Benchmarks continue to trade in red tailing negative start of European markets

Benchmark equity indices continued to trade in red tailing negative start of European markets, which kept Sensex below psychologically crucial 26,600 and Nifty oscillate around 7,950 levels respectively. The mood continues to remain downbeat on slew of macro-economic data, with the first one being the India’s fiscal deficit figures, which crossed half the budget estimate (BE) for 2014-15 in the first three months of the financial year. Besides, 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. The underlying weakness of the markets is also as traders wind up their position in the holiday truncated week since markets remain closed on Thursday and Friday on account of ‘Mahatma Gandhi Jayanthi’ and ‘Dussehra’. However, broader indices too succumbing to selling pressure, were trading mixed at this point of time, with small cap index reeling with a cut of over quarter of a percent.

On the global front, receiving a negative handover from Asian counterparts, European shares too got off to a negative start ahead of a batch of euro zone data expected to show relatively weak manufacturing activity. Meanwhile, trading in Asia was subdued with China closed for National Day and investors’ warily monitoring Hong Kong's pro-democracy unrest, as thousands of protesters stepped up pressure on the city's pro-Beijing government.

Closer home, on the BSE sectoral front, shares from Information technology, Technology and power counters which were the only gainers of the session. On the flip side, Oil & Gas, FMCG and Realty counters were the prominent losers of the session. Meanwhile, Auto stocks too were trading tad lower on reporting monthly sales figure, however losses were limited as petrol prices was reduced by 54 paisa a litre on the back of softening international oil rates. Airline stocks were up after ATF price was cut by an average of nearly 3 percent across cities in India. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1413:1137; while 101 shares remained unchanged.

The BSE Sensex is currently trading at 26589.73, down by 40.78 points or 0.15% after trading in a range of 26549.54 and 26683.70. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green and red; the BSE Mid cap index was up by 0.01%, while Small cap index down by 0.28%.

The gaining sectoral indices on the BSE were IT up by 1.60%, TECK up by 1.14%, Power up by 0.13% while, Oil & Gas down by 1.13%, FMCG down by 0.79%, Realty down by 0.70%, Bankex down by 0.48%, PSU down by 0.20% were the losing indices on BSE.

The top gainers on the Sensex were Wipro up by 2.98%, Hero MotoCorp up by 1.76%, TCS up by 1.66%, Infosys up by 1.56% and Coal India up by 1.07%. On the flip side, Maruti Suzuki down by 2.53%, Tata Steel down by 1.98%, GAIL India down by 1.87%, ONGC down by 1.61% and Reliance Industries down by 1.34% were the top losers.

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 is currently trading at 7950.25, down by 14.55 points or 0.18% after trading in a range of 7936.70 and 7977.50. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Wipro up by 2.84%, HCL Technologies up by 1.98%, Hero MotoCorp up by 1.74%, TCS up by 1.70% and Infosys up by 1.53%. On the flip side, Maruti Suzuki down by 2.54%, Indusind Bank down by 2.31%, GAIL India down by 2.10%, Jindal Steel & Power down by 2.05% and Tata Steel down by 1.61% were the top losers.

Asian markets were trading mostly lower; with Nikkei 225 declined by 91.27 points or 0.56% to 16,082.25; KOSPI Index slid by 28.55 points or 1.41% to 1,991.54 and Straits Times lost 11.31 points or 0.35% to 3,265.43; FTSE Bursa Malaysia KLCI edged lower by 1.75 points or 0.09% to 1,844.56. On the flip side, Jakarta Composite up by 7.25 points or 0.14% to 5,144.83 and Taiwan Weighted up by 23.34 points or 0.26% to 8,990.26 were the only gainers amongst Asian pack.

European markets too got off to a negative start; with France’s CAC trading lower by 7.9 points or 0.18% to 4,408.34; UK’s FTSE 100 was edging lower by 16.46 points or 0.25% to 6,606.26 and Germany’s DAX shedding 5.52 points or 0.06% to 9,468.78