Post Session: Quick Review

After taking a pause in previous trading session, local equity markets resumed their record break run on Wednesday, which took Sensex and Nifty at their new highs, which was above psychologically crucial 27,900 and 8,300 levels respectively, with gains of around two tenths of a percent. Sentiment right from the start remained upbeat as oil prices slumped to a four-year low, in a development which augurs well for the economy since the country imports nearly 85% of its crude requirement, and as such, the sharp fall in crude prices recently will help lower import bill, subsidy burden and overall inflation. Markets remained largely unscathed from dismal set of macro-economic data, which though triggered bit of profit-booking in afternoon deals, but bulls which remained on the defense throughout the session, bargained decent gains for local equity markets for yet another session. On the macro-front, growth in India’s dominant service industry stalled last month as new orders came in at a weaker pace, with HSBC Purchasing Managers’ Index (PMI), compiled by Markit, falling to watershed’ 50’ mark, break-even point between growth and contraction, in October from September’s 51.6. Meanwhile, broader indices also outperforming larger counterparts went home with gains in the range of 0.25%-0.75%.

On the global front, Asian stock markets ended mostly lower on Wednesday after an economic growth downgrade in the euro zone and an unexpected widening of the U.S. trade deficit weighed on the sentiment. The U.S. trade deficit in September unexpectedly widened after exports hit a five-month low. On the flip side, European shares rose early on Wednesday, reversing most of the previous session's losses, helped by a raft of positive company results. On the earnings front, British retailer Marks & Spencer surged 8.3 percent after posting a rise in underlying first-half profit for the first time in four years, beating expectations, while German chemicals distributor Brenntag gained 7.8 percent, boosted by forecast-beating earnings.

Closer home, though more of the sectoral indices on BSE concluded into negative territory, stocks from Metal, Power and Infrastructure counters were the worst performers. On the flip side, stocks from Banking, Healthcare and Information Technology were the flavours of the session. In a contradictory scenario, while metal stocks tanked on weak Chinese economic data, banking stocks rallied on mounting hopes of rate cut in RBI’s next policy meeting. The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1638:1378, while 109 scrips remained unchanged. (Provisional)

The BSE Sensex ended at 27915.88, up by 55.50 points or 0.20% after trading in a range of 27857.65 and 28010.39. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.23%, while Small cap index up by 0.76%. (Provisional)

The gaining sectoral indices on the BSE were Bankex up by 1.41%, Healthcare up by 1.01%  IT up by 0.73%, Capital Goods up by 0.57% and FMCG up by 0.32%, while Metal down by 3.03%, Power down by 0.91%, Infrastructure down by 0.86%, Oil & Gas down by 0.66%, PSU down by 0.40% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.49%, Sun Pharma up by 2.26%, Dr. Reddys Lab up by 2.24%, ICICI Bank up by 2.19% and SBI up by 2.18%. On the flip side, Hindalco down by 4.34%, Sesa Sterlite down by 3.56%, Coal India down by 3.21%, Hero MotoCorp down by 2.50% and Bharti Airtel down by 2.47% were the top losers. (Provisional)

Meanwhile, the activity in Indian services sector, which accounts for around 60% of country’s GDP remained stagnant in the month of October following the five successive month-growth, adding to pressure on the government to take necessary economic reforms. The HSBC services Purchasing Managers’ Index (PMI), based on the survey of around 350 private service sector companies, fell to six-month low at 50 in October from 51.6 in the month of September. Services providers linked stagnation in activity to weaker growth of new business. Despite rising for the sixth consecutive month, new work intakes in the Indian service sector increased at the weakest pace during October.

The HSBC survey highlighted that among the monitored sub-sectors, the best-performing was Post & Telecommunications, whereas activity fell quickest in Hotels & Restaurants. Indicating expansion at weaker pace than previous month in business activity overall, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, fell to 51 in October from 51.8 in September. Employment in the Indian service sector also slowed in October as the rate of job creation was marginal overall and weaker than the long-run series average. Amid continuing expansion in new business and stagnant employment level, backlogs of work at service sector firms in India accumulated at the quickest rate in three months during October.

The Survey indicated a steady inflation trend with input prices faced by Indian services companies rose for 67 consecutive months in October. However, the rate of cost inflation was unchanged from September and was the joint-weakest since November 2009. According, services providers increased selling prices in October, marking a four-year period of charge inflation. Though, the rate of inflation was slight overall and muted in comparison with historical data. The prices charged sub-index only nudged up to 50.7 from September’s near four-year low of 50.6.

On business outlook, services firms remained optimistic for output growth over the next 12 months as business sentiment was the strongest in three months. The survey indicated that anticipated improvements in demand and new marketing initiatives were leading factors credited for strongest improvement in business confidence among services firms.

India VIX, a gauge for markets short term expectation of volatility dipped 0.52% at 13.66 from its previous close of 13.73 on Monday. (Provisional)

The CNX Nifty ended at 8338.30, up by 14.15 points or 0.17% after trading in a range of 8323.50 and 8365.55. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 2.85%, BPCL up by 2.24%, Dr. Reddys Lab up by 2.22%, HCL Tech up by 2.18% and SBI up by 2.15%. On the flip side, Cairn India down by 4.97%, Jindal Steel & Power down by 4.50%, Sesa Sterlite down by 4.35%, Hindalco down by 4.31% and NMDC down by 3.89% were the top losers. (Provisional)

European Markets were trading in the green; UK’s FTSE 100 was up 0.78%, France’s CAC was up by 1.03% and Germany’s DAX was up by 1.18%.

Asian markets ended mostly in red on Wednesday, with China’s stocks dropping for the first time in seven days on concern that recent gains were excessive of valuations. Bank of Japan Governor Haruhiko Kuroda stated that reaching a sustained level of 2% inflation in two years is a hard task for any central bank but Japan needs to find a way end a deflationary spiral. Kuroda added that the BoJ board’s projection in its latest semi-annual outlook report released has been revised down slightly; CPI inflation is still projected as likely to reach around 2% in or around fiscal 2015. He also lauded a weaker yen as benefiting exports and stated that it reflects Japan’s fundamentals. Indonesian GDP fell to a seasonally adjusted annual rate of 5.01%, from 5.12% in the preceding month. Taiwanese CPI fell to a seasonally adjusted annual rate of -0.18%, from 0.10% in the preceding quarter. Philippines CPI rose to a seasonally adjusted annual rate of 0.1%.