Benchmarks pare some early losses; still continue to trade in red

Benchmark equity indices pared some losses, however are still trading below the neutral line as funds and retail investors reduced positions amid a weak trend in global markets. Besides, weak IIP data for the month of August came in substantially below expectation at a mere 0.4% also weighed on market sentiment.  Some traders remained on the sidelines and refrained from any buying activity ahead of Consumer Price Index (CPI) data to be announced later in the day; however it is expected to ease to 7.2 per cent for the September as compared to 7.8 per cent reported in the month of August, helped by lower food and fuel costs. On the sectoral front, stocks from IT, Teck and Metal counters were supporting the markets’ uptrend, while those from Consumer Durables, information technology (IT) and FMCG counters were adding to the underlying cautious undertone.

In scrip specific development, shares of Diamond Power Infrastructure have surged after reporting 29% year-on-year (yoy) growth in net profit at Rs 40.32 crore for the second quarter ended September 2014, on back of strong operational income. Besides, PVR rose after Sundaram Mutual Fund acquired nearly over one percentage points stake in the company through open market. On the flip side, shares of Novartis India have declined on account of being penalised by National Pharmaceutical Pricing Authority (NPPA).

On the global front, all key Asian markets were in the red as doubts and worries about the health of the major economies weighed on riskier assets including equities. Furthermore, Global oil futures lost more than a dollar after Saudi Arabia and Kuwait signalled ample supplies and willingness to bear lower prices to defend market share. Back home, Indian rupee recovered by 8 paise to 61.27 against the US dollar in early trade today on fresh selling of the American currency. The market breadth on BSE was negative, out of 2291 stocks traded, 918 stocks advanced, while 1297 stocks declined on the BSE.

The BSE Sensex is currently trading at 26149.83 down by 147.55 points or 0.56% after trading in a range of 26276.57 and 26092.69. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.56%, while Small cap index was down by 0.15%.

The gaining sectoral indices on the BSE were IT up by 0.69%, TECK up by 0.39% and Metal up by 0.27%, while Realty down by 1.92%, Oil & Gas down by 0.92%, Auto down by 0.79%, Infrastructure down by 0.77% and FMCG down by 0.72% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.39%, Hero MotoCorp up by 1.05%, TCS up by 1.04%, Axis Bank up by 0.70% and Tata Steel up by 0.67%. On the flip side, Cipla down by 2.26%, Wipro down by 2.22%, Mahindra & Mahindra down by 2.00%, Bharti Airtel down by 1.73% and NTPC down by 1.42% were the top losers.

Meanwhile, as industrial production growth remained subdued in August, India Inc has pitched for bold reforms to spur the domestic industry. Factory output growth measured in terms of the Index of Industrial Production (IIP) slowed down to five-month low at 0.4% in the month of August mainly due to the contraction in manufacturing output and lower offtake of consumer goods.

Sector wise, the output of manufacturing sector declined by 1.4% in August as compared to de-growth of 1% in the previous month. Electricity sector grew by 12.9% in the reported month as against 11.7% in July and mining sector output grew by 2.6% as compared to 2.1% in the previous month.

CII Secretary General Chandrajit Banerjee has asserted that there is need to revive investment and stimulate demand in the economy. Further, steps to be taken to expedite the execution of approved projects and providing a competitive market for coal and mining sectors. He also expects that government’s recent announcements and policy actions like 'Make in India' initiative ensuring flexible labour policy, etc should help the turnaround.

FICCI Secretary General A Didar Singh stressed that negative manufacturing growth reinforces the belief that fall in manufacturing growth has not yet bottomed out. It is more worrisome to see negative growth in consumer and capital goods sectors especially at a time when the country is hoping that the demand to pick up. Capital goods production witnessed a contraction of 11.3% in August as against a de-growth of 3.8% in July. Consumer durables sector witnessed a massive contraction as the sector’s production declined by 15% in August as compared to 20.90% contraction in the previous month.

The CNX Nifty is currently trading at 7,818.70 down by 41.25 points or 0.52% after trading in a range of 7,835.10 and 7,796.00. There were 13 stocks advancing against 37 declining on the index.

The top gainers on Nifty were Lupin up by 1.50%, Infosys up by 1.40%, Jindal Steel & Power up by 1.22%, TCS up by 0.96% and Hero MotoCorp up by 0.95%. On the flip side, DLF down by 5.14%, Cipla down by 2.48%, Wipro down by 2.30%, Zee Entertainment down by 2.01% and Mahindra & Mahindra down by 1.97% were the top losers.

Asian markets were trading in the red; Hang Seng slipped 0.62%, KOSPI Index contracted by 0.84%, Straits Times tumbled by 0.73%, Jakarta Composite dipped 0.65%, Shanghai Composite dropped 0.98%, FTSE Bursa Malaysia KLCI declined by 0.29% and Taiwan Weighted was down by 2.66%. The Japanese market remained shut for the trade today for Health-Sports Day holiday.