Bourses maintain modest gains on supportive macro data

Markets are holding modest gains in the afternoon trade, partially on hopes of a rate cut from the Reserve Bank of India’s monetary policy review slated tomorrow and partially on good macro data after HSBC India Purchasing Managers' Index (PMI), improving for the thirteenth month in a row in November, surged to 53.3, its 21-month peak and much better than compared to 51.6 in October. However, in spite of accelerated expansions in output and new business, employment in the Indian manufacturing economy remained broadly unchanged in November and that was possibly restricting any big gains in the market. On the sectoral front, while the consumer durables were maintaining the lead, the cuts on metal index has widened, making it the biggest losing index on BSE after the Chinese Manufacturing Purchasing Managers' Index ( PMI) edged down to 50.0 in November, a six-month low. On the other hand the jewellary stocks were in the rally mood, reacting to the government’s decision to ease curbs on gold imports.

The BSE Sensex is currently trading at 28722.92, up by 28.93 points or 0.10% after trading in a range of 28672.73 and 28809.64. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices despite paring gains were trading in green; the BSE Mid cap index was up by 0.33%, while Small cap index up by 0.01%.

The gaining sectoral indices on the BSE were Consumer Durables up by 4.16%, FMCG up by 1.17%, IT up by 1.02%, TECK up by 0.82%, Auto up by 0.54% while, Oil & Gas down by 1.45%, Metal down by 1.43%, Power down by 1.40%, Realty down by 1.21%, PSU down by 1.06% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 3.32%, Hero MotoCorp up by 2.53%, Wipro up by 2.36%, Maruti Suzuki up by 1.92% and Cipla up by 1.79%. On the flip side, ONGC down by 2.41%, BHEL down by 2.03%, Sesa Sterlite down by 1.99%, Tata Steel down by 1.96% and Tata Power down by 1.94% were the top losers.

Meanwhile, concerned over the sluggish manufacturing growth, India Inc has pitched for a rate cut by RBI to provide impetus to recovery through higher consumption spending and opening up channels for investment. Dragged down by sluggish manufacturing sector growth, Indian Gross Domestic Product (GDP) growth slowed down to 5.3% y-o-y to 14.39 lakh crore in Q2FY15 as against 5.7% in the previous quarter. Manufacturing sector, having around 75% share in industrial production, was a major dampener with a growth of 0.1% during the second quarter as against the 1.3% registered in the same period of the previous year.

Industry body FICCI has highlighted that though growth in agriculture and services sector is in line with expectations, the subdued growth in manufacturing at 0.1% during quarter is a matter of concern. Interest rate is an important element of the cost structure for manufacturing and given the current inflation situation RBI should ease the monetary policy stance as this would give a boost to investment sentiments. Further, it added that the present wave of optimism needs to be maintained through continued efforts by the government towards further improving the tax and policy environment to encourage enterprises to expand. The Confederation of Indian Industry (CII) stated that there is need for continuing with proactive policies which would help revive investments and address the bottlenecks plaguing the agriculture and industrial sectors. The central bank should review its status quo approach and move towards paring interest rates in its forthcoming monetary policy to give a fillip to recovery.

There is a strong demand from the industry reeling under slowdown to see lower interest rates and is expecting at least 50 basis points cut in the benchmark interest rate by RBI on its bi-monthly monetary policy due on Tuesday. Meanwhile, industry expectations for a rate cut are not unrealistic and based on more than expected decline in the retail inflation which is currently hovering at 5.52 per cent for October, much lower than the RBI target of 8% by January, 2015 and 6% by January, 2016.

The CNX Nifty is currently trading at 8600.55, up by 12.30 points or 0.14% after trading in a range of 8583.50 and 8623.00. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 5.08%, Hindustan Unilever up by 3.26%, Wipro up by 2.40%, Hero MotoCorp up by 2.36% and Indusind Bank up by 1.95%. On the flip side, Jindal Steel & Power down by 2.52%, ONGC down by 2.37%, NMDC down by 2.29%, BHEL down by 2.27% and Sesa Sterlite down by 2.07% were the top losers.

Asian markets were mostly in red, Hang Seng plunged by 535.74 points or 2.23% to 23,451.71, Taiwan Weighted lost 69.44 points or 0.76% to 9,117.71, FTSE Bursa Malaysia KLCI was down by 51.09 points or 2.81% to 1,769.80, Straits Times was lower by 20.80 points or 0.62% to 3,329.70, KOSPI Index was down by 15.56 points or 0.79% to 1,965.22 and Shanghai Composite was a bit lower by 3.59 points or 0.13% to 2,679.25. On the other hand, Jakarta Composite gained 10.14 points or 0.2% to 5,160.03 and Nikkei 225 was higher by 130.25 points or 0.75% to 17,590.10.