Benchmarks witness consolidation after record run

Trade at Indian equity markets remained lackluster and range bound on Monday after a four-day rally, lacking any fresh buying interest. Though, benchmarks hit another life time high levels in early session of trade, profit-booking gripped markets thereafter. Sentiments got dampened after the eight core sector’s growth plunged to eight-month low of 1.9 per cent in September much lower than 5.8 per cent in August this year, as output in crude oil, natural gas and fertiliser declined.

However, down-side remained capped as some support came in with Finance Minister Arun Jaitley’s statement that economic growth in the current fiscal will be in the 5.5-5.9 per cent range and declining prices of crude oil and food will help lower inflation. FM has outlined major priorities of the government as reviving and sustaining higher GDP growth, increasing savings, fiscal consolidation, keeping the Current Account Deficit at moderate level and reviving investment cycle, among others. Meanwhile, factory activity expanded at a modest pace in October, as stronger demand led manufacturers to add jobs for the first time in four months and allowed them to raise prices. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 51.6 in October from 51.0 in September. The index has now been above the 50 level that indicates an expansion in activity for a year.

The global cues were somewhat sluggish; European markets were trading in red as France’s manufacturers hinted at a sixth month of shrinkage with a score of 48.5, and Italy’s fell back into negative territory with a reading of 49. Asian markets ended mostly in the red after China’s services sector grew at its slowest pace in nine months in October as a cooling property sector weighed on demand, adding to signs of fragility in the world’s second-largest economy. The official non-manufacturing PMI fell to 53.8 in October from September’s 54.0, which was the weakest reading since January.

Back home, shares of most of the frontline automobiles companies ended in red after reporting drop in vehicle sales during the month of October. However, real estate and infrastructure scrips attracted investor interest as the government relaxed foreign direct investment (FDI) rules in the construction sector by reducing minimum built up area as well as capital requirement and easing exit norms. Additionally, shares in Indian airline companies surged after state-run oil marketing companies slashed jet fuel prices since fuel charges contribute to nearly one-third of an airline's operational expenses.

The NSE’s 50-share broadly followed index Nifty gained marginally to end above the psychological 8,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dipped by around five points and managed to hold the psychological 27,850 mark. Broader markets, however, outperformed benchmarks and ended the session in the green with a gain of over a percentage point. The market breadth remained in favour of decliners, as there were 1826 shares on the gaining side against 1158 shares on the losing side while 104 shares remain unchanged.

Finally, the BSE Sensex lost 5.45 points or 0.02%, to 27860.38, while the CNX Nifty gained 1.95 points or 0.02% to 8,324.15.

The BSE Sensex touched a high and a low of 27969.82 and 27785.40, respectively. The BSE Mid cap index was up by 1.09%, while the Small cap index was up by 1.34%.

The top gainers on the Sensex were Sesa Sterlite up by 2.17%, Axis Bank up by 1.34%, HDFC up by 1.04%, ICICI Bank up by 1.02% and Infosys up by 0.82%. On the flip side, GAIL India down by 5.70%, Mahindra & Mahindra down by 2.67%, Coal India down by 2.45%, Hero MotoCorp down by 1.66% and Maruti Suzuki down by 1.58% were the top losers in the index.

On the BSE Sectoral front Realty up by 3.61%, Bankex up by 0.46%, Healthcare up by 0.37%, Capital Goods up by 0.29% and TECK up by 0.27% were the top gainers, while Consumer Durables down by 1.48%, Auto down by 0.88%, PSU down by 0.23%, Oil & Gas down by 0.21% and Metal down by 0.09% were the top losers in the space.

Meanwhile, in an encouraging development, business conditions in the Indian manufacturing sector continued to grow at a modest pace in October as robust demand, both domestically as well as internationally, led manufacturers to raise prices of their products. The HSBC India Purchasing Managers' Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rebounded from September's nine-month low of 51.0 to 51.6 in October. The latest reading was consistent with a moderate improvement in business conditions during the month as a figure above 50 indicates that the sector is expanding, while a figure below that level means contraction.

Notably, production at Indian manufacturers rose for the twelfth successive month in October. Moreover, the pace of output growth accelerated from the prior month and was solid overall. Indicative of strong demand, the new orders sub-index rose to 53.0 from September's 51.3 on robust overseas demand that helped push output higher and prompted manufacturers to add jobs for the first time since June. In addition, export orders received by Indian manufacturers rose in October, extending the current sequence of growth to 13 months. The rate of expansion accelerated to the most, marked in four months and was robust overall. Growth of new business was broad-based by sector, with the strongest rise recorded in intermediate goods.

Further, the improvement in activity allowed companies to increase prices charged slightly, even as the cost of raw materials rose at their slowest pace in 17 months. However, these companies refrained from aggressive inventory accumulation. With this, HSBC expects the trend of output price hike to strengthen with growth, which in turn may prompt the Reserve Bank of India (RBI) to keep monetary policy restrictive in the near term. In the September policy review, Reserve Bank Governor Raghuram Rajan kept all key rates unchanged citing continued risks to inflation and difficult external situation, especially on the geopolitical front.

The CNX Nifty touched a high and low of 8,350.60 and 8,297.65 respectively.

The top gainers of the Nifty were Jindal Steel & Power up by 5.72%, DLF up by 2.69%, SSLT up by 2.52%, Tech Mahindra up by 2.47% and Bank of Baroda up by 2.10%. On the other hand, GAIL (India) down by 5.91%, Coal India down by 2.93%, Mahindra & Mahindra down by 2.92%, NMDC down by 2.81% and HCL Technologies down by 2.39% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.34%, United Kingdom’s FTSE 100 was down by 0.13% and Germany’s DAX was down by 0.35%.

Asian markets ended mostly in red on Monday, after gauges of China’s manufacturing and services industries showed signs of a broadening slowdown in the world’s second-largest economy. The Japanese market remained shut for the trade today for Culture Day holiday. Growth in China’s factories fell to a five-month low in October, missing expectations for an expansion as manufacturers battled cooling order growth and rising costs in the slowing economy. The official Purchasing Managers’ Index (PMI) eased to 50.8 in October from September’s 51.1. Growth in new orders cooled in October, as the index retreated to 51.6 from 52.2. New export orders were 49.9 in October, pointing to a contraction, from 50.2 in September. The services sector has been more resilient than the manufacturing sector and is creating more jobs, which partly explains why the government has so far refrained from more aggressive policy easing in supporting the slowing economy. The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.8 in October from September’s 54.0, which was the weakest reading since January.

Thai Consumer Price Inflation fell to a seasonally adjusted annual rate of 1.48%, from 1.75% in the preceding month. Indonesian Trade Balance rose to a seasonally adjusted -0.27B, from -0.31B in the preceding month while Indonesian Inflation rose to a seasonally adjusted 4.83%, from 4.53% in the preceding month. South Korean Trade Balance rose to a seasonally adjusted 7.50B, from 3.43B in the preceding quarter whose figure was revised up from 3.40B.