Benchmarks end lackluster trade slightly lower on feeble global cues

Indian equity benchmarks ended lackluster day of trade slightly in the red on Wednesday with frontline gauges declining below their crucial 7,950 (Nifty) and 26,600 (Sensex) levels. Lack of buying triggers amid disappointing macro-economic data on domestic front and feeble global cues mainly contributed to down-session of performance at Dalal Street. Sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 485.93 crore on September 30, 2014, as per provisional data.

Sentiments also remained down-beat after data released by the Controller General of Accounts revealed that Fiscal deficit touched 74.9 percent of the Budget Estimates for 2014-15 to cross Rs 3.97 lakh crore at the end of August. It also showed that the total expenditure of the government during April-August was over Rs 6.72 lakh crore or 37.5 percent of the estimates for the entire 2014-15 fiscal. Selling got accelerated after the HSBC Manufacturing Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, fell to 51.0 in the month of September from 52.4 in August. However, losses remained capped on report that the eight core industries grew at 5.8 per cent in August this year compared to 4.7 per cent during the corresponding month of last year.

Global cues remained sluggish with European counters made a weak start ahead of a batch of euro zone data expected to show relatively weak manufacturing activity. Asian markets slumped due to continued civil unrest in Hong Kong and as downbeat day on Wall Street sapped confidence. Further, trading in Asia was subdued with China closed for National Day and investors warily monitored Hong Kong’s pro-democracy unrest, as thousands of protesters stepped up pressure on the city's pro-Beijing government.

Back home, decline in oil and gas sector mainly led the down-fall on announcement of Petrol price cut by 54 paisa a litre, also  the price of non-subsidised cooking gas (LPG)  has been cut by Rs 21 per cylinder and that of jet fuel (ATF) by a steep 3 percent on the back of falling international oil rates. However, the widely expected first reduction in diesel rates in over five years will have to wait till the return of Prime Minister Narendra Modi from the US. There will be buzz in the auto stocks as well, as they will start announcing their monthly sales numbers. Moreover, Auto stocks concluded lackluster on reporting monthly sales figure.

On the flip side, shares related to information technology (IT) rallied for yet another session as investors do not expect the Reserve Bank of India (RBI) to cut rates in a hurry after India’s apex bank cited upside risks to medium term inflation target of 6% by Jan 2016 to hold rates in its forth bi-monthly monetary policy review on Tuesday. Additionally, airline stocks edged higher after ATF price was cut by an average of nearly 3 percent across cities in India.

The NSE’s 50-share broadly followed index Nifty edged lower by around twenty points and end below the psychological 7,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over sixty points to end below its psychological 26,600 mark. Broader markets too struggled to get any traction and ended the session with a cut of around quarter of a percent. The market breadth remained in favour of decliners, as there were 1,279 shares on the gaining side against 1,636 shares on the losing side, while 96 shares remained unchanged.

Finally, the BSE Sensex declined by 62.52 points or 0.23%, to 26567.99, while the CNX Nifty lost 19.25 points or 0.24% to 7,945.55.

The BSE Sensex touched a high and a low of 26683.70 and 26548.22, respectively. The BSE Mid cap index was down by 0.20%, while the Small cap index was down by 0.37%.

The top gainers on the Sensex were Wipro up by 3.22%, Infosys up by 2.66%, Mahindra & Mahindra up by 2.07%, TCS up by 1.37% and Hero MotoCorp up by 1.24%. On the flip side, Maruti Suzuki down by 3.11%, Tata Power down by 2.47%, Tata Steel down by 2.31%, GAIL India down by 2.27% and Reliance Industries down by 1.96% were the top losers in the index.

On the BSE Sectoral front IT up by 1.94% and TECK up by 1.36% were the only gainers, while Oil & Gas down by 1.55%, FMCG down by 1.26%, Consumer Durables down by 0.85%, Capital Goods down by 0.72% and Realty down by 0.63% were the top losers in the space.

Meanwhile, business activity in Indian manufacturing sector, although improving for the eleventh consecutive month, expanded at its weakest pace in nine months, i.e. since December 2013, for the month of September on account of slow growth in new orders combined with slowdown in output. The HSBC Manufacturing Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, fell to 51.0 in the month of September from 52.4 in August. The reading however remained above the crucial 50 mark for the eleventh consecutive month that separates growth from contraction and was indicative of modest improvement in operating conditions. Indicative of weak demand, the new orders sub index fell to 51.3 from 54.5, the steepest fall in 18 months.

Growth of new business was broad-based by sector, with the sharpest rise noted in capital goods. By sub-sector, the strongest expansion occurred in the intermediate goods category. Meanwhile, purchasing activity rose in line with production and new orders, as the rate of expansion slowed to a four-month low in September. Subsequently, input stocks increased fractionally in September. In contrast, Indian manufacturers reduced their post-production inventories, marking the end of a year-long period of accumulation. However, in an encouraging sign, inflationary pressure from both inputs and outputs eased in September. While, the Input costs continued to rise at a solid pace, the rate of cost inflation decelerated sharply from the prior month. 

The survey further points that though the rate of cost inflation decelerated sharply, which is the mildest since May, 2013, the central bank is likely to look beyond the near term moderation and keep policy rates elevated so as to reign in entrenched inflation expectations. The Reserve Bank of India (RBI) aims to lower retail inflation to 6% by January 2016 and the elevated inflation and risks of a spiral in food and fuel prices prompted RBI Governor Raghuram Rajan to keep interest rates unchanged on Tuesday.

The CNX Nifty touched a high and low of 7,977.50 and 7,936.70 respectively.

The top gainers of the Nifty were Wipro up by 3.05%, Infosys up by 2.70%, Mahindra & Mahindra up by 2.37%, HCL Technologies up by 1.47% and TCS up by 1.40%.

On the other hand, IndusInd Bank down by 3.13%, Maruti Suzuki India down by 3.00%, GAIL (India) down by 2.66%, Jindal Steel & Power down by 2.55% and Tata Power Company down by 2.47% were the top losers.

Most of European markets were trading in red, France’s CAC 40 was down by 0.33% and United Kingdom’s FTSE 100 was down by 0.40%, while Germany’s DAX was up by 0.17%.

Asian markets ended mostly in red on Wednesday, with Hong Kong bracing for bigger protests as Chinese holidays started. Shanghai Stock Exchange and Hong Kong Stock Exchange were closed today on account of ‘National Day’ holiday. Growth in China’s manufacturing sector held up in September but remained subdued in a sign that the world’s second-largest economy is still struggling to recover its growth momentum. The official Purchasing Managers’ Index (PMI) hovered at 51.1, indicating a modest expansion in activity and a touch ahead of forecasts for a 51.0 reading. The data came a day after China cut mortgage rates for the first time since the 2008 global financial crisis to boost its flagging economy, and reinforced a view among some analysts that sluggish domestic demand and a cooling property market were dragging on activity. Indonesian Inflation rose to a seasonally adjusted 4.53%, from 3.99% in the preceding month. South Korean CPI fell to -0.1%, from 0.2% in the preceding month.

The Bank of Japan released its quarterly Tankan business survey for September, showing depreciation of the yen supports the Tokyo stock market, but that higher costs are also hitting household spending. The September Tankan showed that sentiment among major manufacturers rose to plus 13 in September from plus 12 in June, showing that negative effects of weak exports and domestic demand were offset by the yen’s drop. The BoJ is expected to maintain the pace of its asset purchases at its next policy meeting on October 6-7, expecting the economy to continue to recover moderately.