at a slower pace.

Lastly, according to survey, services activity was once again turning down following a swift post-election uptick, suggesting that an improvement in reforms momentum was required to lift sentiment in the sector. India's services activity, after shrinking for 10 months, expanded for the first time in May at the time Prime Minister Narendra Modi's Bharatiya Janata Party scored a landslide election victory that drove a wave of optimism. However, NDA government is yet to launch sweeping reforms aimed at pushing the economy back to the double-digit growth rates of late 2009-early 2010.

The CNX Nifty is currently trading at 8111.45, up by 28.40 points or 0.35% after trading in a range of 8092.25 and 8133.10. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 3.55%, TCS up by 2.73%, Wipro up by 2.49%, Infosys up by 2.31% and Tata Motors up by 1.66%. On the flip side, GAIL India down by 2.49%, Jindal Steel & Power down by 1.19%, IDFC down by 1.19%, ITC down by 1.16% and Bajaj Auto down by 1.09% were the top losers.

Asian markets were trading mostly in positive terrain; Straits Times rose 7.47 points or 0.22% to 3,335.77; Jakarta Composite added 16.21 points or 0.31% to 5,217.80; Shanghai Composite advanced 20.78 points or 0.92% to 2,286.83; Taiwan Weighted firmed up 50.63 points or 0.54% to 9,450.35; Nikkei 225 inched higher by 59.75 points or 0.38% to 15,728.35; Hang Seng spurted 500.92 points or 2.02% to 25,249.94. On the flip side, FTSE Bursa Malaysia KLCI down by 6.6 points or 0.35% to 1,861.09 and KOSPI Index declined by 0.38 points or 0.02% to 2,051.20.

European markets got off to a mostly positive start; with UK’s FTSE 100 gaining by 3.86 points or 0.06% to 6,829.17; Germany’s DAX rising by 27.99 points or 0.3% to 9,507.02, while France’s CAC lost 1.4 points or 0.03% to 4,378.33.